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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 23, 1995
SpecTran Corporation
(Exact name of registrant as specified in its charter)
Delaware 0-12489 04-2729372
(State or other (Commission (IRS Employer
jurisdiction) File No.) Identification No)
50 Hall Road, Sturbridge, MA 01566
(Address of principal executive offices)
Registrant's telephone number, including area code (508) 347-2261
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 23, 1995, SpecTran Corporation (the "Company") completed the
acquisition of all of the issued and outstanding stock of Applied Photonic
Devices, Inc., ("APD") from Irving N. Dwyer, David P. DaVia, The Irving N.
Dwyer and Annette M. Dwyer Charitable Remainder Trust and the DaVia Charitable
Remainder Trust for a total purchase price of $3.9 million, of which $650,000
was paid through the issuance of 144,444 shares of the Company's Common Stock
priced at $4.50 per share, which was the closing price of the Company's stock
on October 3, 1994. The assets acquired in the transaction include machinery,
equipment, intellectual property, contract rights and accounts receivable. The
amount of consideration paid was generally based upon the future earnings
potential of APD. The source of the funds for the acquisition was primarily
the Company's loan from Fleet Bank of Massachusetts, N.A. and the issuance of
the aforesaid 144,444 shares. APD was engaged in the manufacture of fiber
optic cable and related products. The Company intends to continue using the
assets acquired for the purpose of manufacturing fiber optic cable and related
products.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of business acquired.
It is impracticable for the Company to provide the required financial
statements at this time. The required financial statements will be filed under
cover of Form 8 not later than August 6, 1995 (60 days after the date this
report must be filed).
(b) Pro forma financial information.
It is impracticable for the Company to provide the required pro forma
financial information at this time. The required pro forma financial
information will be filed under cover of Form 8 not later than August 6, 1995
(60 days after the date this report must be filed).
(c) Exhibits.
99.3 Stock Purchase Agreement among APD Acquisition Corp. and Irving
N. Dwyer, David P. DaVia, The Irving N. Dwyer and Annette M. Dwyer Charitable
Remainder Trust and the DaVia Charitable Remainder Trust dated March 31, 1995.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SPECTRAN CORPORATION
(Registrant)
Date: June 6, 1995 /s/ Bruce A. Cannon
-------------------------------
Bruce A. Cannon
Senior Vice President and Chief
Financial Officer
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EXHIBIT INDEX
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Exhibit Description Page
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99.3 Stock Purchase Agreement among APD Acquisition
Corp. and Irving N. Dwyer, David P. DaVia, The
Irving N. Dwyer and Annette M. Dwyer
Charitable Remainder Trust and the DaVia
Charitable Remainder Trust.
</TABLE>
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STOCK PURCHASE AGREEMENT
AMONG
APD ACQUISITION CORPORATION,
AS BUYER
AND
IRVING N. DWYER,
DAVID P. DAVIA,
THE IRVING N. DWYER CHARITABLE REMAINDER TRUST,
AND
THE DAVID P. DAVIA CHARITABLE REMAINDER TRUST,
AS SELLERS
March 31, 1995
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STOCK PURCHASE AGREEMENT
AMONG
APD ACQUISITION CORPORATION,
AS BUYER
AND
IRVING N. DWYER,
DAVID P. DAVIA,
THE IRVING N. DWYER CHARITABLE REMAINDER TRUST,
AND
THE DAVID P. DAVIA CHARITABLE REMAINDER TRUST
AS SELLERS
TABLE OF CONTENTS
7
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Preliminary Statement1
ARTICLE 1 CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 SALE AND PURCHASE OF SHARES AND CERTAIN
REPRESENTATIONS AND WARRANTIES REGARDING THE
PROPERTIES AND LIABILITIES OF THE COMPANY . . . . . . . . 4
2.1 Shares to be Acquired . . . . . . . . . . . . . . . . . . 5
2.2 Obligations of the Company . . . . . . . . . . . . . . . 5
2.3 Sellers' Obligations . . . . . . . . . . . . . . . . . . 5
2.4 Payment . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4.1 Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4.2 At Closing . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4.3 Adjustments . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 3 CERTAIN SPECIFIC MATTERS RELATING TO EMPLOYMENT
AGREEMENTS WITH SELLERS AND EMPLOYEES
AND BANK DEBT . . . . . . . . . . . . . . . . . . . . . . 6
3.1 Employment Agreement with Irving N. Dwyer
and David P. DaVia . . . . . . . . . . . . . . . . . . 6
</TABLE>
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TABLE OF CONTENTS (cont'd)
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3.2 Employees . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Bank Debt . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . 7
4.1 Representations Regarding the Company . . . . . . . . 7
4.2 Compliance with Law . . . . . . . . . . . . . . . . . . 8
4.3 Authority and Compliance . . . . . . . . . . . . . . . 8
4.4 Machinery, Equipment and Other Property . . . . . . . . 9
4.5 Contracts . . . . . . . . . . . . . . . . . . . . . . . 11
4.6 Facility . . . . . . . . . . . . . . . . . . . . . . . 12
4.7 Legal Proceedings, Etc. . . . . . . . . . . . . . . . . 12
4.8 Substantial Customers . . . . . . . . . . . . . . . . . 13
4.9 Substantial Suppliers . . . . . . . . . . . . . . . . . 13
4.10 No Finder . . . . . . . . . . . . . . . . . . . . . . . 13
4.11 Absence of Certain Events . . . . . . . . . . . . . . . 14
4.12 Completeness of Schedules . . . . . . . . . . . . . . . 15
4.13 Delivery of Documents . . . . . . . . . . . . . . . . . 14
4.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.15 Officers and Directors . . . . . . . . . . . . . . . . 15
4.16 Bank Accounts . . . . . . . . . . . . . . . . . . . . . 15
4.17 Business Operations . . . . . . . . . . . . . . . . . . 15
4.18 Contracts and Agreement with Sellers . . . . . . . . . 16
4.19 Financial Statements . . . . . . . . . . . . . . . . . 16
4.20 Trusts . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . 17
5.1 Organization and Good Standing . . . . . . . . . . . . 17
5.2 Compliance with Law . . . . . . . . . . . . . . . . . . 17
5.3 Authority and Compliance . . . . . . . . . . . . . . . 17
5.4 No Finder . . . . . . . . . . . . . . . . . . . . . . . 18
5.5 Legal Proceedings, Etc. . . . . . . . . . . . . . . . . 18
5.6 Capitalization . . . . . . . . . . . . . . . . . . . . 18
5.7 SpecTran Liable . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 6 CLOSING PROCEDURES . . . . . . . . . . . . . . . . . . 19
6.1 Closing Date . . . . . . . . . . . . . . . . . . . . . 19
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TABLE OF CONTENTS (cont'd)
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6.2 Closing Deliveries of Sellers . . . . . . . . . . . . . 19
6.3 Closing Deliveries of Buyer . . . . . . . . . . . . . . 20
ARTICLE 7 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER . . . 21
7.1 Representations, Warranties and Covenants . . . . . . . 22
7.2 Authorizing Resolutions . . . . . . . . . . . . . . . . 22
7.3 Compliance with Laws . . . . . . . . . . . . . . . . . 22
7.4 Legal Matters . . . . . . . . . . . . . . . . . . . . . 22
7.5 Opinion of Counsel . . . . . . . . . . . . . . . . . . 22
7.6 Related Agreements . . . . . . . . . . . . . . . . . . 22
7.7 Payment of Purchase Price . . . . . . . . . . . . . . . 22
7.8 Closing Certificates . . . . . . . . . . . . . . . . . 22
7.9 Consents and Approvals . . . . . . . . . . . . . . . . 22
7.10 Release of Bank Guarantees . . . . . . . . . . . . . . 23
7.11 Employment Agreements . . . . . . . . . . . . . . . . . 23
ARTICLE 8 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER . . . 23
8.1 Representations, Warranties and Covenants . . . . . . . 23
8.2 Instruments of Conveyance . . . . . . . . . . . . . . . 23
8.3 Compliance with Laws . . . . . . . . . . . . . . . . . 23
8.4 Legal Matters . . . . . . . . . . . . . . . . . . . . . 23
8.5 Opinion of Counsel . . . . . . . . . . . . . . . . . . 23
8.6 Related Agreements . . . . . . . . . . . . . . . . . . 23
8.7 Closing Certificates . . . . . . . . . . . . . . . . . 23
8.8 Consents and Approvals . . . . . . . . . . . . . . . . 24
8.9 Intentionally Omitted . . . . . . . . . . . . . . . . . 24
8.10 Absence of Certain Changes . . . . . . . . . . . . . . 24
8.11 Agreements With Irving N. Dwyer, David P. DaVia
and Other Employees . . . . . . . . . . . . . . . . . . 24
8.12 Board Approval . . . . . . . . . . . . . . . . . . . . 24
8.13 Bank Accounts . . . . . . . . . . . . . . . . . . . . . 25
8.14 Environmental Insurance . . . . . . . . . . . . . . . . 25
8.15 Product Liability Insurance . . . . . . . . . . . . . . 26
ARTICLE 9 ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . 26
9.1 Definitions . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
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TABLE OF CONTENTS (cont'd)
<TABLE>
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9.2 Environmental Representations . . . . . . . . . . . . . 28
9.3 Application of Article 12 . . . . . . . . . . . . . . . 29
ARTICLE 10 CERTAIN COVENANTS OF SELLER PENDING AND AFTER
THE CLOSING DATE . . . . . . . . . . . . . . . . . . . 29
10.1 Business in the Ordinary Course . . . . . . . . . . . . 29
10.2 Maintenance of Physical Assets . . . . . . . . . . . . 30
10.3 Maintenance of Rights . . . . . . . . . . . . . . . . . 30
10.4 Compliance With Laws . . . . . . . . . . . . . . . . . 30
10.5 Litigation and Adverse Developments . . . . . . . . . . 30
10.6 Report . . . . . . . . . . . . . . . . . . . . . . . . 30
10.7 Update Schedules . . . . . . . . . . . . . . . . . . . 30
10.8 Non-Competition . . . . . . . . . . . . . . . . . . . . 30
10.9 Third Party Consents . . . . . . . . . . . . . . . . . 30
10.10 Exclusive Dealing . . . . . . . . . . . . . . . . . . . 31
10.11 Access Pending Closing . . . . . . . . . . . . . . . . 31
10.12 Cash . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 11 COVENANTS OF THE PARTIES . . . . . . . . . . . . . . . 31
11.1 Consummation of Transactions . . . . . . . . . . . . . 31
11.2 Cooperation . . . . . . . . . . . . . . . . . . . . . . 31
11.3 Confidentiality . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 12 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . 33
12.1 Indemnification of Buyer . . . . . . . . . . . . . . . 33
12.2 Extent of Seller's Liability for
Indemnification . . . . . . . . . . . . . . . . . . . 33
12.3 Indemnification of Sellers . . . . . . . . . . . . . . 34
12.4 Indemnification Procedures Involving
Only Sellers and Buyer . . . . . . . . . . . . . . . 35
12.5 Certain Procedures Regarding
Indemnification of Third Party Claims, Etc. . . . . . 35
ARTICLE 13 TERMINATION . . . . . . . . . . . . . . . . . . . . . . 36
13.1 Methods of Termination . . . . . . . . . . . . . . . . 36
13.2 Effect of Termination . . . . . . . . . . . . . . . . . 37
</TABLE>
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TABLE OF CONTENTS (cont'd)
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ARTICLE 14 MISCELLANEOUS MATTERS . . . . . . . . . . . . . . . . 38
14.1 Survival of Representations and Warranties . . . . . 38
14.2 Further Assurances; Access to Records . . . . . . . . 38
14.3 Mail . . . . . . . . . . . . . . . . . . . . . . . . 39
14.4 Changes, Waivers . . . . . . . . . . . . . . . . . . 39
14.5 Expenses, Etc. . . . . . . . . . . . . . . . . . . . 39
14.6 Counterparts . . . . . . . . . . . . . . . . . . . . 39
14.7 Contents of Agreement; Parties in Interest;
Assignment, Etc. . . . . . . . . . . . . . . . . . . 40
14.8 Conflict with Related Agreements . . . . . . . . . . 40
14.9 Dispute Resolution . . . . . . . . . . . . . . . . . 40
14.10 Receipt of Monies or Other Assets . . . . . . . . . . 41
14.11 Section Headings and Gender . . . . . . . . . . . . . 41
14.12 Schedules . . . . . . . . . . . . . . . . . . . . . . 41
14.13 Notices . . . . . . . . . . . . . . . . . . . . . . . 41
14.14 Governing Law . . . . . . . . . . . . . . . . . . . . 43
</TABLE>
SCHEDULES
EXHIBITS
<PAGE> 7
STOCK PURCHASE AGREEMENT
THIS AGREEMENT, dated as of this 31st day of March, 1995, is among
IRVING N. DWYER, DAVID P. DAVIA, THE DAVIA CHARITABLE REMAINDER TRUST, and THE
IRVING N. DWYER AND ANNETTE M. DWYER CHARITABLE REMAINDER TRUST, (collectively,
"Sellers") and APD ACQUISITION CORP., a Delaware corporation ("Buyer").
