SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
[X] CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
July 15, 1998 (June 30, 1998)
Date of Report (Date of earliest event reported)
LINC CAPITAL, INC.
(Exact name of registrant as specified in its charter)
Commission File Number: 000-23309
Delaware 06-0850149
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
303 East Wacker Drive, Suite 1000,
Chicago, Illinois 60601
(Address of principal executive offices) (Zip Code)
(312) 946-1000
(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition or Disposition of Assets
On June 30, 1998 LINC Capital, Inc. (the "Company") acquired the assets and
business of Spectra Precision Credit Corp.(SPCC), the finance subsidiary of
Spectra Precision, Inc., and Spectra Precision Funding Corporation, a special
purpose subsidiary of SPCC, pursuant to an Asset Purchase Agreement dated June
30, 1998 among the Company, SPCC, and Spectra Precision, Inc.
The consideration paid is $40.6 million, including the assumption of $3.3
million of SPCC's liabilities, plus additional performance-related consideration
of up to $3.5 million over a four-year period. The acquisition includes the
purchase of SPCC's $34.0 million lease portfolio and all of the outstanding
stock of Sprectra Precision Credit Ltd., an affiliate of SPCC conducting
business in the United Kingdom. The consideration for the acquisition was
determined through arms-length negotiations between the Company and Spectra
Precision, Inc. The funds required for the purchase price were derived from
borrowings under the Company's Senior Credit Facility which is provided by a
group of banks, including Fleet Bank N.A. as agent.
Spectra Precision, Inc., parent of SPCC, a division of the Sweden-based
Spectra Precision Group, is an international manufacturer of laser-based
leveling and alignment instruments, machine control systems, surveying
instruments and software used in the construction, agricultural and surveying
markets. SPCC provides leasing, financing, floor plan financing and rental
services to 24 direct sales offices and more than 140 dealer/distributors of
Spectra Precision's products throughout the world. SPCC had total revenues of
approximately $4.5 million for its fiscal year ended December 31, 1997.
The Company and Spectra Precision, Inc. have also established a seven-year
vendor agreement to provide financing services to Spectra Precision's clients in
the United States, Canada and Europe. SPCC is headquartered in Dayton, Ohio.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired
The required financial statements will be filed on or prior to September
14, 1998.
(b) Pro Forma Financial Information
The required pro forma information will be filed on or prior to September
14, 1998.
(c) Exhibits
Exhibit
Number Document Description
------ --------------------
2.1 Asset Purchase Agreement by and among LINC Capital, Inc.,
Spectra Precision Credit Corp., Spectra Precision Funding
Corporation, and Spectra Precision, Inc. dated June 30, 1998.
------------
* The Company agrees to furnish supplementally to the Commission a copy
of any omitted schedule or exhibit to such agreement upon request by
the Commission.
<PAGE>
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, thereunto duly authorized.
LINC CAPITAL, INC.
Dated: July 15, 1998
By: /s/ Allen P. Palles
-------------------
Allen P. Palles
Executive Vice President and
Chief Financial Officer
(Principal Financial
and Accounting Officer)
<PAGE>
Exhibit 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
LINC CAPITAL, INC.,
SPECTRA PRECISION CREDIT CORP.,
SPECTRA PRECISION FUNDING CORPORATION,
AND
SPECTRA PRECISION, INC.
JUNE 30, 1998
<PAGE>
- viii -
TABLE OF CONTENTS
Section 1. Definitions........................................................1
Section 2. Basic Transaction..................................................8
2.1 Purchase and Sale of Assets........................................8
2.2 Assumption of Liabilities..........................................8
2.3 Purchase Price.....................................................9
2.4 The Closing........................................................9
2.5 Purchase Price Adjustment..........................................9
2.6 Deliveries at the Closing.........................................11
2.7 Allocation........................................................11
2.8 Obligations of Spectra............................................11
Section 3. Representations and Warranties of the Seller and Spectra..........11
3.1 Organization......................................................11
3.2 Authorization of Transaction......................................11
3.3 Noncontravention..................................................12
3.4 Brokers' Fees.....................................................12
3.5 Title to Assets...................................................12
3.6 Condition of Leases...............................................13
3.7 Other Lease Matters...............................................16
3.8 [Intentionally left blank]........................................16
3.9 Subsidiaries......................................................16
3.10 Financial Statements..............................................16
3.11 Events Subsequent to Most Recent Fiscal Year End..................17
3.12 Undisclosed Liabilities...........................................19
3.13 Legal Compliance..................................................19
3.14 Tax Matters.......................................................19
3.15 Intellectual Property.............................................20
3.16 Assets............................................................22
3.17 Contracts.........................................................22
3.18 Receivables.......................................................23
3.19 Powers of Attorney................................................23
3.20 Litigation........................................................24
3.21 Product Liability.................................................24
3.22 Employees.........................................................24
3.23 Employee Benefits.................................................24
3.24 Guaranties........................................................25
3.25 Environmental, Health, and Safety Matters.........................25
3.26 Certain Business Relationships With the Sellers...................25
3.27 Disclosure........................................................25
Section 4. Representations and Warranties of the Buyer.......................25
4.1 Organization of the Buyer.........................................25
4.2 Authorization of Transaction......................................26
4.3 Noncontravention..................................................26
4.4 SEC Filings.......................................................26
4.5 Brokers' Fees.....................................................27
Section 5. Covenants.........................................................27
5.1 Pre-Closing Covenants.............................................27
5.2 Post-Closing Covenants............................................28
5.3 Taxes.............................................................30
Section 6. Conditions to Obligation to Close.................................31
6.1 Conditions to Obligation of the Buyer.............................32
6.2 Conditions to Obligation of the Seller............................33
Section 7. Termination.......................................................35
7.1 Termination of Agreement..........................................35
7.2 Effect of Termination.............................................35
Section 8. Indemnification...................................................35
8.1 Indemnifiable Claims..............................................36
8.2 Notice of Claim...................................................37
8.3 Manner of Payment.................................................38
8.4 Limitations.......................................................38
8.5 Exclusive Remedy. ................................................39
Section 9. Miscellaneous.....................................................39
9.1 Survival of Representations and Warranties........................39
9.2 Press Releases and Public Announcements...........................39
9.3 No Personal Liability.............................................39
9.4 No Third-Party Beneficiaries......................................39
9.5 Entire Agreement..................................................39
9.6 Succession and Assignment.........................................39
9.7 Counterparts......................................................40
9.8 Headings..........................................................40
9.9 Notices...........................................................40
9.10 Governing Law.....................................................41
9.11 Amendments and Waivers............................................41
9.12 Severability......................................................41
9.13 Expenses..........................................................41
9.14 Construction......................................................41
9.15 Incorporation of Exhibits and Schedules...........................42
9.16 Specific Performance..............................................42
9.17 Submission to Jurisdiction........................................42
9.18 Arbitration. .....................................................42
<PAGE>
SCHEDULES
Schedule I Assumed Contracts
Schedule II Assumed Liabilities
Schedule III Lease Forms
Schedule 3.3 Noncontravention
Schedule 3.5 Title to Assets
Schedule 3.6 Leases
Schedule 3.7 Other Lease Matters
Schedule 3.10 Financial Statements
Schedule 3.11 Events Subsequent to the Most Recent Fiscal Year End
Schedule 3.14 Taxes
Schedule 3.15 Intellectual Property
Schedule 3.17 Contracts
Schedule 3.19 Powers of Attorney; Bank Accounts
Schedule 3.23 Employee Benefits
Schedule 3.25 Environmental, Health and Safety Matters
Schedule 3.26 Certain Business Relationships with the Sellers
Schedule 6.1(c) Consents
<PAGE>
EXHIBITS
Exhibit A - Form of Real Property License
Exhibit B -- Form of Vendor Program Agreement
Exhibit C -- Form of Opinion of Buyer
Exhibit D -- Form of Opinion of Seller
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT dated as of June 30, 1998, by and among LINC
Capital, Inc., a Delaware corporation (the "Buyer"), Spectra Precision Credit
Corp., a Delaware corporation ("SPCC"), Spectra Precision Funding Corporation, a
Delaware corporation and a wholly-owned subsidiary of SPCC ("SPC," and together
with SPCC, the "Sellers"), and Spectra Precision, Inc., a Delaware corporation
("Spectra"). The Buyer, the Sellers and Spectra are referred to collectively
herein as the "Parties."
This Agreement contemplates a transaction in which the Buyer will
purchase the assets (and assume certain of the liabilities) of the Sellers in
return for cash. Simultaneously with the execution of this agreement, the Buyer
and Spectra Physics Holding, plc (the "UK Parent") are entering into a Stock
Purchase Agreement (the "Stock Purchase Agreement") whereby the Buyer will
purchase and UK Parent will sell all of the outstanding stock of Spectra
Precision Credit, Ltd. (the "UK Subsidiary").
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
Section 1. Definitions.
"Accounting Principles" shall have the meaning set forth in Section
3.10.
<PAGE>
"Acquired Assets" means all right, title, and interest of the Sellers
in, to and under all of the assets, business, properties and rights of the
Sellers which are used in, held for use in or associated with, directly or
indirectly, the Business, including all of their rights, title and interest in,
to and under the following: (a) tangible personal property (such as office
equipment, office supplies and furniture), (b) Intellectual Property, goodwill
associated therewith, licenses and sublicenses granted and obtained with respect
thereto, and rights thereunder, remedies against infringements thereof, and
rights to protection of interests therein under the laws of all jurisdictions,
(c) leases, and lease financing arrangements, including without limitation, the
Leases, the Lease Documents, all rights in and to the Equipment, all rights in
and to the Scheduled Payments, and all rights in and to the residual values of
the Equipment, (d) the Assumed Contracts, (e) all receivables existing as of the
Closing Date and other assets set forth on the SPCC Closing Balance Sheet, (f)
securities, (g) claims, deposits, prepayments, refunds, causes of action, choses
in action, rights of recovery, rights of set off, and rights of recoupment, (h)
franchises, approvals, permits, licenses, orders, registrations, certificates,
variances, and similar rights obtained from governments and governmental
agencies, (i) books, records, ledgers, files, documents, correspondence, lists,
plats, architectural plans, drawings, and specifications, creative materials,
advertising and promotional materials, studies, reports, and other printed or
written materials, and (j) Cash, including all amounts held as a security
deposits or in escrow and all rights thereto, and all amounts held in lock boxes
and collection accounts, and the rights thereto; provided, however, that the
Acquired Assets shall not include the Excluded Assets.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of
Code ss.1504(a) or any similar group defined under a similar provision of state,
local, or foreign law.