Preliminary Statement
WHEREAS, Sellers own all of the issued and outstanding capital stock of
APPLIED PHOTONIC DEVICES, INC., a Connecticut corporation (the "Company"),
consisting of 5,000 authorized shares of common stock, of which 100 shares are
outstanding, par value $.10 per share (the "Shares");
WHEREAS, the Company is engaged in the business of developing,
manufacturing and selling fiber optic cable and cable components, products used
for engineering cable systems integration; specialty designed cable for
advanced OEM applications; value added cable assemblies in jumper or pigtail
form; and complete ready-to-install multifiber trunk cables with completed
terminations; plus engineering and planning services for cable selection,
splicing, racking, assistance in termination installation, supervision,
training and documenting facility installations (the "Business");
WHEREAS, Sellers wish to sell and Buyer wishes to buy the Shares; and
WHEREAS, Sellers and Buyer desire to provide for an orderly transition
from Sellers to Buyer, and for other arrangements ancillary to the purchase and
sale of the Shares.
NOW, THEREFORE, in consideration of the premises and mutual and
dependent promises set forth herein, the parties hereto agree as follows:
ARTICLE 1 CERTAIN DEFINITIONS.
The following defined terms shall have the following meanings:
1.1 "Affiliate" means, with respect to the Company or Buyer,
another corporation, partnership, joint venture, other entity
of any type or individual that directly or indirectly
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through one or more intermediaries, controls, is controlled
by, or is under common control with the Company or Buyer,
respectively.
1.2 "Agreement" means this Agreement, as the same may be
extended, modified, supplemented or terminated from time to
time.
1.3 "Balance Sheet" has the meaning set forth in Section 4.19
hereof.
1.4 "Bank" means First National Bank of Connecticut (Hartford).
1.5 "Business" has the meaning set forth in the Preliminary
Statement to this Agreement.
1.6 "Business Property" means all outstanding stock of the
Company.
1.7 "Closing" or "Closing Date" means the date on which the
transactions contemplated by this Agreement shall be
consummated.
1.8 "Company" has the meaning set forth in the Preliminary
Statement to this Agreement.
1.9 "Copyrights" means all copyrights, domestic or foreign,
whether registered or unregistered, owned or controlled by
Seller relating to the Business, and all materials and matter
(and, if in writing, shall include any machine-readable
forms) to which such copyrights relate.
1.10 "Employee Benefit Plan" shall have the meaning set forth in
Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended.
1.11 "Facility" means the 45,000 square feet facility leased by
the Company at 50 Tiffany Street, Brooklyn, Connecticut.
1.12 "Governmental Rights" means all governmental permits,
easements, rights and other authorizations related to the
Business owned or controlled by the Company.
1.13 "Indemnitee" means a party asserting a claim for
indemnification under Article 12 hereof.
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1.14 "Indemnitor" means the party from whom indemnification is
sought under Article 12 hereof.
1.15 "Lease" means the lease between the Company and Mark C.
Yellin for the Facility dated December 20, 1990.
1.16 "Notice Date" has the meaning set forth in Section 12.3(a)
hereof.
1.17 "Patents" means all United States and foreign patents and
patent applications (and any patents issuing therefrom),
together with any extensions, reissues, renewals, divisions,
continuations or continuations in part thereof and any
foreign equivalents of any of the foregoing.
1.18 "Products" means fiber optic cable and cable components,
products used for engineering cable systems integration;
specialty designed cable for advanced OEM applications; value
added cable assemblies in jumper or pigtail form; and
complete read-to-install multifiber trunk cables with
completed terminations; plus engineering and planning
services for cable selection, splicing, racking, assistance
in termination installation, supervision, training and
documenting facility installations.
1.19 "Purchase Price" means the aggregate amount to be paid by
Buyer to Sellers for the Shares, as set forth in Section 2.4
hereof.
1.20 "Purchase Shares" has the meaning set forth in Section 2.4.2
hereof.
1.21 "Related Agreements" means
(a) the Stock Powers to be executed on and as of the
Closing Date by Sellers provided for in Section 8.2;
(b) the Non-Competition Agreements to be executed on and
as of the Closing Date by Sellers provided for in
Section 10.8 of the Agreement;
(c) the Employment Agreements to be executed on and as of
the Closing Date by Sellers provided for in Section
3.1 of the Agreement;
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(d) the Escrow Agreement to be executed on and as of the
date hereof by Buyer, Sellers, SpecTran and Hackmyer &
Nordlicht, as escrow agent, provided for in Section
2.4.1, below ; and
(e) all instruments, and any other agreements and
documents to be executed and delivered at Closing by
Sellers, Buyer or their Affiliates and which are
referred to in this Agreement.
1.22 "SpecTran" means SpecTran Corporation, a Delaware
corporation, which is the owner of all of the issued and
outstanding capital stock of Buyer.
1.23 "Trade Secrets" means any and all information developed by
or for and/or owned or controlled by the Company at the
Closing, including but not limited to any formula; data
processing, engineering or manufacturing techniques or
methods; research or development information; patterns;
devices; compilations; programs; methods; ideas; inventions;
discoveries; know-how; show-how; improvements; procedures;
results; designs; processes; parts of processes; products
components or composition; product quality protocols and
specifications; production manuals; files, records, plans,
notebooks, production and quality control data, books and
publications, business information; computer programs and
data (including preclinical and clinical data).
1.24 "Trademarks" includes all U.S. and foreign trademarks,
tradenames, or service marks, whether registered, under
application or in common law, or with respect to which an
Intent to Use filing has been made as of the Closing Date
(collectively, the "Trademarks").
ARTICLE 2 SALE AND PURCHASE OF SHARES AND CERTAIN REPRESENTATIONS AND
WARRANTIES REGARDING THE PROPERTIES AND LIABILITIES OF THE
COMPANY.
Subject to the terms and conditions and on the basis of and in reliance
on the representations, warranties, obligations and agreements set forth in
this Agreement, the parties agree as follows:
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2.1 Shares to be Acquired. At the Closing, Sellers shall sell,
assign, transfer and convey and Buyer shall purchase and
accept the Shares, free and clear of any liens, claims or
encumbrances of any kind.
2.2 Obligations of the Company. Sellers represent that the
liabilities of the Company as of the Closing Date shall be as
follows (the "Company's Liabilities"):
(a) All liabilities of the Company stated on the Balance
Sheet; and
(b) To the extent not covered by Section 2.2(a), all of
the Company's obligations of future performance due
after the Closing Date under the contracts, open
purchase orders, leases, licenses, and other
agreements included under Section 4.5 below as the
same may exist at Closing, provided that all required
consents to the assignment of any such agreement have
been obtained by Sellers.
2.3 Sellers' Obligations. Sellers represent and warrant that the
Company, as of the Closing Date, shall have no liabilities,
accrued, contingent or otherwise, except as set forth in
Section 2.2, above.
2.4 Payment. The Purchase Price shall be THREE MILLION NINE
HUNDRED THOUSAND DOLLARS ($3,900,000.00) (subject to
adjustment as set forth in Section 2.4.3, below). ONE
HUNDRED THOUSAND DOLLARS ($100,000.00) previously paid to
Irving N. Dwyer and David P. DaVia by SpecTran pursuant to
the letter from SpecTran to Irving N. Dwyer and David P.
DaVia dated October 3, 1994 as amended January 25, 1995 is to
be credited to the Purchase Price. The Purchase Price shall
be payable by Buyer and adjusted as described below.
2.4.1 Escrow. Upon the execution of this Agreement, the
amount of ONE MILLION FIVE HUNDRED SEVENTY FIVE
THOUSAND DOLLARS ($1,575,000), representing one half
of the of the cash portion of the Purchase Price to be
paid at Closing (the "Escrow Fund"), shall be
deposited into escrow with Hackmyer & Nordlicht as
escrow agent (the "Escrow Agent") pursuant to an
Escrow Agreement in the form attached hereto as
Exhibit 2.4.1.
2.4.2 At Closing. At Closing, the balance of the Purchase
Price shall be paid as follows: (i) Buyer shall
deliver to Sellers the aggregate amount of ONE
MILLION FIVE HUNDRED SEVENTY FIVE THOUSAND DOLLARS
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($1,575,000) in cash by certified check or wire
transfer to an account or accounts designated in
writing by Sellers, (ii) the parties shall deliver
joint written directions to the Escrow Agent
instructing the Escrow Agent to release the Escrow
Fund to the Sellers as they shall direct pursuant to
the Escrow Agreement and (iii) Buyer shall cause
SpecTran to deliver to Sellers the aggregate amount of
SIX HUNDRED FIFTY THOUSAND DOLLARS ($650,000.00) by
the issuance from SpecTran of 144,444 shares of its
common stock, par value $.01 per share, valued at
$4.50 per share, the closing price of such shares on
October 3, 1994 as quoted in the Wall Street Journal,
to be divided between Sellers as set forth on Schedule
2.4.2 hereto (the "Purchase Shares").
2.4.3 Adjustments. There shall be a dollar for dollar
adjustment in the Purchase Price to the extent that
the net book value of the Company as of the Closing is
less than the net book value set forth in the Balance
Sheet dated June 30, 1994, payable by Sellers
promptly upon request by Buyer.
ARTICLE 3 CERTAIN SPECIFIC MATTERS RELATING TO EMPLOYMENT AGREEMENTS
WITH SELLERS AND EMPLOYEES AND BANK DEBT.
3.1 Employment Agreements With Irving N. Dwyer and David P.
DaVia. At Closing, Buyer will cause the Company to enter
into three-year employment agreements with each of Irving N.
Dwyer and David P. DaVia providing for a starting salary of
EIGHTY-FIVE THOUSAND DOLLARS ($85,000.00) per annum with
annual 6% increases substantially in the forms attached as
Exhibits 3.1(a) and Exhibits 3.1(b) hereto. The employment
agreements shall also provide for use of an automobile and
life insurance coverage consistent with the coverage granted
to executives of SpecTran.
3.2 Employees. Buyer will exercise good faith efforts to retain
at their present salary level all of the Company's employees
desiring to remain employed by the Company after the Closing.
Buyer's ability to enter into employment agreements with each
of the Sellers and to obtain commitments from employees of
the Company of sufficient quantity and quality reasonably
necessary for Buyer to properly operate the Business are
conditions to Buyer's obligation to close, as set forth in
Section 8.11 hereof. Buyer hereby undertakes to extend to
all of the Company's employees staying with the Company after
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the Closing all benefits offered to employees of SpecTran
generally and to give such employees full credit for prior
service to the Company for the purpose of determining the
employee's seniority. Sellers and Buyer will work together
and coordinate activities in this area.
3.3 Bank Debt. Buyer acknowledges and agrees that the Company
has outstanding indebtedness to the Bank in the amount of
approximately SIX HUNDRED EIGHTEEN THOUSAND TWO HUNDRED FIFTY
DOLLARS ($618,250.00), which will be paid by Buyer or one of
its Affiliates at the Closing. Buyer further acknowledges
that Sellers require as a condition of Closing that the
personal guarantees of Irving N. Dwyer and David P. DaVia of
the Company's indebtedness to the Bank be surrendered and
canceled by the Bank. It is understood by the parties that
the consent of the Bank to this Agreement and the
transactions contemplated hereby shall be a condition to each
party's obligation to proceed with the Closing.
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLERS
As an inducement to Buyer to enter into this Agreement and to consummate
the transactions contemplated hereby, Sellers hereby represent and warrant to
Buyer that as of the date of this Agreement:
4.1 Representations Regarding the Company.
(a) Subsidiaries. The Company has no subsidiaries and
does not own stock in or directly or indirectly
control any corporation, association or business
entity. The Company is not a party to any joint
venture or partnership agreement.
(b) Capitalization. The aggregate number of shares which
the Company is authorized to issue is 5,000 shares of
common stock, par value $10.00 per share, of which 100
shares are issued, presently outstanding and owned by
Sellers in the amounts set forth on Schedule 4.1(b)
hereto. The Company has no authorized capital stock
except for the common stock and there are no shares of
capital stock reserved for issue. All of the Shares
have been validly issued and are fully paid and
non-assessable. The Company has no outstanding
subscriptions, contracts, options, warrants, or other
obligations (including conversion or
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preemptive rights) to issue, sell or otherwise dispose
of, or to purchase, redeem or otherwise acquire any of
its capital stock. The sale of the Shares to Buyer
will not give rise to any rights of first refusal of
any person or entity. No person or entity other than
Sellers owns or has any interest in the capital stock
of the Company. Sellers own the Shares free and clear
of any encumbrances, pledges, security interests,
liens, charges, claims, equities and options of
whatever nature and has the full right and authority
to transfer the Shares to Buyer at time of closing.
The Shares are not subject to any agreement,
commitments or restrictions with respect to their
transferability. Upon transfer of the Shares to
Buyer, Buyer shall receive title to the Shares free
and clear of all encumbrances, pledges, security
interests, liens, charges, claims, equities and
options of whatever nature.
(c) Organization and Good Standing. The Company is a
corporation duly organized, validly existing and in
good standing under the laws of the State of
Connecticut and is duly and validly authorized to do
business in all other jurisdictions in which its
failure to be so qualified would have a material
adverse effect on the Company.
(d) Charter, By-Laws, Minutes. True, complete and correct
copies of the Certificate of Incorporation and By-
Laws of the Company, as currently in effect, and the
Company's minute book, have been provided by Sellers
to Buyer.
4.2 Compliance with Law. There are no authorizations, including
those of any governmental authority, court or regulatory
body, that are required to be obtained by Sellers or the
Company in order to permit Sellers to execute and deliver and
consummate and perform the transactions contemplated by this
Agreement and the Related Agreements to which either or both
Sellers is a party.
4.3 Authority and Compliance.
(a) At the Closing Date, the Company will have all
requisite corporate power and authority to own or
lease the assets of the Company.
(b) Each Seller has the unencumbered right to execute and
deliver this Agreement and the Related Agreements to
which each is a party and to perform the
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<PAGE> 15
transactions contemplated hereby and thereby. This
Agreement constitutes (and, upon execution and
delivery at the Closing, each of the Related
Agreements to be executed by Sellers will constitute)
a legal, valid and binding obligation of each Seller
enforceable against each of them in accordance with
its terms, except that (i) such enforcement may be
subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in
effect relating to creditors rights generally and (ii)
the remedy of specific performance and other forms of
equitable relief may be subject to equitable defenses
and to the discretion of the court before which any
proceeding therefor may be brought.
(c) The execution and the delivery of this Agreement and
the Related Agreements to which each of them is a
party and the consummation and performance by Sellers
of the transactions contemplated hereby and thereby
will not: (i) violate the Certificate of
Incorporation or By-Laws of the Company; (ii) conflict
with or result in a breach of any of the terms,
conditions or provisions of, or constitute a default
under, any instrument, agreement, mortgage, judgment,
order, award, or decree to which Seller, the Company
or any of their Affiliates is a party or by which
Seller, the Company or any of their Affiliates is
bound and which would have a material adverse effect
upon the Company, the Business or the assets of the
Company, the Business or the Business Property or
(iii) give any third party the right under any
instrument, agreement, mortgage, judgment, order,
award or decree to terminate, modify or otherwise
change the rights or obligations of either Seller or
the Company under such instrument, agreement,
mortgage, judgment, order, award or decree, the effect
of which termination, modification or change would be
materially adverse to the Company, the Business or the
assets of the Company.
(d) Sellers and the Company have not violated any
applicable statute, order, rule or regulation, which
violation would prevent the consummation of the
transactions contemplated herein.
4.4 Machinery, Equipment and other Property.
(a) Schedule 4.4(a) sets forth a list of the machinery and
equipment owned by the Company. The Company owns such
machinery and equipment free and clear of all liens,
claims and encumbrances of any kind whatsoever and no
other person
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<PAGE> 16
or entity has any rights to any of such machinery and
equipment except as set forth on Schedule 4.4(a).
(b) The manufacturing equipment of the Company is in good
condition, normal wear and tear excepted.
(c) Schedule 4.4(c) sets forth a list of leases of tangible
personal property to which the Company is a party. Sellers
and the Company have not received any notice of cancellation
or termination under any option or right reserved to the
lessor under any such lease or any notice of default under
any such lease, and no event has occurred which, with notice
or lapse of time or both, would constitute a default by the
Company under any such lease, the effect of which default
would be materially adverse to the Business.
(d) The Product inventory of the Company will, at the Closing
Date, meet applicable specifications published therefor by
Seller.
(e) The Company does not own or use any Patents.
(f) The Company does not own or use any Trademarks other than
"Opti-Pak".
(g) Schedule 4.4(g) lists all registered Copyrights owned or used
by the Company.
(h) Sellers and the Company have not received any written claim
that the Company has infringed the patent or proprietary
rights of any other person. The Company is not subject to
any outstanding order, judgment or decree of any court of
administrative agency, and have not entered into any
stipulation or agreement, restricting their use of the
Patents, Trademarks, Trade Secrets or Copyrights.
(i) The Company has not licensed to any party the right to use
any of the Patents, Trademarks, Trade Secrets or Copyrights.
(j) Schedule 4.4(j) lists all of the Company's inventory and
supplies, including raw materials, work in process and
finished goods.
(k) Schedule 4.4(k) lists the Company's accounts receivable.
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<PAGE> 17
4.5 Contracts.
(a) Schedule 4.5 lists all of the Company's contracts, including,
without limitation:
(i) any contract for the purchase, sale or lease of real
property;
(ii) any contract for the lease or sublease of tangible
personal property, under which the Company's
undischarged obligations exceed $1,000.00;
(iii) any contract for the purchase or sale of raw
materials, commodities, merchandise, supplies, other
materials or tangible personal property or for the
furnishing or receipt of services which calls for
performance over a period of more than thirty (30)
days and involves more than the sum of $1,000.00;
(iv) any material distributor, dealer, manufacturer's
representative, sales, agency or advertising
contract;
(v) any customer contract which involves more than the
sum of $1,000.00;
(vi) all contracts relating to the Patents, Trademarks,
Copyrights, Trade Secrets or other intellectual
property to which the Company is a party described in
Section 4.4, above; and
(vii) any other contract, whether or not made in the
ordinary course of business, which affects the
Company.
(b) All contracts set forth in Schedule 4.5 are in full force and
effect, and are legal, valid and binding obligations of the
Company, enforceable against the Company, in accordance with
their terms, except where (i) such enforcement may be subject
to bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to
creditors rights generally and (ii) the remedy of specific
performance and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought.
The Company is not now in default in the
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<PAGE> 18
performance of any material term of any such contract, and no
event has occurred which, with notice or lapse of time or
both, would constitute a default by the Company under any
such contract.
(c) The distributors and representatives that are parties to the
contracts listed on Schedule 4.5 constitute all distributors
and representatives being used by the Company. Within the
last twelve (12) months, the Company has not made any claims
against or initiated any disputes with any such distributor
or representative and has not received notice of any claim or
dispute with Seller or the Company from any such distributor
or representative.
(d) The sale of the Purchase Shares to Buyer will not constitute
an assignment under any contract listed on Schedule 4.5 which
would require the consent of the other party to the contract.
4.6 Facility.
(a) All of the Company's activities are conducted at the
Facility. Except as set forth on Schedule 4.6(a), the
Company has never conducted any operations at any location
other than the Facility.
(b) The operations of the Business as currently conducted by the
Company comply with the terms of the Lease, the Certificate
of Occupancy of the Facility and applicable zoning
regulations.
4.7 Legal Proceedings, Etc.
(a) There are no claims or actions pending or, to Sellers' best
knowledge, threatened, against the Company or Sellers before
any court, governmental authority, or arbitrator pertaining
to the Company or involving the assets of the Company, except
as set forth in Schedule 4.7(a). The Company and Sellers are
not subject to or in default with respect to any indictment,
order, injunction, decree or award of any court, arbitrator
or governmental agency which would adversely affect the
ability of Sellers to execute, deliver and carry out their
respective obligations under this Agreement and the Related
Agreements. There are no claims or actions pending, or, to
Sellers' best knowledge, threatened against the Company
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<PAGE> 19
or Sellers before any court, governmental authority, or
arbitrator, which question or challenge the validity of this
Agreement or any of the Related Agreements or any action
taken, or to be taken, by the Sellers pursuant to this
Agreement or any of the Related Agreements, or in connection
with the transactions contemplated hereby or thereby, which,
if decided adversely against the Company or either Seller,
would have an adverse effect upon the ability of the Sellers
to carry out their obligations under this Agreement or any of
the Related Agreements or would have a material adverse
effect on the Company.