"Aggregate Funded Amount" means, as of any date, the sum of the Funded
Amounts for each Contingent Payment Period after the date hereof and through
such date.
"Assumed Contracts" means the contracts, agreements and instruments
listed on Schedule I attached hereto.
"Assumed Liabilities" means (a) all Liabilities of the Sellers set
forth on Schedule II attached hereto, adjusted to give effect to payments
thereof through the Closing Date and the incurrence of additional Liabilities in
the Ordinary Course of Business and as reflected on the SPCC Closing Balance
Sheet, and (b) all obligations of the Sellers under the Leases and the Assumed
Contracts (other than for breaches thereof).
"Average Inventory Financings" means, with respect to any Contingent
Payment Period, an amount equal to (i) the average outstanding amount during
such Contingent Payment Period by the Buyer and its Affiliates for inventory
financing arrangements, dealer floor plan financings and similar financing
arrangements through Spectra, its Affiliates (including captive distributors)
and its independent dealer network pursuant to the Vendor Program Agreement
(including financing of equipment not constituting "Covered Products" as defined
in the Vendor Program Agreement) divided by (ii) four. For such purpose the
amount which is not denominated in United States dollars shall be determined as
of the date such arrangement is funded by reference to the spot price for the
relevant currency published in the Wall Street Journal on such date.
"Banks" means National City Bank, Dayton, a national banking
association, and Keybank National Association, a national banking association.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"Business" means the business of leasing and financing equipment
pursuant to arrangements with Spectra, Affiliates of Spectra and independent
distributors of equipment.
"Business Day" means any day other than a Saturday, a Sunday or any
other day on which banks in Chicago, Illinois or Dayton, Ohio, may, or are
required to, remain closed.
<PAGE>
"Buyer" has the meaning set forth in the preface above.
"Canadian Equipment" means Equipment covered by Leases originated in
Canada.
"Cash" means cash and cash equivalents (including marketable securities
and short term investments).
"Charged-Off Lease" means a lease that has been charged-off as
uncollectible by the Sellers in the Ordinary Course of Business.
"Closing" has the meaning set forth in Section 2.4 below.
"Closing Balance Sheets" has the meaning set forth in Section 2.5
below.
"Closing Date" has the meaning set forth in Section 2.4 below.
"Closing Net Worth" has the meaning set forth in Section 2.5 below.
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of
ERISA and Code ss.4980B.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contingent Payment Amount" means, with respect to any Contingent
Payment Date, an amount equal to 7% of the Excess Lease Originations for such
Contingent Payment Date.
"Contingent Payment Date" means each January 31, April 30, July 31, and
October 31 beginning October 31, 1998 and ending on July 31, 2002. Each
Contingent Payment Date is related to the Contingent Payment Period immediately
preceding such Contingent Payment Date as set forth in the definition of
Contingent Payment Period.
"Contingent Payment Period" means (i) with respect to the October 31,
1998 Contingent Payment Date, the period from the Closing Date through September
30, 1998, and (ii) with respect to any other Contingent Payment Date, the
calendar quarter immediately preceding such Contingent Payment Date through the
quarter ending on June 30, 2002.
"Contingent Purchase Price" has the meaning set forth in Section 2.3
below.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement, (b) qualified defined
contribution retirement plan or arrangement which is an Employee Pension Benefit
Plan, (c) qualified defined benefit retirement plan or arrangement which is an
Employee Pension Benefit Plan (including any Multiemployer Plan), or (d)
Employee Welfare Benefit Plan or material fringe benefit or other retirement,
bonus, or incentive plan or program.
<PAGE>
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
ss.3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
ss.3(1).
"Environmental, Health, and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, ordinances and other
provisions having the force or effect of law, all judicial and administrative
orders and determinations, all contractual obligations and all common law
concerning public health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation all those relating
to the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of any hazardous
materials, substances or wastes, chemical substances or mixtures, pesticides,
pollutants, contaminants, toxic chemicals, petroleum products or byproducts,
asbestos, polychlorinated biphenyls, noise or radiation, each as amended and as
now or hereafter in effect.
"Equipment" means all equipment, inventory, and other property
described as being leased pursuant to or in which either Seller is granted a
Security Interest in pursuant to a Lease.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means each entity which is treated as a single
employer either Seller for purposes of Code ss.414.
"Excess Lease Originations" means (i) for any Contingent Payment Date,
if the Aggregate Funded Amount on the last day of the related Contingent Payment
Period is less than or equal to $25,000,000, zero, (ii) for the Contingent
Payment Date related to the Contingent Payment Period in which the Aggregate
Funded Amount first exceeds $25,000,000, the amount by which the Aggregate
Funded Amount on the last day of such Contingent Payment Period exceeds
$25,000,000, and (iii) for any Contingent Payment Date after the Contingent
Payment Date described in clause (ii), an amount equal to the Funded Amount for
the Contingent Payment Period related to such Contingent Payment Date.
"Excluded Assets" means all of each Seller's rights to and interest in,
and under (i) such Seller's corporate charter, qualifications to conduct
business as a foreign corporation, arrangements with registered agents relating
to foreign qualifications, taxpayer and other identification numbers, seals,
minute books, stock transfer books, blank stock certificates, and other
documents relating to the organization, maintenance, and existence of such
Seller as a corporation, (ii) any of the rights of such Seller under this
Agreement (or under any side agreement between such Seller on the one hand and
the Buyer on the other hand entered into on or after the date of this
Agreement), (iii) in the case of SPCC, the shares of capital stock of SPC, (iv)
deferred tax assets and (v) the Retained Marks.
"Extremely Hazardous Substance" has the meaning set forth in ss.302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
<PAGE>
"Fiduciary" has the meaning set forth in ERISA ss.3(21).
"Financial Statement" has the meaning set forth in Section 3.10 below.
"Funded Amount" means, with respect to any Contingent Payment Period,
an amount equal to (i) the aggregate amount funded during such Contingent
Payment Period by the Buyer and its Affiliates for equipment leases, equipment
loans and similar financing arrangements through Spectra, its Affiliates
(including captive distributors) and its independent dealer network pursuant to
the Vendor Program Agreement, including financing of equipment not constituting
"Covered Products" as defined in the Vendor Program Agreement (other than
inventory financing arrangements, dealer floor plan financings and similar
financing arrangements) plus, (ii) the Average Inventory Financings for such
Contingent Payment Period. For such purpose the amount which is not denominated
in United States dollars shall be determined as of the date such arrangement is
funded by reference to the spot price for the relevant currency published in the
Wall Street Journal on such date.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable investigation.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
<PAGE>
"Leases" means all leases and similar financing arrangements with
either Seller or UK Subsidiary as Lessor or similar party providing financing,
including Charged-Off Leases and including leases subject to the Lease
Receivables Purchase Agreement.
"Lease Documents" means the lease agreements and financing contracts
evidencing the Leases, together with all related documents and agreements
including, without limitation, master lease agreements, schedules or other
addenda to such lease agreements and financing contracts, certificates of
delivery and acceptance, UCC financing statements, remarketing agreements,
residual guarantee agreement, insurance policies, and guaranty agreements and
other credit supports.
"Lease Receivables Purchase Agreement" means the Third Restated
Receivables Purchase Agreement, dated as of December 31, 1997, by and among
SPCC, and the Banks, and all other agreements and documents contemplated
thereby.
"Material Adverse Effect" means any material adverse effect on the
business, condition (financial or otherwise), operations or results of
operations of the Sellers, taken as a whole.
"Most Recent Balance Sheet" means the balance sheets contained within
the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in Section
3.10 below.
"Most Recent Fiscal Month End" has the meaning set forth in Section
3.10 below.
"Most Recent Fiscal Year End" has the meaning set forth in Section 3.10
below.
"Net Worth" means total assets, minus deferred tax asset, minus total
liabilities.
"Obligor" means any lessee party or other party obligated to pay or
perform any obligations under or in respect of a Lease or the Equipment covered
by a Lease (excluding the lessor party thereunder, but otherwise including,
without limitation, any guarantor of a Lease or any vendor, manufacturer or
similar party under a remarketing agreement, residual guarantee or similar
agreement).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
<PAGE>
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Prohibited Transaction" has the meaning set forth in ERISA ss.406 and
Code ss.4975.
"Purchase Price" means the Cash Purchase Price, as adjusted pursuant to
Section 2.5, and the Contingent Purchase Price.
"Related Agreements" has the meaning set forth in Section 3.2.
"Retained Marks" means the names "Laserguard," "Spectra Precision" and
"Laserplane," together with all translations, adaptations, derivations, logos
and combinations thereof.
"Reportable Event" has the meaning set forth in ERISA ss.4043.
"Scheduled Payment" means the monthly rental payments or installments
of principal and interest under the terms of the Leases.
"SEC" means the Securities and Exchange Commission.
"SEC Reports" has the meaning set forth in Section 4.4.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable or for Taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Sellers" has the meaning set forth in the preface above.
"Spectra" has the meaning set forth in the preface above.