(b) The Company has never been subject to any lawsuit with
respect to tax, environmental or product liability matters or
settled any claim related to any of such matters, except as
set forth in Schedule 4.7(a).
4.8 Substantial Customers. Listed on Schedule 4.8 are the Company's
customers responsible for at least 75% of the Company's sales for
the twelve-month periods ended December 31, 1994 and December 31,
1993, as well as the dollar amount for which each such customer was
invoiced during such period. Regarding the customers set forth in
Schedule 4.8 for the twelve-month period ended December 31, 1994,
the Company and Sellers have not received any notice from any of
such customers, that such customer will cease to purchase or
materially decrease its purchases. Sellers authorize Buyer to
discuss the Company's relationship with any such customer upon
reasonable prior notice to Sellers in each instance, and Sellers may
participate therein.
4.9 Substantial Suppliers. Listed on Schedule 4.9 are the Company's ten
largest suppliers for the twelve-month periods ending December 31,
1994 and December 31, 1993, as well as the dollar amount of goods
and services purchased from each such supplier during such period.
The Company and Sellers have not received any notice from any of
such suppliers that such supplier will cease to sell goods or
services to Buyer on terms and conditions similar to those imposed
on prior sales to the Company, or have given any written complaint
to the Company or Sellers. Sellers authorize Buyer to discuss the
Company's relationship with any such supplier upon reasonable prior
notice to Sellers in each instance, and Sellers may participate
therein.
4.10 No Finder. Neither Seller has paid or become obligated to pay any
fee or commission to any broker, finder or intermediary for or on
account of the transactions provided for in this Agreement.
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<PAGE> 20
4.11 Absence of Certain Events. Since June 30, 1994, the Company has
not, other than in the ordinary course of business consistent with
past practices:
(a) incurred or discharged any liabilities;
(b) except as required in connection with the transactions
contemplated by this Agreement, transferred any of its assets
or properties;
(c) subjected any of the assets of the Company to any encumbrance;
(d) made or suffered any amendment or termination of any contract
(including real property leases), or waived any debts, claims
or rights, including intellectual property rights;
(e) suffered any damage, destruction or casualty loss, materially
adversely affecting the Company;
(f) suffered any adverse change in its relations with any of its
customers or vendors;
(g) suffered any material labor trouble involving any union or
other group of employees or suffered the loss of any key
employee;
(h) increased the salaries, benefits or other compensation of, or
made any advance or loan to, any of its officers or employees
of the Company;
(i) made any capital expenditure or capital addition or
betterment (including any capitalized lease transaction)
relating to the Business in excess of $1,000.00 (in the
aggregate), except as set forth in Section 4.11(i);
(j) changed any of the accounting practices followed by it; or
(k) entered into any agreement or made any commitment to take any
of the types of action described in subparagraphs (a) through
(j) above.
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<PAGE> 21
4.12 Completeness of Schedules. The Schedules attached hereto completely
and correctly present the information required by this Agreement to
be set forth therein.
4.13 Delivery of Documents. Sellers have delivered to Buyer true,
correct and complete copies of all documents, including all
amendments, supplements or modifications thereof or waivers
currently in effect thereunder, described in any Schedule to any
Section of this Agreement unless otherwise expressly provided in any
such Schedule.
4.14 Taxes. Except as set forth on Schedule 4.14, the Company has duly
and properly filed all local, state and federal tax returns and
reports required to be filed by it as of the date of this Agreement
and has paid or have established adequate reserves for the payment
of such taxes due or claimed to be due, whether or not disputed, and
will pay, reflect or establish on its books for all periods
subsequent to the date hereof through the Closing Date reserves that
are adequate for the payment of all such taxes.
4.15 Officers and Directors. The officers and directors of the Company
are as follows:
Officers
President - Irving N. Dwyer
Vice President - Annette M. Dwyer
Secretary-Treasurer - David P. DaVia
Directors
Irving N. Dwyer
Annette M. Dwyer
David P. DaVia
Joan S. DaVia
4.16 Bank Accounts. Schedule 4.16 hereof sets forth a list of all bank
accounts and safety deposit boxes of Company, together with a
description of the authorized signatories for such accounts.
4.17 Business Operations. Except as set forth on Schedule 4.17, the
Company has all permits, licenses and other authorizations necessary
for the operation of the Business as currently conducted. The
Business has been, and will be from the date hereof until the
Closing Date, conducted in material compliance with all applicable
laws, rules and
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<PAGE> 22
negotiations, and all applicable statements and reports required to
be filed by law as to which the Business is subject have been and
will be filed by the Company.
4.18 Contracts and Agreements With Sellers. None of the Sellers is and
at the Closing Date, none of them will be, with respect to the
Company, a party to any (a) lease of real or personal property; (b)
royalty, distribution, agency or license agreement; (c) contract or
employment agreement with any officer, employee, professional
personnel, or firm or independent contractor providing services to
or receiving services or Products from, the Company; (d) agreement
guaranteeing the payment or performance of the obligations of others
(except for the personal guarantees of Irving N. Dwyer and David P.
DaVia of the Company's debt to the Bank described in Section 3.3,
above); (e) vendor contracts or agreements; (f) commitments,
contracts or agreements requiring the services of or Products of the
Company for which a prepayment or advance has been made; (g)
commitments or agreements with any party for the sale of all or any
part of the Shares or Business Property (except as set forth in this
Agreement); or (h) any other contract, commitment or agreement
extending by their terms beyond the Closing Date or involving or
potentially involving the expenditure of amounts in excess of
$1,000.00.
4.19 Financial Statements. Unaudited financial statements of the Company
as of June 30, 1994, including the balance sheets of the Company as
of such date, have been previously provided to Buyer by Sellers (the
"Balance Sheet"). The Balance Sheet have been prepared in
accordance with generally accepted accounting principles, are true,
complete and correct and fairly present the financial position of
the Company as of such dates and the results of operations for the
year and period then ended. As of June 30, 1994, the Company did
not have any liabilities, absolute, contingent or otherwise, except
as reflected in the Balance Sheet or on the Schedules hereto, and at
the Closing Date there will be no other liabilities relating to the
Business except those incurred since June 30, 1994 in the ordinary
course of business. Except as set forth in Schedule 4.4(k), the
accounts receivable reflected in the Balance Sheet net of reserves
(except to the extent heretofore collected) and such accounts
receivable arising since the date of the Balance Sheet are or will
be fully collectible (subject to a normal level of reserves) and
subject to no counterclaims or setoffs and will be duly collected in
the ordinary course of business.
4.20 Trusts. The Irving N. Dwyer and Annette M. Dwyer Charitable
Remainder Trust and The DaVia Charitable Remainder Trust have each
been duly and validly created, are in
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<PAGE> 23
existence, and have full power and authority to execute and deliver
this Agreement and the Related Agreements to which they are parties
and to consummate the transactions contemplated hereunder and
thereunder. The co-Trustees of The Irving N. Dwyer and Annette M.
Dwyer Charitable Remainder Trust are Irving N. Dwyer and Annette M.
Dwyer. The co-Trustees of The DaVia Charitable Remainder Trust are
David P. DaVia and Joan S. DaVia. Such co-Trustees have full power
and authority to execute and deliver this Agreement and the Related
Agreements to which the foregoing trusts are parties on behalf of
the trusts.
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BUYER.
As an inducement to Sellers to enter into this Agreement and to consummate
the transactions contemplated hereby, Buyer hereby represents and warrants to
the Sellers that as of the date of this Agreement:
5.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware and is duly qualified to conduct business and
is in good standing in each of the jurisdictions in which it
conducts business where the failure to be so qualified would have a
material adverse effect on Buyer's business or assets.
5.2 Compliance with Law. There are no licenses, permits, approvals,
registrations, qualifications, certificates or other authorizations
including those of any governmental authority, court or regulatory
body, that are required to be obtained by Buyer in order to permit
Buyer to execute and deliver and consummate and perform the
transactions contemplated by this Agreement and the Related
Agreements to which Buyer is a party.
5.3 Authority and Compliance.
(a) Buyer has full corporate power and authority to execute and
deliver this Agreement and the Related Agreements to which it
is a party and to perform the transactions contemplated
hereby and thereby. The execution, delivery and performance
of this Agreement and such Related Agreements by Buyer has
been duly authorized and approved by all requisite corporate
action on the part of the Buyer. This Agreement constitutes
(and, upon execution and delivery at or prior
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<PAGE> 24
to the Closing, each of the Related Agreements to be executed
by Buyer will constitute) a legal, valid and binding
obligation of Buyer enforceable in accordance with its terms,
except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors
rights generally and (ii) the remedy of specific performance
and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
(b) The execution and the delivery of this Agreement and the
Related Agreements and the consummation and performance by
Buyer of the transactions contemplated thereby will not: (i)
violate the Certificate of Incorporation or By-Laws of Buyer;
(ii) conflict with or result in a breach of any of the terms,
conditions or provisions of, or constitute a default under,
any instrument, agreement, mortgage, judgment, order, award,
or decree to which Buyer is a party or by which Buyer is
bound.
(c) Buyer has not violated any applicable statute, order, rule or
regulation, which violation would prevent the consummation of
the transactions contemplated herein.
5.4 No Finder. Buyer has not paid or become obligated to pay any fee or
commission to any broker, finder or intermediary for or on account
of the transactions provided for in this Agreement.
5.5 Legal Proceedings, Etc. Buyer is not subject to or in default with
respect to any indictment, order, injunction, decree or award of any
court, arbitrator or governmental agency which would adversely
affect the ability of the Buyer to execute, deliver and carry out
its obligations under this Agreement and the Related Agreements.
There are no claims or actions pending, or to Buyer's best
knowledge, threatened against Buyer before any court, governmental
authority, or arbitrator, which question or challenge the validity
of this Agreement or any of the Related Agreements or any action
taken, or to be taken, by Buyer pursuant to this Agreement or any of
the Related Agreements, or in connection with the transactions
contemplated hereby or thereby, which, if decided adversely against
Buyer, would have an adverse effect upon the ability of Buyer to
carry out its obligations under this Agreement or any Related
Agreement.
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<PAGE> 25
5.6 Capitalization. At the time of Closing, Buyer will be adequately
capitalized to enable it to pay the Purchase Price and otherwise
consummate the transactions and perform the obligations contemplated
hereby.
5.7 SpecTran Liable. SpecTran hereby agrees to deliver a corporate
guarantee of the obligations of Buyer hereunder as set forth in
Exhibit 5.7 hereto.
ARTICLE 6 CLOSING PROCEDURES.
Subject to the fulfillment of the conditions precedent specified the
following will occur:
6.1 Closing Date. The Closing Date shall take place at the offices of
SpecTran Corporation, Sturbridge, Massachusetts, not later than
three (3) business days after all conditions to Closing in Sections
7 and 8 of this Agreement shall have been satisfied or waived, but
in no event later than May 31, 1995 (provided that no party to this
Agreement is required to close unless all of the conditions to their
obligation to close set forth herein have been met on or before such
date).
6.2 Closing Deliveries of Sellers. On the Closing Date, Sellers shall
deliver to Buyer the following:
(a) Stock certificates evidencing the Shares and such stock
powers and other instruments as are necessary or reasonably
desirable to vest in Buyer all right, title and interest in
and to the Shares;
(b) All of the documents, Related Agreements, instruments and
opinions required to be delivered by Sellers to Buyer under
Section 8 of this Agreement;
(c) A certificate of Sellers stating that representations and
warranties of Sellers as set forth in this Agreement, as
updated by the revised Schedules dated the Closing Date
pursuant to Section 6.2(g) below, are true and correct in all
material respects as of the Closing Date;
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<PAGE> 26
(d) A certificate by Sellers stating that, to their best
knowledge and belief, Sellers have performed and complied
with all agreements and conditions required by this Agreement
to be performed and complied with by them prior to or on the
Closing Date;
(e) A certificate of Sellers stating that all authorizations,
consents, approvals and waivers or other action set forth in
Schedule 7.9 hereof required to be obtained by Sellers in
connection with the execution, delivery and performance of
this Agreement and the consummation of all agreements and
transactions contemplated by this Agreement have been
obtained;
(f) A list certified by an officer of the Company setting forth
the names of all of the officers and directors of the
Company, together with the resignations of all of such
officers and directors as of the Closing Date;
(g) Updates (to the extent any information therein has changed)
of all Schedules attached to this Agreement provided by
Seller, each to be dated the Closing Date;
(h) The resignations of all incumbent officers and directors of
the Company, effective as of the Closing Date; and
(i) The minute books, stock ledgers and other similar corporate
records of the Company.
6.3 Closing Deliveries of Buyer. On the Closing Date, Buyer shall
deliver to Seller the following:
(a) All documents, Related Agreements, opinions and instruments
required to be delivered by Buyer to Sellers under Section 7
of this Agreement;
(b) A certificate of Buyer signed on its behalf by an officer
that the warranties and representations of the Buyer set
forth in this Agreement, as updated by the revised Schedules
dated the Closing Date pursuant to Section 6.3(g) below, are
true and correct as of the Closing Date;
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<PAGE> 27
(c) A certificate by an officer of Buyer stating that, to his
best knowledge and belief, Buyer has performed and complied
with all agreements and conditions required by this Agreement
to be performed and complied with by it prior to or on the
Closing Date;
(d) As payment of a portion of the Purchase Price payable on the
Closing Date, certified checks or wire transfers to an
account or accounts designated in writing by Sellers in the
aggregate amount of ONE MILLION FIVE HUNDRED SEVENTY FIVE
THOUSAND DOLLARS ($1,575,000.00);
(e) Written instructions to the Escrow Agent, to be co-signed by
Sellers, directing the Escrow Agent to release the Escrow
Fund to an account or accounts designated in writing by
Sellers;
(f) As payment of a portion of the Purchase Price payable on the
Closing Date Rule 144 unregistered stock not publicly
tradable for two years, stock certificates representing
144,444 shares of common stock of SpecTran in two separate
certificates representing 72,222 shares of common stock of
SpecTran each; and Sellers shall execute at closing Investor
Representation Letters in form attached hereto as Exhibit
6.3(f).
(g) Updates (to the extent any information therein has changed)
of all Schedules attached to this Agreement provided by
Buyer, each to be dated the Closing Date.
ARTICLE 7 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLERS.
The obligations of Sellers under this Agreement are subject to the
fulfillment on or prior to the Closing Date of each of the following conditions,
unless such condition is waived in writing by Sellers:
7.1 Representations, Warranties and Covenants. The representations and
warranties of Buyer contained in Article 5 hereof shall be true,
complete and accurate (i) on the date hereof, and (ii) at and as of
the Closing Date. Buyer shall have performed and complied with all
covenants, obligations and conditions required by this Agreement to
be performed or complied with by it on or prior to the Closing.
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<PAGE> 28
7.2 Authorizing Resolutions. Buyer shall have taken all corporate
action necessary to effect the transactions called for by this
Agreement. Buyer shall have delivered to Seller copies of
resolutions duly adopted by its boardof directors and, if
applicable, by its stockholder, authorizing the transactions
contemplated hereby, certified by the Secretary of Buyer, as being
true, complete and in effect as of the Closing Date.
7.3 Compliance with Laws. The parties shall have complied with all laws
applicable to the transactions contemplated hereunder, including
without limitation the making of all filings required by the
Environmental Transfer Act of the State of Connecticut and all
other applicable federal and state environmental laws.
7.4 Legal Matters. No suit, action, or other proceeding, or injunction
or final judgment relating thereto which seeks to restrain,
prohibit, question the validity or legality of, or otherwise
challenge any of the transactions contemplated by this Agreement
shall be reasonably perceived to be threatened or shall be pending
before any court or governmental agency by any non-affiliated third
party.
7.5 Opinion of Counsel. Sellers shall have received the opinion of
Hackmyer & Nordlicht, counsel for Buyer, dated the Closing Date,
reasonably satisfactory in form and substance to Sellers.
7.6 Related Agreements. Each of the Related Agreements to which Buyer
is a party shall have been duly executed and delivered by Buyer.
7.7 Payment of Purchase Price. Buyer shall have paid the balance of the
Purchase Price as contemplated by Section 2.4 hereof.
7.8 Closing Certificates. Buyer shall have delivered the certificates
contemplated by Sections 6.3(b-d) hereof.
7.9 Consents and Approvals. The parties shall have received all
necessary consents and approvals of governmental bodies, lenders,
lessors and other third parties (including receipt of any
permissions necessary to assign to Buyer all contract rights that
are Business Property), such consents and approvals, and the party
responsible therefor, are listed in Schedule 7.9.
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7.10 Release of Bank Guarantees. The personal guarantees of Irving N.
Dwyer and David P. DaVia of the Company's indebtedness to the Bank
shall be surrendered and canceled by the Bank.
7.11 Employment Agreements. Irving N. Dwyer and David P. DaVia shall
have entered into employment agreements with the Company as set
forth in Section 3.1 hereof, subject to consummation of the Closing.
ARTICLE 8 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER.
The obligations of Buyer under this Agreement are subject to the
satisfaction, on or prior to the Closing Date, of all of the following
conditions unless waived in writing by the Buyer:
8.1 Representations, Warranties and Covenants. The representations and
warranties of Sellers contained in this Agreement shall be true,
complete and accurate (i) on the date hereof and (ii) at and as of
the Closing Date. Sellers shall have performed and complied with
all covenants, obligations and conditions required by this Agreement
to be performed or complied with by them on or prior to the Closing.
8.2 Instruments of Conveyance. Sellers shall have delivered to Buyer
stock certificates evidencing the Shares and such stock powers and
other instruments as shall be appropriate to transfer the ownership
of the Shares to Buyer in a form reasonably satisfactory to Buyer
and Seller and as shall, in the reasonable judgment of Buyer, be
necessary or appropriate to vest in Buyer title to the Shares free
and clear of all pledges, security interest, claims, liens, charges
and encumbrances of every kind.
8.3 Compliance with Laws. The parties shall have complied with all laws
applicable to the transactions contemplated hereunder, including
without limitation the making of all filings required by the
Environmental Transfer Act of the State of Connecticut and
compliance with all other applicable federal and state environmental
laws.
8.4 Legal Matters. No suit, action, or other proceeding, or injunction
or final judgment relating thereto which seeks to restrain,
prohibit, question the validity or legality of, or otherwise
challenge this Agreement or any of the transactions contemplated
herein shall
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be reasonably perceived to be threatened or shall be pending before
any court of governmental agency by any non- affiliated third party.
8.5 Opinion of Counsel. Buyer shall have received the opinion of
O'Brien, Shafner, Stuart, Kelly & Morris, P.C., counsel for Sellers,
dated the Closing Date, reasonably satisfactory in form and
substance to Buyer.
8.6 Related Agreements. Each of the Related Agreements to which Sellers
are a party shall have been duly executed and delivered by Sellers.
8.7 Closing Certificates. Seller shall have delivered the certificates
contemplated by Sections 6.2(c-f) hereof.
8.8 Consents and Approvals. The parties shall have received all
necessary consents and approvals of governmental bodies, lenders,
lessors and other third parties (including receipt of any
permissions necessary to assign to Buyer all contract rights that
are Business Property), such consents and approvals, and the party
responsible therefor, are listed in Schedule 7.9.
8.9 Intentionally Omitted.
8.10 Absence of Certain Changes. There shall not have occurred:
(a) any material adverse change in the Company's business,
financial condition, assets or operations since June 30,
1994 or
(b) the legal inability of Sellers to convey, assign or transfer
to Buyer the Shares and there shall have been delivered to
the Buyer a certificate to that effect, dated the Closing
Date and signed by Sellers.
8.11 Agreements with Irving N. Dwyer, David P. DaVia and Other Employees.
Buyer shall cause the Company have entered into employment
agreements with Irving N. Dwyer and David P. DaVia as set forth in
Section 3.1 hereof, subject to consummation of the Closing, and the
Company shall have retained sufficient quantity and quality of the
Company's employees reasonably necessary for Buyer to properly
operate the Business on terms reasonably satisfactory to Buyer.
Irving N. Dwyer and David P. DaVia Sellers shall
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have also executed and delivered to Buyer the Non-Competition
Agreements provided for in Section 10.8, below. Until the Closing
Date or until this transaction is terminated (whichever first
occurs), Irving N. Dwyer and David P. DaVia shall, and shall cause
the Company to, use reasonable efforts to keep available the
services of its present officers, employees and agents associated
with the Business and to maintain its relations and goodwill with
its suppliers, customers, distributors and any other parties having
material relationships with the Company.
8.12 Board Approval. Buyer shall have received the approval of its Board
of Directors to this Agreement, the Related Agreements to which
Buyer is a party and transactions contemplated hereby and thereby.
8.13 Bank Accounts. Sellers shall execute and deliver all documents and
instruments required to effect the change of control over the
Company's bank accounts to Buyer.
8.14 Environmental Insurance. Sellers shall arrange for the Company, at
the Company's expense, to pay for a Phase One environmental survey
of the Facility. Buyer's obligation to close hereunder is expressly
made conditional upon receipt of a written report on such Phase One
environmental survey in a form acceptable to Buyer. It is agreed
that the Phase One environmental survey shall be considered
acceptable to Buyer if it is sufficient for Buyer to be able to
obtain a three-year insurance policy from a reputable insurance
company for the costs of any environmental remediation which may be
required at the Facility (including any damage caused by the
underground fuel tank attributable to the Company) which provides
coverage of at least One Million Dollars ($1,000,000) and having an
aggregate premium not to exceed Twenty Five Thousand Dollars
($25,000). Notwithstanding the foregoing, if Buyer can obtain such
insurance but the premium thereon exceeds Twenty Five Thousand
Dollars ($25,000), Sellers shall have the option, but are not
required, within fifteen (15) days after being advised by Buyer that
it is unable to obtain such insurance at such cost to either (i) pay
the amount of the premium quoted to Buyer in excess of Twenty Five
Thousand Dollars ($25,000) or (ii) find another reputable insurance
company reasonably acceptable to Buyer which is willing to provide
identical insurance to Buyer for an aggregate premium of Twenty Five
Thousand Dollars ($25,000) or less. If Buyer cannot obtain such
insurance without a Phase Two environmental survey being conducted,
it shall have the option, in its sole discretion, to either (i) pay
for the cost of such Phase Two environmental survey, in which case
Sellers shall fully cooperate with Buyer and its
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representatives conducting such survey and the Closing Date shall
automatically be delayed until ten days after the completion thereof
and the issuance of a written report thereon, (ii) proceed with the
Closing without obtaining such insurance or Phase Two environmental
survey or (iii) terminate the transactions contemplated herein by
written notice to Sellers. In the event Buyer elects to conduct
the Phase Two environmental survey, Buyer shall have the right, but
not the obligation, to close the transaction contemplated hereunder
after the completion of such survey, regardless of the findings of
the survey or whether it is sufficient to enable Buyer to obtain
environmental insurance as set forth herein.