"SPC" has the meaning set forth in the preface above.
"SPCC" has the meaning set forth in the preface above.
"SPCC Closing Balance Sheet" has the meaning set forth in Section 2.5
below.
<PAGE>
"Subsidiary" means any corporation or other Person with respect to
which a specified Person (or a Subsidiary thereof) owns a majority of the common
stock or has the power to vote or direct the voting of sufficient securities to
elect a majority of the directors or otherwise has a majority of the voting
interest.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code ss.59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever (including any interest, penalty,
or addition thereto).
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Vendor Program Agreement" means that vendor program agreement by and
between Buyer and Spectra in the form of Exhibit B hereto.
"UK Business" means the Business as defined in the Stock Purchase
Agreement.
"UK Closing Balance Sheet" has the meaning set forth in Section 2.5
below.
"UK Equipment" means Equipment covered by Leases originated in the
United Kingdom.
"US Equipment" means Equipment covered by Leases originated in the
United States.
"UK Parent" has the meaning set forth in the preface above.
"UK Subsidiary" has the meaning set forth in the preface above.
Section 1. Basic Transaction.
1.1 Purchase and Sale of Assets. On and subject to the terms and conditions of
this Agreement, the Buyer agrees to purchase from the Sellers, and the
Sellers agree to sell, transfer, convey, and deliver to the Buyer, all of
the Acquired Assets at the Closing for the consideration specified below
in this Section 2.
<PAGE>
1.2 Assumption of Liabilities. On and subject to the terms and conditions of
this Agreement, the Buyer agrees to assume and become responsible for all
of the Assumed Liabilities at the Closing. The Buyer will not assume or
have any responsibility, however, with respect to any other obligation or
Liability of the Sellers not included within the definition of Assumed
Liabilities, or any other Liability or obligations related to, associated
with or arising from the Business (whether or not such Liability or
obligation is disclosed in this Agreement).
1.1 Purchase Price.
(1) The Buyer agrees to pay collectively to the Sellers at the Closing
$7,950,000 (the "Cash Purchase Price") by delivery of cash payable by
wire transfer or delivery of other immediately available funds.
(2) On each Contingent Payment Date (or if such day is not a Business Day,
the next succeeding Business Day), the Buyer agrees to pay collectively
to the Sellers, by delivery of cash payable by wire transfer or check,
an amount equal to the lesser of (i) the Contingent Payment Amount for
such Contingent Payment Date and (ii) $3,500,000 less the Contingent
Payment Amount for all prior Contingent Payment Dates. The aggregate
amount payable under this Section 2.3(b) is referred to as the
"Contingent Purchase Price" and shall in no event exceed $3,500,000.
1.2 The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Kirkland & Ellis in
Chicago, Illinois, commencing at 9:00 a.m. local time on the earlier of (i) June
30, 1998 or (ii) on the date five business days after the termination or
expiration of the waiting period under the Hart-Scott-Rodino Act or such other
date as the Parties may mutually determine (the "Closing Date");
1.3 Purchase Price Adjustment
(3) Closing Balance Sheets and Closing Net Worth.
<PAGE>
(i)......Within 30 days after the Closing Date, SPCC will cause to be
prepared and delivered to the Buyer (i) an unaudited consolidated balance sheet
of SPCC as of the Closing Date immediately prior to giving effect to the
transactions contemplated hereby (but excluding any fees, expenses, taxes,
prepayment penalties or other charges payable or to be paid by the Sellers
related to or arising from the transactions contemplated hereby), prepared in
accordance with the Accounting Principles, including month-end closing
procedures, consistently applied, provided that the reserve for uncollectible
accounts shall be $635,000 (the "SPCC Closing Balance Sheet"), and (ii) an
unaudited consolidated balance sheet of the UK Subsidiary as of the Closing Date
immediately prior to giving effect to the transactions contemplated hereby (but
excluding any fees, expenses, taxes, prepayment penalties or other charges
payable or to be paid by the Sellers related to or arising from the transactions
contemplated hereby), prepared in accordance with generally accepted accounting
principles in the United Kingdom, including month-end closing procedures,
consistently applied (the "UK Closing Balance Sheet," and together with the SPCC
Closing Balance Sheet, the "Closing Balance Sheets"). The Closing Balance Sheets
shall be accompanied by the Seller's calculation of Closing Net Worth. For
purposes hereof, "Closing Net Worth" means the sum of (i) Net Worth as reflected
on the SPCC Closing Balance Sheet and (ii) Net Worth (which may be negative) as
reflected on the UK Closing Balance Sheet.
(ii)..... If the Buyer disagrees with the computation of Closing Net Worth,
the SPCC Closing Balance Sheet or the UK Closing Balance Sheet, the Buyer shall,
within 15 days after receipt of the Closing Balance Sheets and accompanying
statement, deliver a written notice (an "Objection Notice") to SPCC setting
forth the Buyer's calculation of Closing Net Worth. The Objection Notice shall
specifically state and shall only state those items or amounts as to which the
Buyer disagrees and the basis of such disagreement, and the Buyer shall be
deemed to have agreed with all other items and amounts on the Closing Balance
Sheets or contained in the calculation of Closing Net Worth. If an Objection
Notice is not delivered within such time period, then the Closing Net Worth as
set forth in the statement delivered by SPCC shall be conclusive and binding
upon the Parties and their respective Affiliates.
(iii)....If an Objection Notice is delivered within such time period, the
Buyer and SPCC shall, during the 15 days following the receipt by SPCC of such
notice, use their reasonable efforts to reach agreement on the disputed items or
amounts in order to determine, the amount of Closing Net Worth, but if they do
not obtain a final resolution within such 15 days, the Buyer and SPCC will
jointly retain an independent accounting firm (the "Firm") to resolve any
remaining disagreements. If the Buyer and SPCC are unable to agree on the choice
of the Firm, the Firm shall be Ernst & Young (Dayton office), unless such firm
is no longer "independent" with respect to either the Buyer or SPCC, in which
case such firm shall select the Firm. The Buyer and SPCC shall direct the Firm
to render a determination within 30 days of its retention and the Parties and
their respective employees shall cooperate with the Firm during its engagement.
The Firm shall consider only those items and amounts which are listed in the
Objection Notice which the Buyer and SPCC are unable to resolve. The
determination of the Firm will be conclusive and binding upon the Parties and
their respective Affiliates. The cost of such review and report by the Firm
shall be borne one-half by SPCC and Spectra and one-half by the Buyer.
(iv).....The Buyer and the Sellers agree that they will, and agree to cause
their respective independent accountants to, cooperate and assist in the
preparation of the Closing Balance Sheets and the calculation of Closing Net
Worth and in the conduct of the reviews thereof by Buyer, and if applicable, the
Firm, including without limitation, the making available to the extent necessary
of books, records, work papers and personnel.
(4) The Post-Closing Adjustment Payment.
<PAGE>
(i)......Payment by Buyer.
- - --------------------------
If the Closing Net Worth is greater than $3,900,000, the Buyer shall,
within three business days after the date the Closing Net Worth is finally
determined under and in accordance with Section 2.4(a) above, deliver to the
Sellers a cashier's or certified check, or wire transfer of immediately
available funds to an account designated by the Sellers, in an aggregate amount
equal to the excess of the Closing Net Worth over $3,900,000, plus interest on
such excess amount at the rate of 8% per annum from the Closing Date to the date
such payment is fully paid.
(ii).....Payment by the Sellers.
- - --------------------------------
If the Closing Net Worth is less than $3,900,000, Sellers and Spectra shall
(which obligation shall be joint and several among the Sellers and Spectra),
within three business days after the date the Closing Net Worth is finally
determined under and in accordance with Section 2.4(a) above, deliver to the
Buyer a cashier's or certified check, or wire transfer of immediately available
funds to an account designated by the Buyer, in an aggregate amount equal to the
excess of the Closing Net Worth over $3,900,000, plus interest on such excess
amount at the rate of 8% per annum from the Closing Date to the date such
payment is fully paid.
1.4 Deliveries at the Closing. At the Closing, (i) the Sellers will
deliver to the Buyer the various certificates, instruments, and documents
referred to in Section 6.1 below; (ii) the Buyer will deliver to the Sellers the
various certificates, instruments, and documents referred to in Section 6.2
below; (iii) the Sellers will execute, acknowledge (if appropriate), and deliver
to the Buyer such instruments of sale, transfer, conveyance, and assignment as
the Buyer and its counsel reasonably may request (including appropriate
financing statements to evidence the sale of the Leases hereunder); (iv) the
Buyer will execute, acknowledge (if appropriate), and deliver to the Sellers
such instruments of assumption as the Sellers and its counsel reasonably may
request; and (v) the Buyer will deliver to the Sellers the Cash Purchase Price
specified in Section 2.3(a) above.
1.5 Allocation. The Parties agree to allocate the Purchase Price (and
all other capitalizable costs) among the Acquired Assets for all purposes
(including financial accounting and tax purposes) in accordance with their
respective book values with the remainder allocated to goodwill.
1.6 Obligations of Spectra. Spectra guarantees the performance by the
Sellers of, and agrees to cause the Sellers to perform, all of their obligations
hereunder. Spectra also guarantees the performance by the UK Parent of all of
its obligations under the Stock Purchase Agreement.
Section 2. Representations and Warranties of the Seller and Spectra.
Each of Spectra and the Sellers represents and warrants to the Buyer that the
statements contained in this Section 3 are correct and complete as of the date
of this Agreement.
2.1 Organization. Each of the Sellers and Spectra is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation with power and authority to own its properties
and to conduct its business as such properties are presently owned and such
business is presently conducted.