8.15 Product Liability Insurance. Sellers shall provide a copy of the
Company's product liability insurance policy in effect as of the
Closing Date and satisfactory evidence of the payment of all
premiums due thereon through the Closing Date, which insurance
provides coverage for the Company of at least $1,000,000.00 for
personal injury and/or property damage resulting from the Company's
products sold, distributed or manufactured prior to the Closing
Date.
ARTICLE 9 ENVIRONMENTAL MATTERS.
9.1 Definitions.
(a) "Company's Facilities" shall mean the Facility and all other
real property owned or occupied by the Company at any time
prior to the Closing.
(b) "Environmental Condition" shall mean the presence of
Hazardous Materials at the Facility which requires removal,
remediation, or corrective action pursuant to standards
established under applicable Environmental Laws or orders or
other directives from any local, state or federal government
agency.
(c) "Environmental Laws" shall mean any applicable laws relating
to or imposing liability or standards of conduct concerning
hazardous or toxic materials and substances, air pollution
(including noise and odors), water pollution, liquid and
solid waste, pesticides, drinking water, community and
employee health, environmental land use management,
stormwater, sediment control, radiation, wetlands, endangered
species, environmental permitting and petroleum products,
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whether now in effect or becoming effective at any time after
the date hereof, including but not limited to those dealing
with public health and safety and the protection of the
environment, such as the Federal Insecticide, Fungicide, and
Rodenticide Act, 7 U.S.C. 136 et seq., as amended; the Toxic
Substances Control Act, 15 U.S.C. 2601 et seq., as amended;
the Clean Water Act, 33 U.S.C. 1251 et seq., as amended; the
National Environmental Policy Act, 42 U.S.C. 4321 et seq., as
amended; the Solid Waste Disposal Act, 42 U.S.C. 6901 et
seq., as amended; the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. 9601 et seq., as
amended; the Clean Air Act, 42 U.S.C. 7401 et seq., as
amended; the Emergency Planning and Community Right-to-Know
Act, 42 U.S.C. 11001 et seq., as amended; the Occupational
Safety and Health Act, 29 U.S.C. 651 et seq., as amended; the
Resource Conservation and Recovery Act, as amended; all
Connecticut state and county laws and ordinances relating to
environmental, health and safety matters; and all rules and
regulations promulgated pursuant to such federal, state and
county laws and ordinances.
(d) "Hazardous Material" means any pollutant, contaminant,
hazardous, toxic or dangerous waste, substance or material,
including, but not limited to, any chemical products,
petroleum substances, PCBs, asbestos, urea formaldehyde,
ammonia, nitrates, semi-volatile or purgeable organics,
flammable explosives, radioactive materials, hazardous waste,
metals or other materials or substances defined as or
included in the definition of substances defined as
"hazardous substances," "hazardous materials," "solid waste,"
"hazardous waste", "toxic substances" or analogous
definitions under any Environmental Law.(1)
(e) "Material Compliance" means compliance which is not
reasonably likely to produce any adverse change in or effect
on the operations, properties or condition (financial or
otherwise), assets or liabilities of the Company and which
would not result in civil or criminal liability to any
individual.
________________________
(1) For the purposes of this Agreement, "solid waste" shall have the
meaning ascribed under the definition of hazardous waste under 42
U.S.C. 6903(5). Without limiting the generality of the foregoing, it
is agreed that normal refuse disposed of by the Company in accordance
with the rules and regulations of Brooklyn, Connecticut shall not be
considered to be "solid waste".
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9.2 Environmental Representations and Warranties. Sellers represent and
warrant that:
(a) Sellers have provided to Buyer copies of all studies,
reports, notices, orders, warnings and similar documents in
the possession of or controlled by Sellers or the Company
analyzing, describing or otherwise relating to Environmental
Conditions or activities at the Company's Facilities;
(b) To the best of Seller's knowledge, there has been no spill,
discharge, burial, release, seepage or infiltration of any
Hazardous Material at, on or from the Company's Facilities in
amounts which exceed reportable thresholds under applicable
Environmental Laws;
(c) To the best of Seller's knowledge, there have not been any
underground or aboveground storage tanks at the Company's
Facilities during the times such facilities were owned or
occupied by the Company, except the current underground
storage tank located at the Company's current Facility;
(d) To the best of Seller's knowledge, there is no condition at
the Company's Facilities which could cause the imposition of
a lien or assessment of penalties against the Company or any
of the Company's assets or which could require remediation
under any Environmental Law;
(e) No approval of any federal, state or local government or
regulatory authority relating to environmental matters is
necessary in connection with the transactions contemplated
hereby, except for the filing by Sellers, and delivery to
Buyer of such filing, pursuant to the Connecticut Transfer
Act, Conn. Gen. Stat. Sec. 22a-134 et seq., as amended;
(f) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby does not
require that any filing or disclosure be made by either party
under any Environmental Law, except for the filing by
Sellers, and delivery to Buyer of such filing, pursuant to
the Connecticut Transfer Act, Conn. Gen. Stat. Sec. 22a-134
et seq., as amended;
(g) The Company has all federal, state and local permits,
approvals and authorizations related to environmental matters
required by applicable
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Environmental Laws to operate the Facility in the manner
conducted prior to the date hereof;
(h) The handling and disposal of all Hazardous Materials used or
produced by the Company has been conducted in Material
Compliance with all applicable Environmental Laws; and
(i) The Company has not received any notice that its activities
fail to comply in any respect with any Environmental Law.
9.3 Application of Article 12. The indemnification provisions of
Article 12 hereof shall be applicable in the event of any breach of
Seller's representations and warranties under Section 9.2 above.
ARTICLE 10 CERTAIN COVENANTS OF SELLERS PENDING AND AFTER THE CLOSING DATE.
10.1 Business in the Ordinary Course. Until the Closing Date or until
this transaction is terminated (whichever first occurs), Sellers
shall cause the Company to not engage in any extraordinary
transactions, including but not limited to the declaration or
payment of dividends, without Buyer's written consent, which shall
not be unreasonably withheld or delayed, and Sellers shall not
subject any of the Shares to any lien, charge, encumbrance, claim,
pledge or security interest or allow the Company to subject any of
the machinery, equipment or other assets of the Company to any lien,
charge, encumbrance, claim or security interest. Sellers agree that
prior to the Closing, they will cause the Company to not conduct any
activities at the Facility other than the operation of the Business
in the ordinary course in substantially the same manner as conducted
by the Company on the date hereof.
10.2 Maintenance of Physical Assets. Until the Closing Date or until
this transaction is terminated (whichever first occurs), Sellers
shall cause the Company to maintain and service the physical assets
of the Business in the same manner as has been its consistent past
practice.
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10.3 Maintenance of Rights. Until the Closing Date or until this
transaction is terminated (whichever first occurs), Sellers shall
cause the Company to maintain in full force and effect all
Governmental Rights, Trade Secrets, Patents, Trademarks and
Copyrights owned or controlled by the Company.
10.4 Compliance With Laws. Until the Closing Date or until this
transaction is terminated (whichever first occurs), Sellers shall
cause the Company to comply with all laws, ordinances, rules,
regulations and orders applicable to the conduct of the Business.
10.5 Litigation and Adverse Developments. Until the Closing Date or
until this transaction is terminated (whichever first occurs),
Sellers shall promptly advise Buyer in writing of all lawsuits,
claims, proceedings and investigations of which Sellers, to their
best knowledge, are aware, that may be threatened, brought, asserted
or commenced against the Company, Sellers or their respective
officers and directors or any of their Affiliates (a) involving the
consummation of the transactions called for by this Agreement or (b)
which might have a material adverse impact on the Company, the
Shares or the Business Property.
10.6 Report. Until the Closing Date or until this transaction is
terminated (whichever first occurs), Sellers shall provide Buyer
with such financial information regarding the Company as Buyer may
reasonably request.
10.7 Update Schedules. Until the Closing Date or until this transaction
is terminated (whichever first occurs), Sellers and Buyer shall
promptly notify each other in writing of any breach or inaccuracy of
any representation of either Sellers or Buyer in this Agreement, and
will supplement or amend the Schedules delivered by it hereto with
respect to any matter which hereafter becomes known to it.
10.8 Non-Competition. At the Closing, each Seller shall deliver to Buyer
a Non-Competition Agreement substantially in the forms attached
hereto as Exhibits 10.8(a) and 10.8(b).
10.9 Third Party Consents. To the extent the transactions contemplate
hereby will constitute an assignment of the Company's rights under
any agreement, contract, lease or other Business Property which
requires the consent of any person not a party to this Agreement,
Sellers will use their best efforts to obtain such consent.
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10.10 Exclusive Dealing. Sellers confirm and acknowledge that in
exchange for the payment to Sellers by SpecTran of
$100,000.00 on October 3, 1994, Sellers have agreed that
until February 28, 1995, Sellers shall not, directly or
indirectly, through any representative or otherwise, solicit
or entertain offers from, negotiate with or in any manner
encourage, discuss, accept or consider any proposal of any
other individual or entity relating to the acquisition of the
Shares or the assets of the Company, whether through direct
purchase, merger, consolidation or other business
combination. Such covenant is hereby extended through the
Closing Date, or such time as the transaction contemplated
herein shall be terminated. This amount shall be
non-refundable except (a) if Sellers have engaged in fraud or
material misrepresentation or (b) if Sellers violate any
provision set forth in Sections 10.1, 10.10 and 14.5 hereof.
10.11 Access Pending the Closing. Sellers agree to afford Buyer
and its representatives (including, without limitation, legal
counsel, accountants and internal business, tax and financial
staff and advisors), between the date hereof and the Closing
Date during reasonable hours with sufficient advance notice,
reasonable, mutually agreeable access to selected employees,
facilities, contracts, books, files and other records
relating to the Company and will furnish Buyer all
information concerning the Business as Buyer may reasonably
require, all subject to the Confidentiality Agreement.
10.12 Cash. Sellers will direct that all cash in the Company's
accounts set forth on Schedule 4.16 remain in such accounts
through the Closing, except for withdrawals for payment of
the Company's obligations incurred and paid in the ordinary
course of business.
ARTICLE 11 CERTAIN COVENANTS OF THE PARTIES.
11.1 Consummation of Transactions. Each party shall use its best
efforts to perform or comply with, and to cause others to
perform or comply with, all of the terms and conditions set
forth in this Agreement (including the fulfillment of the
conditions precedent to the obligation to close of the other
party hereto). Neither party will knowingly take any action
that would result in a breach by such party of any of its
representations and warranties under this Agreement.
11.2 Cooperation. Buyer and Sellers shall cooperate with each
other and proceed, as promptly as is reasonably practicable,
to prepare and file the notifications and other
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filings required by applicable law in connection with the
transactions described in this Agreement, to seek to obtain
all necessary consents and approvals from lenders, lessors
and other third parties, and to endeavor to comply with all
other legal or contractual requirements for or preconditions
to the execution, consummation and performance of this
Agreement.