<PAGE>
2.2 Authorization of Transaction. Each of the Sellers and Spectra has
full power and authority (including full corporate power and authority) to
execute and deliver this Agreement and the other agreements and documents
contemplated hereby (the "Related Agreements") and to perform its obligations
hereunder and thereunder. Without limiting the generality of the foregoing, the
board of directors of each of the Sellers and Spectra have duly authorized the
execution, delivery, and performance of this Agreement and the Related
Agreements. This Agreement constitutes, and each of the Related Agreements when
executed and delivered will constitute, the valid and legally binding obligation
of each Seller and Spectra, enforceable in accordance with its terms and
conditions.
2.3 Noncontravention. Except as disclosed on Schedule 3.3 attached
hereto, neither the execution and the delivery of this Agreement and the Related
Agreements, nor the consummation of the transactions contemplated hereby or
thereby (including the assignments and assumptions referred to in Section 2
above), will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which any of the Sellers or Spectra
and its Subsidiaries is subject or any provision of the charter or bylaws of any
of them or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
any of the Sellers or Spectra and its Subsidiaries is a party or by which it is
bound or to which any of its assets is subject (or result in the imposition of
any Security Interest upon any of its assets), except in the case of any of the
foregoing clauses (i) or (ii), for any such violation, conflict, default,
acceleration, right or notice which would not, and would not reasonably be
expected to, individually or the aggregate, have a Material Adverse Effect.
Except under the Hart-Scott-Rodino Act, none of the Sellers or Spectra and its
Subsidiaries needs to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement (including the assignments and assumptions referred to in Section 2
above).
2.4 Brokers' Fees. Except for the engagement of Prudential Securities,
Inc. (whose fees and expenses will be paid in full by the Sellers), none of the
Sellers, Spectra, or any of their Subsidiaries has any Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement.
2.5 Title to Assets. The Sellers have good and marketable title to, or
a valid leasehold interest in, the properties and assets used by them, located
on their premises, or shown on the Most Recent Balance Sheet or acquired after
the date thereof, free and clear of all Security Interests (except as listed on
Schedule 3.5), except for properties and assets disposed of in the Ordinary
Course of Business since the date of the Most Recent Balance Sheet and Leases
subject to the Lease Receivables Purchase Agreement. Without limiting the
generality of the foregoing, the Sellers have good and marketable title to all
of the Acquired Assets, free and clear of any Security Interest or restriction
on transfer. As of immediately prior to the Closing, the Sellers and the Banks
collectively shall have the entire right, title and interest to the Leases.
<PAGE>
2.6 Condition of Leases. Schedule 3.6 attached hereto sets forth a
true, complete and correct list of the Leases as of June 25, 1998 included in
the Acquired Assets, including all Leases then subject to the Lease Receivables
Purchase Agreement. Except as set forth in Schedule 3.6:
(5) There is no restriction or limitation in any of the Lease Documents or
otherwise restricting the Sellers from executing this Agreement or
consummating the transaction contemplated by this Agreement, or if the
Lease Documents require the consents of the Obligors to the
transactions contemplated by this Agreement, such consents have been
obtained;
(6) (i) As to equipment covered by each Lease that has a booked residual
amount relating to the same as indicated on Schedule 3.6, the Sellers
either own such Equipment or has a right to purchase the Equipment at
the end of the lease term for a nominal amount;
(ii) As to all other Equipment, the Sellers own such
Equipment or has a first priority perfected security interest in such
Equipment, except (A) that no filings are made if the original
equipment cost of US Equipment is less than $5,000 and if the original
equipment cost of Canadian Equipment is less than $20,000, and (B) no
filings are made or other actions taken in the United Kingdom with
respect to UK Equipment;
(7) With respect to each Lease, only one original of such Lease exists;
(8) Each Lease is genuine and in full force and effect in accordance with
its terms, and nothing has occurred or failed to be performed which
would or might permit any Obligor to terminate such Lease or suspend or
reduce any payments or obligations due or to become due in respect of
such Lease or the related Lease Documents by reason of default by the
lessor party under such Lease. To the Knowledge of the Sellers, none of
the Obligors in respect of a Lease or the related Lease Documents is
the subject of a bankruptcy, insolvency or other similar proceeding;
(9) Except for the delinquency in the payment of any Scheduled Payment that
is not more than 30 days past due, there does not exist any default in
the payment of any Scheduled Payments due under any Lease or the
related Lease Documents; and to the Knowledge of the Sellers there does
not exist any other default, breach, violation or event permitting
acceleration, termination or repossession under any Lease or the
related Lease Documents (or under any other agreement between the
Obligor(s) and the Seller in respect of such Lease) or any event which,
with notice and the expiration of any applicable grace or cure period,
would constitute such a default, breach, violation or event permitting
acceleration, termination or repossession under such Lease. Each Lease
that has become a Charge-Off Lease in the last 24 months is identified
as such on Schedule 3.6;
<PAGE>
(10) All material requirements of any federal, state or local law, including
without limitation, usury laws, applicable to each Lease (including the
origination, acquisition and servicing thereof) have been complied with
in all material respects;
(11) Each Lease has the following characteristics:
(i) such Lease was originated in the United States,
Canada or the United Kingdom and the Scheduled Payments thereunder are
payable only in the currency of the country in which such Lease was
originated by Obligors domiciled in such country;
(ii) the required security deposit and, except for
Leases originated after April 15, 1998, at least one Scheduled Payment
has been made by the Obligor under each such Lease that was entered
into by any Seller prior to the Closing Date;
(iii) no Obligor in respect of such Lease is an
Affiliate of any Seller or Spectra; and
(iv) the lessee party under such Lease has
unconditionally accepted the Equipment covered by such Lease by signing
a Delivery and Acceptance Agreement for such Lease;
(12) Each Lease and the related Lease Documents are valid, binding and
legally enforceable obligations of the parties thereto, enforceable in
accordance with their respective terms;
(13) Each Lease is a fixed rate lease contract;
(14) Attached hereto as Schedule III is a copy of each form of Lease used by
the Sellers in connection with any Lease, such forms are the only such
forms used in connection with the Leases, and any variation in any
Lease from such forms is immaterial.
(15) No Obligor in respect of a Lease has asserted any such right of
rescission, set-off, counterclaim, abatement or defense to its
obligations under its Lease or any related Lease Document, or under any
other Lease (or any related Lease Document) to which such Obligor is a
party.
(16) None of the Leases or their related Lease Documents has been modified,
amended or extended (in the manner of an extension in the maturity
date, a change in the amount or time of payment of any installment of
rent or otherwise), no indulgences or waivers have been granted in
respect of the obligations of any Obligor under any Lease, and neither
the Sellers nor any Affiliate of the Sellers has advanced any monies on
behalf of or to cure any breach or default by any Obligor.
<PAGE>
(17) All material Taxes payable by the Seller as lessor, in respect to the
Leases, any Equipment covered by or securing the obligations under the
Leases or any payments on the Leases, that have become due and payable
have been paid to every applicable governmental authority;
(18) As to each Lease originated in the United States or Canada, at the time
the Lease was entered into, the interest of either Seller which is a
party to such Lease in respect of the Equipment covered by or securing
the obligations under such Lease was duly perfected by the filing or
recording in applicable jurisdictions of the required financing
statements or other documents sufficient to perfect such Seller's
interest in such Equipment except where the original equipment cost of
US Equipment is less than $5,000 and the original equipment cost of
Canadian Equipment is less than $20,000, and such Seller has not taken
any action on its behalf to change such perfected status. As to each
Lease originated in the United Kingdom, at the time the Lease was
entered into, the interest of the Seller a party to such Lease in
respect of the Equipment covered by or securing the obligations under
such Lease is not perfected. All US Equipment is located within the
United States, all Canadian Equipment is located within Canada, and all
UK Equipment is located within the United Kingdom;
(19) Each Lease involves either the lease of tangible personal property or
software owned by the Seller or the loan of money secured by a security
interest in tangible personal property owned by the Obligor thereunder;
(20) No Seller has received any notice challenging its ownership or the
priority of its security interest in the Equipment covered by any
Lease, and there are no proceedings pending before any court or
governmental entity or overtly threatened by any Obligor or other party
seeking any determination or ruling that might adversely affect the
validity or enforceability of any Lease or any of the terms and
provisions of the related Lease Documents;
(21) As to each Lease, there are no agreements or understandings between
either Seller and the Obligors in respect of such Lease or otherwise
binding on such Seller other than as expressly set forth in the related
Lease Documents;
(22) None of the Obligors is a governmental entity with leases containing
"non-appropriation" and /or "essential use" clauses;
(23) The lessor under each Lease has no contingent obligations thereunder
for maintenance or otherwise;
<PAGE>
(24) Schedule 3.6 sets forth the following for each Lease as of June 25,
1998: the name of the lessee thereunder, the lease number, the
equipment type, the state in which the equipment is located, the
original lease term, the remaining aggregate unpaid balance of the
lease, the gross contract balance, periodic lease payments and booked
residual value, and the final maturity date. All information set forth
on Schedule 3.6 is true, correct and complete as of such date.
(25) There are no side or other agreements, arrangements, or understandings
relating to the residuals of Equipment, and the provisions of the
Leases relating to such residuals do not permit the lessee or any other
person to purchase the Equipment under such Lease for less than an
amount listed on Schedule 3.6 for such residual; and
(26) Schedule 3.6 lists and describes all credit support arrangements
entered into by the Sellers, Spectra or any of their Affiliates with
respect to the Leases.
2.7 Other Lease Matters. Schedule 3.7 hereto sets forth the lease
volumes generated by the Sellers since January 1, 1996 for the monthly periods
indicated thereon, and Schedule 3.7 is accurate in all material respects.
Schedule 3.7 hereto includes an aging schedule as of May 31, 1998 which is true,
correct and complete in all material respects for all of the Leases.
2.8 [Intentionally left blank]
2.9 Subsidiaries.
(1) SPCC has no Subsidiaries other than SPC, SPC is wholly-owned
by SPCC and SPC has no Subsidiaries;
(2) SPC has not engaged in any activities other than the
transactions contemplated by the Lease Receivables Purchase Agreement; and
(27) Each of SPCC and Spectra is a is wholly-owned Subsidiary of Spectra-
Physics Holding USA, Inc. ("Parent").
<PAGE>
2.10 Financial Statements. Attached hereto as Schedule 3.10 are the
following financial statements (collectively the "Financial Statements"): (i)
the reviewed consolidated balance sheets and statements of income, and cash flow
as of and for the fiscal year ended December 31, 1996 for SPCC; (ii) audited
consolidated balance sheets and statements of income, and cash flow as of and
for the fiscal year ended December 31, 1997 (the "Most Recent Fiscal Year End")
for SPCC; and (ii) unaudited consolidated balance sheets and statements of
income, and cash flow (the "Most Recent Financial Statements") as of and for the
5 months ended May 29, 1998 (the "Most Recent Fiscal Month End") for the
Sellers. The Financial Statements (including the notes thereto) have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby, present fairly in all material respects the financial
condition of the Sellers as of such dates and the results of operations of the
Sellers for such periods and were prepared based upon the books and records of
the Sellers; provided, however, that the Most Recent Financial Statements are
subject to normal year-end adjustments (which will not be material individually
or in the aggregate) and lack footnotes and other presentation items (the
"Accounting Principles").
2.11 Events Subsequent to Most Recent Fiscal Year End. Except as
disclosed on Schedule 3.11, since the Most Recent Fiscal Year End, there has not
been any Material Adverse Effect. Without limiting the generality of the
foregoing, since that date:
(28) neither Seller has sold, leased, transferred, or assigned any of its
assets, tangible or intangible, other than for a fair consideration in
the Ordinary Course of Business, other than the Leases;
(29) neither Seller has entered into any agreement, contract, lease or
license (or series of related agreements, contracts, leases and
licenses), involving more than $100,000, in the aggregate, or outside
the Ordinary Course of Business;
(30) no party (including the Sellers) has accelerated, terminated, modified,
or cancelled any agreement, contract, lease, or license to which either
Seller is a party or by which any of them is bound, including, without
limitation any Lease, Lease Document or Assumed Contract;
(31) neither Seller has imposed any Security Interest which has not
been terminated upon any of its assets, tangible or intangible;
(32) neither Seller has made any cumulative capital expenditure (or series
of related capital expenditures) involving more than $100,000 in the
aggregate;
(33) neither Seller has made any capital investment in, any loan to, or any
acquisition of the securities or assets of, any other Person (or series
of related capital investments, loans, and acquisitions) involving more
than $10,000 in the aggregate;
(34) neither Seller has issued any note, bond, or other debt security or
created, incurred, assumed, or guaranteed any indebtedness for borrowed
money or capitalized lease obligation other than in the Ordinary Course
of Business;
(35) neither Seller has delayed or postponed the payment of accounts payable
and other Liabilities outside the Ordinary Course of Business;
(36) neither Seller has cancelled, compromised, waived, or released any
right or claim (or series of related rights and claims) involving more
than $20,000 in the aggregate, other than Charged-Off Leases in the
Ordinary Course of Business;
(37) neither Seller has granted any license or sublicense of any rights
under or with respect to any Intellectual Property, except in the
Ordinary Course of Business;
(1)
<PAGE>
(38) there has been no change made or authorized in the charter or bylaws of
either Seller;
(39) neither Seller has issued, sold, or otherwise disposed of any of its
capital stock, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise)
any of its capital stock;
(40) neither Seller has declared, set aside, or paid any dividend or made
any distribution with respect to its capital stock (whether in cash or
in kind) or redeemed, purchased, or otherwise acquired any of its
capital stock;
(41) neither Seller has experienced any damage, destruction, or loss
(whether or not covered by insurance) to its property involving more
than $50,000 in the aggregate;
(42) neither Seller has made any loan to, or entered into any other
transaction with, any of its directors, officers, and employees outside
the Ordinary Course of Business;
(43) neither Seller has entered into any employment contract or collective
bargaining agreement, written or oral, or modified the terms of any
existing such contract or agreement;
(44) neither Seller has granted any increase in the base compensation of any
of its directors, officers, and employees outside the Ordinary Course
of Business;
(45) neither Seller has adopted, amended, modified, or terminated any bonus,
profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its directors, officers, and
employees (or taken any such action with respect to any other Employee
Benefit Plan) outside the Ordinary Course of Business;
(46) neither Seller has made any other change in employment terms for any of
its directors, officers, and employees outside the Ordinary Course of
Business;
(47) neither Seller has made or pledged to make any charitable or other
capital contribution outside the Ordinary Course of Business;
(48) there has not been any other occurrence, event, incident, action,
failure to act, or transaction outside the Ordinary Course of Business
involving either Seller which involves more than $50,000; and
(49) neither Seller has committed to any of the foregoing.
<PAGE>
2.12 Undisclosed Liabilities. Neither Seller has any Liability, except
for (i) Assumed Liabilities, (ii) Liabilities set forth in the financial
statements described in Section 3.10, (iii) Liabilities incurred in the Ordinary
Course of Business since May 29, 1998 and (iv) any other Liabilities which do
not, and would not reasonably be expected to, individually or in the aggregate,
have a Materially Adverse Effect.
2.13 Legal Compliance. Each Seller, and its respective predecessors and
Affiliates has complied in all material respects with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof) except in the case of such Seller's
Affiliates where failure to comply does not or would not reasonably be expected
to, individually or in the aggregate, have a Material Adverse Effect, and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of them alleging any
failure so to comply.
2.14 Tax Matters.
(50) Each Seller has filed all material Tax Returns that it was required to
file and has paid all Taxes shown therein as due and owing or is
appropriately contesting such Taxes in good faith by appropriate
proceedings and appropriate reserves have been established. Neither
Seller is currently the beneficiary of any extension of time within
which to file any Tax Return. No claim has ever been made by an
authority in a jurisdiction where either Seller does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction.
There are no Security Interests on any of the assets of either Seller
that arose in connection with any failure (or alleged failure) to pay
any Tax.
(51) Each Seller has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third
party.
(52) Neither Seller has received from any governmental authority any written
notice of proposed adjustment, deficiency or underpayment of Taxes,
which notice has not been satisfied by Payment or withdrawn. Schedule
3.14 attached hereto lists all federal, state, local, and foreign
income Tax Returns filed with respect to each Seller for taxable
periods ended on or after January 1, 1996, and, with respect to such
Tax Returns, indicates those Tax Returns that have been audited, and
indicates those Tax Returns that currently are the subject of audit.
Each Seller has delivered to the Buyer correct and complete copies of
all federal income Tax Returns, examination reports, and statements of
deficiencies related to federal income tax assessed against or agreed
to by such Seller since January 1, 1996.
(53) Neither Seller has waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
<PAGE>
(54) The unpaid Taxes (other than income taxes) of the Sellers (A) did not,
as of the Most Recent Fiscal Month End, exceed the reserve for Tax
Liability (other than any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) set forth on
the face of the Most Recent Balance Sheet (rather than in any notes
thereto) and (B) do not exceed that reserve as adjusted for the passage
of time through the Closing Date in accordance with the past custom and
practice of the Sellers in filing their Tax Returns.
2.15 Intellectual Property.
(55) Each Seller owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property
necessary or desirable for the operation of the businesses of such
Seller as presently conducted. Except for the Retained Marks, each item
of Intellectual Property owned or used by such Seller immediately prior
to the Closing hereunder will be owned or available for use by the
Buyer on identical terms and conditions immediately subsequent to the
Closing hereunder. Each Seller has taken all reasonably necessary and
desirable action to maintain and protect each item of Intellectual
Property that it owns or uses.
(56) Neither Seller has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of
third parties, and neither Seller and the directors and officers (and
employees with responsibility for Intellectual Property matters) of
such Seller has ever received any charge, complaint, claim, demand, or
notice alleging any such interference, infringement, misappropriation,
or violation (including any claim that such Seller must license or
refrain from using any Intellectual Property rights of any third
party). To the Knowledge of the Sellers, no third party has interfered
with, infringed upon, misappropriated, or otherwise come into conflict
with any Intellectual Property rights of either Seller.
(57) Schedule 3.15 attached hereto identifies each patent or registration
which has been issued to either Seller with respect to any of its
Intellectual Property, identifies each pending patent application or
application for registration which either Seller has made with respect
to any of its Intellectual Property, and identifies each license,
agreement, or other permission which either Seller has granted to any
third party with respect to any of its Intellectual Property (together
with any exceptions). Each Seller has delivered to the Buyer correct
and complete copies of all such patents, registrations, applications,
licenses, agreements, and permissions (as amended to date). Schedule
3.15 also identifies each trade name or unregistered trademark used by
each Seller and its Subsidiaries in connection with any of its
businesses. With respect to each such item of Intellectual Property
required to be identified in Schedule 3.15:
(1) the Sellers or an Affiliate of the Sellers possess all right, title,
and interest in and to the item, free and clear of any Security
Interest, license, or other restriction;
<PAGE>
(2) the item is not subject to any outstanding injunction, judgment, order,
decree, ruling, or charge;
(3) no action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand is pending or is overtly threatened which challenges
the legality, validity, enforceability, use, or ownership of the item;
and
(4) neither Seller has ever agreed to indemnify any Person for or against
any interference, infringement, misappropriation, or other conflict
with respect to the item except in the Ordinary Course of Business.