11.3 Confidentiality.
(a) The terms and provisions of the Non-Disclosure
Agreement, dated September 12, 1994, by and between
the Company and SpecTran, a copy of which is annexed
hereto as Exhibit 11.3, shall continue in full force
and effect with respect to the transactions
contemplated by this Agreement until the Closing of
this transaction. If a Closing does not occur, such
agreements will continue in full force and effect in
accordance with their respective terms.
(b) Following the Closing, Sellers shall keep all
financial, technical and other information concerning
the Company known to them strictly confidential and
shall not disclose any of such information to any
third party, except in connection with (i) disclosure
of information which is generally known by others
engaged in activities similar to the Company or which
has been publicly disseminated through no fault of
Sellers, (ii) information necessary for the
preparation of Sellers' tax returns and responses to
any audits or inquiries of tax regulatory authorities
and (iii) disclosure of information which is compelled
by operation of law, provided that in each case,
Sellers will deliver written notice to Buyer before
making any such disclosure. Sellers shall ensure that
such information is not used or disclosed by any other
persons or entities except as permitted by this
Agreement. Sellers acknowledge the competitive value
and confidential nature of such information and the
damage that would result to Buyer and the Company if
such information is disclosed to a third party or used
by Sellers in violation of this Agreement.
Accordingly, Sellers agree that both injunctive relief
and monetary relief, alone or in combination, are
appropriate remedies for any breach of this Agreement
by Sellers or their advisors. In the event any action
is required to enforce the terms of this Section, the
unsuccessful party in such action shall reimburse the
prevailing party for all costs and expenses (including
reasonable attorneys' fees) incurred by the prevailing
party.
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ARTICLE 12 INDEMNIFICATION.
12.1 Indemnification of Buyer. From and after the Closing Date,
Sellers shall to the extent in Section 12.2 stated herein,
each jointly and severally defend, indemnify and hold
harmless Buyer, its Affiliates, and their directors,
officers, employees, stockholders and agents, from and
against:
(a) any and all obligations of the Company which are not
disclosed in this Agreement or the Balance Sheet; no
further transfers of stock for two years paid;
(b) any and all damages, losses and liabilities resulting
from or relating to the Company or the business
property prior to the Closing Date, (including claims
made after the Closing Date which relate to matters or
events in existence or which arose prior to the
Closing Date), including, without limitation, all
liabilities arising from the manufacture, shipment or
sale prior to the closing date of products, whether
accrued, absolute, contingent or otherwise;
(c) excluding what is covered by Sections 12.1(a) and
12.1(b) above, any and all damages, losses and
liabilities whatsoever resulting from any
misrepresentation or nonfulfillment of any covenant or
agreement on the part of Sellers hereunder, under any
certificate or other instrument to be furnished under
this Agreement, or under any of the Related
Agreements; and
(d) any and all actions, suits, claims, proceedings,
investigations, audits, demands, assessments, fines,
judgments, costs and other reasonable expenses
(including reasonable legal fees incident to any of
the foregoing).
12.2 Extent of Sellers Liability for Indemnification.
(a) Sellers' liability under the indemnification specified
in Section 12.1 hereof shall be limited to the value of the
Purchase Shares. In addition, Sellers shall not be required
to indemnify Buyer for any loss or liability for which Buyer
in entirely made whole through the environmental insurance
policy or product liability insurance policy described in
Sections 8.14 and 8.15, above. In the event of the
occurrence of any matter for which Sellers are required to
indemnify Buyer which is not entirely covered by such
insurance,
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Buyer shall be entitled to have returned to it by Sellers
that number of Purchase Shares equal in value to the dollar
amount for which indemnification is sought, to be valued as
of the day Buyer delivers to Sellers a written claim for
indemnification by the closing price of SpecTran's common
stock on that day as quoted in the Wall Street Journal. If
indemnification is required, Buyer agrees to draw from the
Sellers' Purchase Shares equally, until all of the Purchase
Shares are returned to Buyer.
(b) In order to carry out the intent of Section 12.2(a),
above, Sellers agree that for a period of two years following
the Closing Date they shall not pledge, sell, hypothecate,
make a gift of or otherwise transfer or encumber the Purchase
Shares and acknowledge that a legend shall be placed on their
stock certificates evidencing such restrictions and
referencing this Agreement. In order to effect the
foregoing, at Closing Sellers shall deposit the stock
certificates evidencing the Purchase Shares with O'Brien,
Shafner, Stuart, Kelly & Morris, P.C., as escrow agent, and
enter into an Escrow Agreement with Buyer and O'Brien,
Shafner, Stuart Kelly & Morris, P.C. providing for the
Purchase Shares to be held in escrow and released to Sellers
on the second anniversary of the Closing Date if no claim for
indemnification has been made by Buyer prior to such time,
provided that the Purchase Shares shall be released to Buyer
as set forth in Section 12.2(a) if Buyer becomes entitled to
indemnification during such two year period. Notwithstanding
the foregoing, if any third party makes a claim against the
Company or Buyer or its Affiliates during such two year
period which is not resolved during such time, but which, if
determined adversely against the Company or Buyer or its
Affiliates, would result in Buyer having a right to
indemnification hereunder, the Purchase Shares shall remain
in escrow until such claim is resolved.
12.3 Indemnification of Sellers. From and after the Closing Date,
Buyer shall defend, indemnify and hold harmless Sellers from
and against:
(a) any and all obligations of the Company disclosed in
this Agreement or the Balance Sheet;
(b) any and all damages, losses and liabilities resulting
form or relating to the Company or the Business
Property on or after the Closing Date including,
without limitation, all liabilities arising from the
manufacture, shipment or sale after the Closing Date
of Products (excluding liabilities relating to the
sale after
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the Closing Date of any Products manufactured prior to
the Closing Date) whether accrued, absolute,
contingent or otherwise;
(c) excluding what is covered by Sections 12.3(a) and
12.3(b) above, any and all damages, losses and
liabilities whatsoever resulting from any
misrepresentation or any breach of any warranty or
nonfulfillment of any covenant or agreement on the
part of Buyer hereunder, under any certificate or
other instrument to be furnished under this Agreement,
or under any of the Related Agreements; and
(d) any and all actions, suits, claims, proceedings,
investigations, audits, demands, assessments, fines,
judgments, costs and other reasonable expenses
(including reasonable legal fees) incident to any of
the foregoing.
12.4 Indemnification Procedures Involving Only Sellers and Buyer.
Any party to this Agreement asserting a claim for
indemnification in connection with this Agreement shall
proceed as follows:
(a) Notice. The party asserting the claim shall so notify
the other party in writing, setting forth the
provision of this Agreement under which the claim is
made, and in reasonable detail the grounds therefor.
The date on which such notice is sent is the "Notice
Date."
(b) Good Faith Discussions. Within ten (10) days after
the Notice Date, the parties shall meet, either in
person or by telephone, for the purpose of resolving
the claim. Both parties agree that they will meet and
negotiate in good faith for this purpose. Such
discussions and negotiations shall be conducted in
accordance with the provisions for dispute resolution
set forth in Section 14.9(a) and (b).
12.5 Certain Procedures Regarding Indemnification of Third Party
Claim, Etc. All claims for indemnification under this
Agreement shall be made as follows: In the event a claim or
demand is made by a third party against an Indemnitee, the
Indemnitee shall promptly notify the Indemnitor of such claim
or demand, specifying the nature and the amount (the "Claim
Notice"). The Indemnitor shall notify the Indemnitee within
thirty (30) days after receipt of the Claim Notice whether
the Indemnitor will undertake, conduct, and control, through
counsel of its own choosing (subject to the consent of the
Indemnitee, such consent not to be unreasonably withheld or
delayed) and at its expense, the
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settlement or defense thereof, and the Indemnitee shall
cooperate with it in connection therewith, provided that if
the Indemnitor undertakes such defense: (i) the Indemnitor
shall not thereby permit to exist any lien, encumbrance or
other adverse charge upon any asset of the Indemnitee or
settle such action without first obtaining the consent of the
Indemnitee, except for settlements solely covering monetary
matters for which the Indemnitor has acknowledged
responsibility for payment; (ii) the Indemnitor shall permit
the Indemnitee (at Indemnitee's sole cost and expense) to
participate in such settlement or defense through counsel
chosen by the Indemnitee and (iii) the Indemnitor shall agree
promptly to reimburse the Indemnitee for the full amount of
any loss resulting from such claim and all related expenses
incurred by the Indemnitee, except for those costs expressly
assumed by Indemnitee hereunder. The Indemnitee agrees to
preserve and provide access to all evidence that may be
useful in defending against such claim and to provide
reasonable cooperation in the defense thereof or in the
prosecution of any action against a third party in connection
therewith. The Indemnitor's defense of any claim or demand
shall not constitute an admission or concession of liability
therefor or otherwise operate in derogation of any rights the
Indemnitor may have against the Indemnitee or any third
party. So long as the Indemnitor is reasonably contesting
any such claim in good faith, the Indemnitee shall not pay or
settle any such claim. If the Indemnitor does not notify the
Indemnitee within thirty (30) days after receipt of the
Indemnitee's Claim Notice that it elects to undertake the
defense thereof, the Indemnitee shall have the right to
contest, settle or compromise the claim in the exercise of
its exclusive discretion at the expense of the Indemnitor
(provided that the Indemnitor shall not be required to pay
the Indemnitee's expenses for the defense, settlement or
compromise of claims which are not covered by the
Indemnitor's obligations under this Article 12).
ARTICLE 13 TERMINATION.
13.1 Methods of Termination. This Agreement and the transactions
contemplated herein may be terminated or abandoned at any
time prior to the Closing:
(a) by written agreement of Sellers and Buyer;
(b) by Buyer, upon written notice to Sellers, if (i) any
condition precedent to Buyer's obligations set forth
in Section 8 hereof is not satisfied on or before the
Closing
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Date and Buyer is not in material default of any of
its obligations hereunder and is otherwise prepared to
fulfill the conditions precedent set forth in Section
7 hereof to Sellers' obligation to close hereunder
which are within Buyer's reasonable control or (ii)
Sellers violate any provision of Sections 10.1, 10.10
or 14.5 hereof;
(c) by Sellers, upon written notice to Buyer, if any
condition precedent to Sellers' obligations set forth
in Section 7 hereof is not satisfied on or before the
Closing Date and Sellers are not in material default
of any of its obligations hereunder and is otherwise
prepared to fulfill the conditions precedent set forth
in Section 8 hereof to Buyer's obligation to close
hereunder which are within Seller's reasonable
control;
(d) by either Sellers or Buyer, upon written notice to the
other, if either reasonably determines that (i) the
consummation of any of the transactions contemplated
hereby or in any of the Related Agreements is likely
to violate any non-appealable final order, decree or
judgment of any court or governmental body having
competent jurisdiction or (ii) there shall exist or be
enacted or adopted any statute, rule or regulation
which makes consummation of any of the transactions
contemplated hereby or in any of the Related
Agreements illegal or otherwise prohibited; or
(e) by either Sellers or Buyer if the Closing Date is not
on or before May 31, 1995, provided that (i) the
terminating party shall have used good faith,
commercially reasonable efforts to comply with and to
fulfill its covenants, obligations and conditions to
close hereunder and (ii) the party not seeking
termination may demand and shall receive a ten (10)
day extension if the reason that the Closing did not
occur was reasonably beyond the control of such party.