(3) Schedule 3.15 attached hereto identifies each item of
Intellectual Property that any third party owns and that either Seller
uses pursuant to license, sublicense, agreement, or permission. The
Sellers have delivered to the Buyer correct and complete copies of all
such licenses, sublicenses, agreements, and permissions (as amended to
date). With respect to each item of Intellectual Property required to
be identified in Schedule 3.15;
(5) the license, sublicense, agreement, or permission covering the item is
legal, valid, binding, enforceable, and in full force and effect;
(6) the license, sublicense, agreement, or permission will continue to be
legal, valid, binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions
contemplated hereby (including the assignments and assumptions referred
to in Section 2 above);
(7) neither Seller nor, to the Knowledge of the Sellers, no other party to
the license, sublicense, agreement, or permission is in breach or
default thereof, and no event has occurred which with notice or lapse
of time would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(8) no party to the license, sublicense, agreement, or permission has
repudiated any provision thereof;
(9) with respect to each sublicense, the representations and warranties set
forth in subsections (A) through (D) above are true and correct with
respect to the underlying license;
(10) the underlying item of Intellectual Property is not subject to any
outstanding injunction, judgment, order, decree, ruling, or charge;
<PAGE>
(11) no action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand is pending or, to the Knowledge of the Sellers, is
threatened which challenges the legality, validity, or enforceability
of the underlying item of Intellectual Property; and
(12) neither Seller has granted any sublicense or similar right with respect
to the license, sublicense, agreement, or permission.
(13) neither Seller will interfere with, infringe upon, misappropriate, or
otherwise come into conflict with, any Intellectual Property rights of
third parties as a result of the continued operation of its businesses
as presently conducted and as presently proposed to be conducted.
2.16 Assets. The Sellers own or lease all buildings, machinery,
equipment, and other tangible assets necessary for the conduct of its businesses
as presently conducted. The Acquired Assets, including all leased assets,
constitute all of the Assets required to operate the Business in the Ordinary
Course of Business.
2.17 Contracts. Other than the Leases, Schedule 3.17 attached hereto
lists the following contracts and other agreements to which either Seller is a
party:
(58) any agreement (or group of related agreements) for the lease of
personal property from any Person providing for lease payments in
excess of $12,000 per annum;
(59) any agreement (or group of related agreements) for the purchase or sale
of raw materials, commodities, supplies, products, or other personal
property, or for the furnishing or receipt of services, the performance
of which will extend over a period of more than one year, result in a
loss to either Seller and its Subsidiaries, or involve consideration in
excess of $50,000;
(60) any agreement concerning the participation of either Seller, in
a partnership or joint venture;
(61) any agreement (or group of related agreements) under which it has
created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation including as indicated on
Schedule 3.17 those that impose a Security Interest;
(62) any agreement concerning confidentiality or noncompetition;
(63) any agreement between either Seller and any of Spectra and its
Affiliates (other than the Sellers);
<PAGE>
(64) any profit sharing, stock option, stock purchase, stock appreciation,
deferred compensation, severance, or other plan or arrangement for the
benefit of its current or former directors, officers, and employees;
(65) any collective bargaining agreement;
(66) any agreement for the employment of any individual on a full-time,
part-time, consulting or other basis (other than any such agreement
terminable by the Company on 30 days notice or less) or providing
severance benefits;
(67) any agreement under which it has advanced or loaned any amount to any
of its directors, officers, and employees, other than routine travel
advances in the Ordinary Course of Business;
(68) all other agreements, arrangements, undertakings and understandings
providing for guaranties, support or other credit enhancement for the
Leases;
(69) any agreement under which the consequences of a default or termination
would have, or reasonably be expected to have, a Material Adverse
Effect; or
(70) any other agreement (or group of related agreements) the performance of
which involves consideration in excess of $50,000.
The Sellers has delivered to the Buyer a correct and complete copy of each
written agreement listed in Schedule 3.17 (as amended to date) and a written
summary setting forth the terms and conditions of each oral agreement referred
to in Schedule 3.17. With respect to each such agreement: (A) the agreement is
legal, valid, binding, enforceable, and in full force and effect; (B) the
agreement will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby (including the assignments and assumptions
referred to in Section 2 above); (C) the Sellers are not, and to the Knowledge
of the Sellers, no other party is in material breach or default, and no event
has occurred which with notice or lapse of time would constitute a material
breach or default, or permit termination, modification, or acceleration, under
the agreement; and (D) no party has repudiated any provision of the agreement.
1.3 Receivables. All accounts and other receivables of the Sellers are
reflected properly on their books and records, and are valid receivables
subject to no setoffs or counterclaims.
1.4 Powers of Attorney; Bank Accounts. Except as set forth on Schedule 3.19,
there are no outstanding powers of attorney executed on behalf of either
Seller. Schedule 3.19 sets forth a complete list of all bank accounts
maintained by or on behalf of either Seller.
<PAGE>
1.5 Litigation. Neither Seller (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party or is
overtly threatened to be made a party to any action, suit, proceeding,
hearing, or investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator. Neither Seller and the directors
and officers (and employees with responsibility for litigation matters) of
the Sellers has any reason to believe that any such action, suit,
proceeding, hearing, or investigation may be brought or threatened against
either Seller.
1.6 Product Liability. Neither Seller has or is reasonably likely to have any
Liability for replacement, repair or other damages in connection with,
arising out of any injury to individuals or property as a result of the
ownership, possession, or use of, any Equipment or other equipment sold,
leased, or delivered by such Sellers.
1.7 Employees. To the Knowledge of the Sellers no executive (other than John
Painter and Carl Zwilling), key employee, or group of employees has any
plans to terminate employment with either Seller. Neither Seller is a
party to or bound by any collective bargaining agreement, nor has any of
them experienced any strikes, grievances, claims of unfair labor
practices, or other collective bargaining disputes. Neither of the Sellers
has committed any unfair labor practice. No organizational effort is
presently being made or threatened by or on behalf of any labor union with
respect to employees of either Seller.
1.8 Employee Benefits.
(1) Schedule 3.23 attached hereto lists each Employee Benefit Plan that
either Seller maintains or to which either Seller contributes or has
any obligation to contribute.
(2) Except as may be disclosed on Schedule 3.24(b), no asset of the Sellers
or any ERISA Affiliate which is to be acquired by the Buyer pursuant to
this Agreement, is subject to any lien under Code Section 401(a)(29),
ERISA Section 302(f) or Code Section 412(n), ERISA Section 4068 or
arising out of any action filed under ERISA Section 4301(b).
(3) Neither of the Sellers nor any ERISA Affiliate has incurred any actual
or contingent liability with respect to any Employee Benefit Plan which
could subject the Buyer or any asset to be acquired by the Buyer
pursuant to this Agreement to any liability.
(4) Neither of the Sellers or any current ERISA Affiliate is, or within the
seven years immediately preceding the date of this Agreement was,
required to contribute to any multiemployer plan, within the meaning of
Section 4001(a)(3) of ERISA. Neither of the Sellers nor any ERISA
Affiliate, while an ERISA Affiliate, has incurred any withdrawal
liability, within the meaning of Section 4201 of ERISA, to any
multiemployer pension plan, which liability has not been fully paid as
of the date hereof.
<PAGE>
1.9 Guaranties. Neither Seller is a guarantor or otherwise is liable for
any liability or obligation (including indebtedness) of any other
Person.
1.10 Environmental, Health, and Safety Matters.
Except as disclosed on Schedule 3.25 attached hereto:
(1) Each of the Sellers, and their respective predecessors and Affiliates
has complied and is in compliance in all material respects with all
Environmental, Health, and Safety Requirements, except in the case of
such Seller's Affiliates where failure to comply does not or would not
reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect.
(2) Neither Seller has within the last two years received any written
notice of any actual or alleged violation of Environmental, Health, and
Safety Requirements, or any liabilities for any investigatory, remedial
or corrective obligations, relating to any of them or their facilities
arising under Environmental, Health, and Safety Requirements which
violations or liabilities would reasonably be expected to have a
Material Adverse Effect.
(3) Neither Seller is responsible for the operation of any landfills,
surface impoundments, or disposal areas.
(4) Neither this Agreement nor the consummation of the transaction that is
the subject of this Agreement will result in any obligations for site
investigation or cleanup, or notification to or consent of government
agencies or third parties, pursuant to any of the so-called
"transaction-triggered" or "responsible property transfer"
Environmental, Health, and Safety Requirements.
1.11 Certain Business Relationships With the Sellers. Except as set forth on
Schedule 3.26, none of Spectra and its Affiliates has been involved in any
business arrangement or relationship with either Seller within the past 12
months, and none of Spectra and its Affiliates (other than the Sellers)
owns any asset, tangible or intangible, which is used in the business of
any of the Sellers.
1.12 Disclosure. The representations and warranties contained in this Section 3
do not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements and
information contained in this Section 3, in light of the circumstances
under which they were made, not misleading.
Section 2. Representations and Warranties of the Buyer.
The Buyer represents and warrants to the Sellers that the statements
contained in this Section 4 are correct and complete as of the date of
this Agreement.
<PAGE>
2.1 Organization of the Buyer. The Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction
of its incorporation with power and authority to own its properties and to
conduct its business as such properties are presently owned and such
business is presently conducted.
2.2 Authorization of Transaction. The Buyer has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and the Related Agreements and to perform its obligations
hereunder and thereunder. Without limiting the generality of the
foregoing, the board of directors of the Buyer has duly authorized the
execution, delivery, and performance of this Agreement and the Related
Agreements. This Agreement constitutes, and the Related Agreements will
when executed and delivered constitute, the valid and legally binding
obligation of the Buyer, enforceable in accordance with its terms and
conditions.
2.3 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2
above), will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which the Buyer is
subject or any provision of its charter or bylaws or (ii) conflict with,
result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract,
lease, license, instrument, or other arrangement to which the Buyer is a
party or by which it is bound or to which any of its assets is subject.
Except under the Hart-Scott-Rodino Act, the Buyer does not need to give
any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order for the
Parties to consummate the transactions contemplated by this Agreement
(including the assignments and assumptions referred to in Section 2
above).
2.4 SEC Filings.
(1) The Buyer has made available to the Sellers copies of all reports,
statements and documents filed by the Buyer with the SEC pursuant to
the Securities Exchange Act since January 1, 1998 (collectively, the
"SEC Reports"). The SEC Reports (i) at the time filed, complied in all
material respect with the applicable requirements of the Securities
Exchange Act, and (ii) did not at the time they were filed (or if
amended or superseded by a filing prior to the Closing Date, then on
the date of such filing) contain any untrue statement of a material
fact or omit to state a material fact required to be stated in such SEC
Reports or necessary in order to make the statements in such SEC
Reports, in the light of the circumstances under which they were made,
not misleading.
<PAGE>
(2) The consolidated financial statements of the Buyer contained in the SEC
Reports (including the notes thereto) (the "Buyer Financial
Statements") have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, present fairly
in all material respects the financial condition of the Buyer as of
such dates and the results of operations of the Buyer for such periods
and were prepared based upon the books and records of the Buyer;
provided, however that the Buyer Financial Statements for interim
periods are subject to normal year-end adjustments (which will not be
material individually or in the aggregate) and lack footnotes and other
presentation items.
(3) Since the date of the last SEC Report, there has not been any material
adverse change in the business, condition (financial or otherwise),
operations, or results of operations of the Buyer and its Subsidiaries
considered as a whole.
2.5 Brokers' Fees. The Buyer has no Liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could
become liable or obligated.
Section 3. Covenants.
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
2.6 Pre-Closing Covenants.
(1) General. Each of the Parties will use its best efforts to take all
action and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in
Section 6 below).
(2) Notices and Consents. The Sellers will give (and will cause each of its
Subsidiaries to give) any notices to third parties, and each Seller
will use its best efforts (and will cause each of its Subsidiaries to
use its best efforts) to obtain any third party consents that the Buyer
may reasonably request in connection with the matters referred to in
Section 3.3 above. Each of the Parties will give any notices to, make
any filings with, and use its best efforts to obtain any
authorizations, consents, and approvals of governments and governmental
agencies in connection with the matters referred to in Section 3.3 and
Section 4.3 above. Without limiting the generality of the foregoing,
each of the Parties will use its reasonable best efforts to obtain an
early termination of the applicable waiting period under the
Hart-Scott-Rodino Act, and will make, or cause its Affiliates to make,
any further filings pursuant thereto that may be necessary, proper, or
advisable in connection therewith.
<PAGE>
(3) Operation of Business. The Sellers will not engage in any practice,
take any action, or enter into any transaction outside the Ordinary
Course of Business. Without limiting the generality of the foregoing,
the Sellers will not (i) declare, set aside, or pay any dividend or
make any distribution with respect to its capital stock or redeem,
purchase, or otherwise acquire any of its capital stock, (ii) pay any
amount to any third party with respect to any Liability or obligation
(including any costs and expenses either Seller has incurred or may
incur in connection with this Agreement and the transactions
contemplated hereby) which would not constitute an Assumed Liability if
in existence as of the Closing, or (iii) otherwise engage in any
practice, take any action, or enter into any transaction that would be
required to be disclosed on Schedule 3.11. The Sellers will continue to
originate Leases in the Ordinary Course of Business.
(4) Preservation of Business. Each Seller will keep its business and
properties substantially intact, including its present operations,
physical facilities, working conditions, and relationships with
lessors, licensors, suppliers, customers, and employees.
(5) Full Access. Each Seller will permit representatives of the Buyer to
have reasonable access to all premises, properties (except for
environmental sampling or testing), personnel, books, records
(including Tax records), contracts, and documents of or pertaining to
such Seller.
(6) Notice of Developments. Each Party will give prompt written notice to
the other Party of any material adverse development causing a breach of
any of its own representations and warranties in Section 3 and Section
4 above. No disclosure by any Party pursuant to this Section 5.6,
however, shall be deemed to amend or supplement the Schedules or to
prevent or cure any misrepresentation, breach of warranty, or breach of
covenant.
(7) Exclusivity. Neither Seller will (i) solicit, initiate, or encourage
the submission of any proposal or offer from any Person relating to the
acquisition of any capital stock or other voting securities, or any
substantial portion of the assets, of any of the Sellers (including any
acquisition structured as a merger, consolidation, or share exchange)
or (ii) participate in any discussions or negotiations regarding,
furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any Person to
do or seek any of the foregoing. Each Seller will notify the Buyer
immediately if any Person makes any proposal, offer, inquiry, or
contact with respect to any of the foregoing.
(8) Fulfillment of Conditions and Covenants. No party will take any course
of action inconsistent with satisfaction of the requirements or
conditions applicable to it set forth in this Agreement. Each party
shall promptly do all such acts and take all such measures as may be
appropriate to enable it to perform as early as possible the
obligations herein provided to be performed by it.
2.7 Post-Closing Covenants.
(1) Employees and Employee Benefits.
(1) Except to the extent otherwise specifically included in the Assumed
Liabilities, the Sellers shall retain all liabilities and obligations
resulting from or arising out of the Employee Benefit Plans and the
plans, programs and arrangements with respect to all employees of the
Business and Buyer shall not assume any such liability or obligation.
(1)
<PAGE>
(2) The Buyer shall offer to each employee of the Business listed on
Schedule 5.2 who is an employee on the Closing Date employment with the
Buyer upon terms and conditions substantially equivalent to those of
such employees' current employment with the Sellers, and the Sellers
and Spectra shall assist the Buyer in obtaining the services of such
employees. Any such employees hired by the Buyer shall be deemed "new
hires" of the Buyer ("New Hires"), and the Buyer shall not have any
liability on account of the previous employment of such New Hires by
the Sellers. The Sellers shall not have any liability arising out of or
in connection with any New Hire's employment (including termination of
such employment) by the Buyer.
(3) For purposes of determining length of service in connection with
employee benefits maintained by the Buyer, the Buyer agrees to give New
Hires credit for years of service at the Sellers. Notwithstanding the
foregoing, in no event shall the Buyer be required to make any
contributions for any such prior service.
(4) The Sellers and Spectra shall continue to provide health care
continuation coverage required to be provided under the provisions of
Sections 601 through 608 of ERISA, including the regulations
promulgated thereunder, for all employees (and their dependents), for
qualifying events occurring at or before the Closing Date, including
any obligations arising as a result of any termination of employment of
employees in connection with this Agreement. The Buyer shall be
responsible for providing health care continuation coverage required to
be provided under the provisions of Section 601 through 608 of ERISA
for the New Hires (and their dependents) for qualifying events
occurring after the Closing Date; provided that, if requested by the
Buyer in writing , the Sellers and Spectra shall provide such
continuation coverage for the New Hires (and their dependents) at no
cost to such New Hires or dependents until the earlier of (i) six
months and (ii) such time as the New Hires (and their dependents) are
covered under the Buyer's health care plans and the Buyer shall
reimburse the Seller and Spectra for out-of-pocket costs and expenses
in providing such coverage.
(5) The Sellers and the Buyer acknowledge and agree that in conformity with
the Standard Procedure of Rev. Proc. 96-60, 1996-2 C.B. 399, (x) the
Sellers will be responsible for and perform all Tax withholding,
payment and reporting duties with respect to any wages and other
compensation paid by the Sellers to any employee in connection with the
operation of the Business prior to or on the Closing Date, and (y) the
Buyer will be responsible for and perform all Tax withholding, payment
and reporting duties with respect to any wages and other compensation
paid by the Buyer to any employee in connection with the operation of
the Business after the Closing Date
<PAGE>
(2) Post-Closing Documentation and Correspondence. The parties acknowledge
that, after the Closing Date, all funds received by Sellers in
connection with the Acquired Assets (including, without limitation, the
payments on the Leases) are to be promptly paid over to Buyer without
offset or deduction. In addition, each Seller shall deliver, or cause
to be delivered to Buyer, as promptly as practicable after receipt,
copies of all applicable correspondence from any insurance company,
taxing authority or otherwise relating to any of the Acquired Assets.
(3) Further Transfers; Transition Assistance.
(1) The Sellers and Spectra shall execute and deliver such further
instruments of conveyance and transfer and take such additional action
as the Buyer may reasonably request to effect, consummate, confirm or
evidence the transfer to the Buyer of the Acquired Assets and the
assumption by the Buyer of the Assumed Liabilities and the Sellers and
Spectra execute such documents as may be reasonably necessary to assist
the Buyer in preserving or perfecting its rights in the Acquired Assets
and its ability to conduct the Business.
(2) From and after the date hereof, neither the Sellers nor Spectra shall
in any manner take or cause to be taken any action which is designed or
intended, or would be reasonably anticipated to have the effect of
discouraging customers, suppliers, referral sources, governmental
agencies, insurance companies, lessors, consultants, advisors and other
business associates from maintaining the same business relationships
with the Buyer or the Business after the date of this Agreement as were
maintained with the Sellers or the Business prior to the date of this
Agreement. After the Closing, each of the Sellers and Spectra shall
refer all customer inquiries with respect to the Business to the Buyer.
(4) Discharge of Liabilities. Each Seller shall pay all of its debts,
obligations and other liabilities existing as of the Closing Date
(other than the Assumed Liabilities), consistent with commercially
reasonable practices, in a timely manner and so as to prevent claims by
third parties against the Buyer; provided, however, that such Seller
shall have no obligation hereunder to perform, pay and/or discharge any
obligation which is disputed in good faith by such Seller. The Buyer
shall pay all payables included in the Assumed Liabilities and perform,
pay and/or discharge, consistent with commercially reasonable
practices, all Assumed Liabilities under the Assumed Contracts in a
timely manner and so as to prevent claims by third parties against the
Sellers; provided, however, that the Buyer shall have no obligation
hereunder to perform, pay and/or discharge any obligation which is
disputed in good faith by the Buyer.