13.2 Effect of Termination.
(a) In the event of termination of this Agreement by one
or both parties pursuant to Section 13.1 hereof, the
transactions contemplated by this Agreement shall be
terminated without further action by the parties
hereto and thereupon shall become void and of no
further effect, without any liability of either party
to the other, except (i) that nothing herein shall
relieve either party from liability for any
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breach of this Agreement occurring prior to such
termination and (ii) Sections 14.5 and 14.14 shall
remain in full force and effect and shall not be
affected by a termination or abandonment of this
Agreement.
(b) If the transactions contemplated by this Agreement are
terminated as provided in this Article 13, each party
will promptly return (or cause to be returned) all
documents, work papers and other materials obtained by
it or its Affiliates, representatives, consultants and
agents from the other party (or any of its agents)
relating to the transactions contemplated hereby.
(c) If the transactions contemplated by this Agreement are
terminated as provided in this Article 13, the deposit
of $100,000.00 previously paid by Buyer as set forth
in Section 2.4 hereof will be returned to Buyer as
required if the reason for such termination is the
occurrence of any of the matters set forth in Section
10.10 hereof.
ARTICLE 14 MISCELLANEOUS MATTERS.
14.1 Survival of Representations and Warranties. All
representations and warranties shall survive the Closing for
the duration of the applicable statute of limitations on
claims related thereto.
14.2 Further Assurances; Access to Records. At any time and from
time to time after the Closing Date, at the request of Buyer
and without further consideration, Sellers shall execute,
acknowledge and deliver all such further documents, and shall
do and perform all such further acts and deeds, as may
reasonably be requested to more effectively vest in Buyer
the rights and benefits intended to be conferred hereby and
to consummate more effectively the transactions contemplated
hereby. Buyer shall make available to Sellers after the
Closing Date such records regarding the Business and the
Business Property as Seller may require for the purposes set
forth in Section 11.3(b).
14.3 Mail. After the Closing Date and for a period of one year
thereafter, Buyer shall remit to Sellers all mail and other
communications received by Buyer that does not relate to
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the Company, and Sellers shall remit to Buyer all mail and
other communications received by Sellers that relates to the
Company.
14.4 Changes, Waivers. This Agreement may not be changed in any
manner except by a written agreement signed by each of the
parties hereto. The failure of any party to enforce at any
time any of the provisions of this Agreement shall in no way
be construed to be a waiver of any such provision, nor in any
way effect the validity of this Agreement or any part thereof
or the right of either party thereafter to enforce each and
every such provision. No waiver of any breach of this
Agreement shall be held to be a waiver of any other or
subsequent breach.
14.5 Expenses, Etc. Buyer and Sellers shall be responsible for
and bear all of its or their own costs and expenses
(including without limitation attorneys' fees and costs,
accountants' fees and costs and other professionals' fees and
costs) incurred in connection with the negotiation,
preparation, execution and delivery of this Agreement and the
Related Agreements and the consummation of the proposed
transactions described in this Agreement. No broker's,
finder's or similar fees shall be payable in connection with
the proposed transactions described in this Agreement, and
each party to this Agreement shall indemnify the other
parties hereto with respect to any such fees.
14.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an
original, but all of such counterparts together shall be
deemed to be one and the same instrument.
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14.7 Contents of Agreement; Parties in Interest; Assignment, Etc.
(a) This Agreement, including the Schedules and Exhibits
hereto and the documents referred to herein (and the
Escrow Agreement described in Section 2.4.1, above),
sets forth the entire understanding and agreement of
the parties hereto with respect to the subject matter
hereof. All previous agreements, promises,
representations, commitments and understandings,
whether verbal or written, between the parties
regarding the subject matter hereof are merged into
and superseded by this Agreement. All
representations, warranties, covenants, terms and
conditions of this Agreement shall be binding upon and
inure to the benefit of and be enforceable by the
respective legal representatives, successors and
permitted assigns of the parties hereto. Nothing
contained in this Agreement, express or implied, is
intended to confer upon any person or entity other
than the parties hereto including SpecTran Corporation
and their respective successors and permitted assigns
any rights or remedies under or by reason of this
Agreement or any Related Agreement.
(b) This Agreement may not be assigned by any party hereto
without the prior written consent of the other party.
14.8 Conflict with Related Agreements. In the event that the
terms of this Agreement conflict with the terms of any of the
Related Agreements, the terms of this Agreement shall govern.
14.9 Dispute Resolution.
(a) Good Faith Negotiation. In the event of any
controversy, claim or dispute, the party initiating
the controversy, claim or dispute shall provide to the
other party a written notice containing a brief and
concise statement of the matter, together with
relevant supporting facts. During a period of sixty
(60) days or such longer period as mutually agreed,
the parties shall attempt to settle the matter by good
faith negotiation. Such efforts shall include, but
not be limited to, full presentation by each party of
its claims, with or without counsel, with the
presentation of Sellers to be made to the President of
Buyer.
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<PAGE> 47
(b) Outside Decisionmaker. If efforts under Section
14.9(a) are not successful, the dispute shall be
referred to an outside decisionmaker. Such
decisionmaker shall be a person reasonably acceptable
to both parties. If the parties cannot agree on one
person, then each shall select one person and those
two individuals shall hear the claim. If they cannot
arrive at a unanimous decision, then they shall select
a third person who shall act independently. The
decision of the outside decisionmaker(s) shall not be
binding on the parties, but shall be used as a basis
for resolving disputes prior the institution of
litigation. In any case, the outside decisionmaker(s)
shall be required to render a decision on the claim in
writing within thirty (30) days of being retained for
this purpose by either party, or sixty (60) days if a
third person is necessary. the costs and expenses of
this decisionmaker shall be shared equally by the
parties. Failure to comply with Sections 14.9(a) and
14.9(b) with respect to any controversy, claim or
dispute shall be an absolute bar to the institution of
any litigation or other proceeding.
14.10 Receipt of Monies or Other Assets. If any monies or other
assets are received by Sellers or Buyer to which the other
party is entitled in accordance with the terms of this
Agreement, such party shall hold such monies or assets in
trust and shall promptly notify and account therefor to the
other within fifteen (15) days of receipt.
14.11 Section Headings and Gender. The section headings herein
have been inserted for convenience of reference only and
shall in no way modify or restrict any of the terms or
provisions hereof. The use of masculine or any other pronoun
herein when referred to any party is for convenience only and
shall be deemed to refer to the particular party intended
regardless of the actual gender of such party.
14.12 Schedules. The Schedules and Exhibits to this Agreement
shall be construed with and as an integral party of this
Agreement to the same extent as if the same had been set
forth verbatim herein.
14.13 Notices. All notices, consents, waivers or other
communications which are required or permitted hereunder
shall be in writing and shall be sufficient if delivered
personally (including by means of recognized courier service
for which a written receipt is given) or by registered or
certified mail, return receipt requested, postage prepaid, or
by facsimile transmission providing a receipt, as follows (or
to such other address as shall be set forth in a notice given
in the same manner):
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If to Buyer:
Dr. Raymond E. Jaeger
President and Chief Executive Officer
APD Acquisition Corp.
c/o SpecTran Corporation
SpecTran Industrial Park
50 Hall Road
Sturbridge, Massachusetts 01566
FAX: 508-347-2747
With a required copy to:
Ira S. Nordlicht, Esq.
Hackmyer & Nordlicht
645 Fifth Avenue
New York, New York 10022
FAX: 212-421-0499
If to Sellers:
Mr. Irving N. Dwyer
22 Stanton Lane
Preston, CT 06365
Mr. David P. Davia
308 Thompson Hill Road
Thompson, CT 06277
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<PAGE> 49
With a required copy to:
Peter F. Stuart, Esq.
O'Brien, Shafner, Stuart, Kelly & Morris, P.C.
475 Bridge Street
Groton, Connecticut 06340
FAX: 203-445-4539
All such notices shall be deemed to have been given on the
date personally delivered, upon possession of a receipt
establishing a facsimile transmission was received or five
(5) days after being mailed in the manner provided above.
14.14 Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of
Connecticut without giving effect to the principles of
conflicts of laws.
IN WITNESS WHEREOF, this Agreement has been executed as of the day and
year first above written.
/s/ BRIAN M. HAND /s/ IRVING N. DWYER
- ------------------- ----------------------
IRVING N. DWYER
/s/ PETER F. STUART
- -------------------
/s/ DAVID P. DAVIA
----------------------
DAVID P. DAVIA
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<PAGE> 50
THE IRVING N. DWYER AND ANNETTE M. DWYER
CHARITABLE REMAINDER TRUST
(As to both signatures)
/s/ PETER F. STUART /s/ IRVING N. DWYER
- -------------------- By:
----------------------------
IRVING N. DWYER, Co-Trustee
/s/ BRIAN M. HAND /s/ ANNETTE M. DWYER
- -------------------- By:
----------------------------
ANNETTE M. DWYER, Co-Trustee
THE DAVIA CHARITABLE
REMAINDER TRUST
(As to both signatures)
/s/ PETER F. STUART /s/ DAVID P. DAVIS
- -------------------- By:
----------------------------
DAVID P. DAVIA, Co-Trustee
/s/ BRIAN M. HAND /s/ JOAN S. DAVIS
- -------------------- By:
----------------------------
JOAN S. DAVIA, Co-Trustee
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<PAGE> 51
APD ACQUISITION CORP.
/s/ BRIAN M. HAND By: /s/ RAYMOND E. JAEGER
- ------------------- -------------------------------------
President and Chief Executive Officer
/s/ PETER F. STUART
- -------------------
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SCHEDULES
Schedule 2.4.2 Allocation of Purchase Shares
Schedule 4.1(b) Share Ownership
Schedule 4.4(a) Machinery and Equipment
Schedule 4.4(c) Leases of Tangible Personal Property
Schedule 4.4(g) Registered Copyrights
Schedule 4.4(j) Inventory
Schedule 4.4(k) Accounts Receivable
Schedule 4.5 Contracts
Schedule 4.6(a) Real Estate
Schedule 4.7(a) Litigation
Schedule 4.8 Customers
Schedule 4.9 Suppliers
Schedule 4.11(i) Capital Expenditures
Schedule 4.14 Taxes
Schedule 4.16 Bank Accounts
Schedule 4.17 Applications
Schedule 7.9 Consents and Approvals (Sellers)
<PAGE> 53
EXHIBITS
Exhibit 2.4.1 Escrow Agreement among Sellers, Buyer and Hackmyer &
Nordlicht
Exhibit 3.1(a) Employment Agreement between Applied Photonic Devices, Inc.
and Irving N. Dwyer
Exhibit 3.1(b) Employment Agreement between Applied Photonic Devices, Inc.
and David P. DaVia
Exhibit 10.8(a) Non-Competition Agreement of Irving N. Dwyer
Exhibit 10.8(b) Non-Competition Agreement of David P. DaVia
Exhibit 5.7 SpecTran corporation Guaranty
Exhibit 6.3(f) Investor Representation Letter
Exhibit 11.3(a) Confidentiality Agreement