(5) Letter of Credit. The Buyer, if the Sellers so request on or prior to
July 31, 1998, shall use commercially reasonable efforts to obtain
within 30 days a letter of credit in form and substance reasonably
satisfactory to the Sellers supporting its obligations to pay the
Contingent Purchase Price; provided, that, the Sellers and Spectra
shall pay for all costs, fees and expenses (including legal fees and
expenses) in connection with such letter of credit.
3.18 Taxes.
<PAGE>
(6) The Sellers and Spectra shall, jointly and severally, be liable for,
and shall indemnify and hold harmless the Buyer, and any tax affiliate
of the Buyer, with respect to all of the following (except to the
extent that any of the following are specifically included in Assumed
Liabilities) (i) any and all Taxes that may be imposed (regardless of
the date of assessment) on or in respect of the operations of the
Business or the UK Business, or arising from actions or inactions by
either Seller or the UK Subsidiary, with respect to all periods ending
on or prior to the Closing Date, (ii) any liability for sales, use,
transfer or any other Taxes (including filing or recording fees)
payable in connection with the transactions contemplated by this
Agreement or the Stock Purchase Agreement, and (iii) the Sellers'
portion, prorated on a per diem basis as of the Closing Date, of any
real or personal property Taxes imposed in respect of the Acquired
Assets. The Sellers and Spectra shall not be liable for any Tax in
respect of the business or income or operations of the Buyer, including
such as occur or commence after the Closing Date or any Tax in respect
of the operations of the Business with respect to all periods after the
Closing Date.
(7) The indemnification set forth in the preceding paragraph shall be in
addition to the indemnification set forth in Section 8.1, provided,
however, that in the event that more than one provision applies,
indemnification shall be available under only one provision.
(8) The parties shall provide reasonable cooperation to each other in
connection with (i) the preparation or filing of any Tax Return, Tax
election, Tax consent or certification, or any claim for a Tax refund
relating to the Business, (ii) any determination of liability for Taxes
and (iii) any audit, examination or other proceeding in respect of
Taxes. The information with respect to any Tax Return, Tax election,
Tax consent or certification, or any claim for a Tax refund with
respect to the Business or the UK Business for periods through and
including the Closing Date, shall be referred to as "Tax Data" and the
books, records and other documents containing Tax Data shall be
referred to as "Tax Documentation." The Tax Data and the Tax
Documentation held by each of the parties immediately after the
transfers contemplated by this Agreement are made shall be retained
until the expiration of six months after the applicable statute of
limitations (including extensions thereof); provided, however, that in
the event an audit, examination, investigation or other proceeding has
been instituted prior to the expiration of the applicable statute of
limitations (or in the event of any claim under this Agreement), the
information shall be retained until there is a final determination
thereof (and the time for any appeal has expired). Moreover, thirty
days before any such Tax Data or Tax Documentation is destroyed by the
Buyer (or either Seller or Spectra, as the case may be), it shall
notify the Sellers and Spectra (or the Buyer, as the case may be) and
provide such other party with the opportunity to copy or retain such
records, all at the expense of such other party.
Section 4. Conditions to Obligation to Close.
<PAGE>
4.1 Conditions to Obligation of the Buyer. The obligation of the Buyer
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(9) the representations and warranties set forth in Section 3 above shall
be true and correct at and as of the Closing Date (except those
representations and warranties that address matters only as of a
particular date, which shall be true and correct as of that date),
except for (i) changes contemplated by this Agreement or attributable
to matters disclosed by the Seller in the disclosure schedules to this
Agreement and (ii) breaches or inaccuracies of representations or
warranties that do not and would not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect (for
purposes of determining whether the condition set forth in this Section
6.1(a) is satisfied, all references in such representations and
warranties to materiality (including material adverse effect) shall be
disregarded);
(10) the Sellers shall have performed and complied with all of its covenants
hereunder in all material respects through the Closing;
(11) the Sellers shall have procured all of the third party consents to
items identified on Schedule 6.1(c);
(12) no action, suit, or proceeding shall be pending or threatened before
any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge
would (A) prevent consummation of any of the transactions contemplated
by this Agreement, or (B) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation;
(13) the Sellers shall have delivered to the Buyer a certificate to the
effect that, to the Sellers' Knowledge, each of the conditions
specified above in Sections 6.1(a), 6.1(b) and 6.1(f) is satisfied in
all respects;
(14) since the date hereof, there shall not have occurred any event,
development circumstance or other matter which has or may reasonably be
expected to have a Material Adverse Effect.
(15) all applicable waiting periods (and any extensions thereof) under the
Hart-Scott-Rodino Act shall have expired or otherwise been terminated
and the Sellers, its Subsidiaries, and the Buyer shall have received
all other authorizations, consents, and approvals of governments and
governmental agencies referred to in Section 3.3 and Section 4.3 above;
<PAGE>
(16) The Buyer and the UK Parent shall have simultaneously closed the
transactions contemplated by the Stock Purchase Agreement.
(17) The Buyer shall have entered into a real property license agreement
(the "Property License") with Spectra with respect to the space
occupied by SPCC at 5475 Kellenburger Road, Dayton, Ohio 45424, in form
and substance as set forth on Exhibit A attached hereto, and such
Property License shall be in full force and effect;
(18) Spectra and the Buyer shall have entered into the Vendor Program
Agreement, and such Vendor Program Agreement shall be in full force and
effect;
(19) The Sellers shall have paid off all indebtedness for borrowed money and
provide written evidence of such payoff and release of all related
Security Interests;
(20) The Buyer shall have received from the Banks a letter of conveyance (or
similar document) which shall convey all right, title and interest in
the Leases subject to the Lease Receivables Purchase Agreement free and
clear of all Security Interests to the Buyer, and UCC financing
statements terminating any Security Interest thereunder and conveying
such interests in such Leases shall have been filed, and the Banks
shall deliver to the Buyer copies of such UCC financing statements;
(21) The Buyer shall be satisfied that it will obtain the benefits of the
recourse agreements between SPCC and each of Spectra Precision of
Canada, Ltd., a Canadian corporation formerly known as Geodimeter of
Canada, Ltd., Spectra Precision Survey, Inc., a Delaware corporation
formerly known as Geotronics of North America, Inc., and Spectra;
(22) the Buyer shall have received from counsel to the Sellers an opinion in
form and substance as set forth in Exhibit C attached hereto, addressed
to the Buyer, and dated as of the Closing Date; and
(23) all actions to be taken by the Sellers in connection with consummation
of the transactions contemplated hereby and all certificates, opinions,
instruments, financing statements and other documents in connection
with the transactions contemplated hereby reasonably requested by the
Buyer will be reasonably satisfactory in form and substance to the
Buyer.
The Buyer may waive any condition specified in this Section 6.1 if it executes a
writing so stating at or prior to the Closing.
2.8 Conditions to Obligation of the Sellers. The obligation of the Sellers to
consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
<PAGE>
(1) the representations and warranties set forth in Section 4 above shall
be true and correct at and as of the Closing Date (except those
representations and warranties that address matters only as of a
particular date, which shall be true and correct as of that date),
except for breaches or inaccuracies of representations or warranties
that do not and would not reasonably be expected to, individually or in
the aggregate, have a material adverse effect on the business,
condition (financial or otherwise), operations or results of operations
of the Buyer and its Subsidiaries considered as a whole (for purposes
of determining whether the condition set forth in this Section 6.2(a)
is satisfied, all references in such representations and warranties to
materiality (including Material Adverse Effect) shall be disregarded);
(2) the Buyer shall have performed and complied with all of its covenants
hereunder in all material respects through the Closing;
(3) no action, suit, or proceeding shall be pending or threatened before
any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge
would (A) prevent consummation of any of the transactions contemplated
by this Agreement or (B) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation (and no such
injunction, judgment, order, decree, ruling, or charge shall be in
effect);
(4) the Buyer shall have delivered to the Sellers a certificate to the
effect that to the Buyer's Knowledge each of the conditions specified
above in Sections 6.2(a) to 6.2(b) is satisfied in all respects;
(5) all applicable waiting periods (and any extensions thereof) under the
Hart-Scott-Rodino Act shall have expired or otherwise been terminated;
(6) The Buyer and Spectra shall have entered into the Property License, and
such Property License shall be in full force and effect;
(7) Spectra and the Buyer shall have entered into the Vendor Program
Agreement, and such Vendor Program Agreement shall be in full force and
effect;
(8) The Seller shall have received a certificate from John Painter to the
effect that, to the Knowledge of such Person, the representations and
warranties set forth in Section 3 are true and correct in all material
respects;
(9) the Sellers shall have received from counsel to the Buyer an opinion in
form and substance as set forth in Exhibit D attached hereto, addressed
to the Sellers, and dated as of the Closing Date; and
<PAGE>
(10) all actions to be taken by the Buyer in connection with consummation of
the transactions contemplated hereby and all certificates, opinions,
instruments, and other documents in connection with the transactions
contemplated hereby reasonably requested by the Sellers will be
reasonably satisfactory in form and substance to the Seller.
The Sellers may waive any condition specified in this Section 6.2 if it executes
a writing so stating at or prior to the Closing.
Section 5. Termination.
2.9 Termination of Agreement. This Agreement may be terminated as provided
below:
(1) the Buyer, Spectra and the Sellers may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(2) the Buyer may terminate this Agreement by giving written notice to the
Sellers at any time prior to the Closing (A) in the event either
Seller, Spectra or UK Parent has breached any material representation,
warranty, or covenant contained in this Agreement or the Stock Purchase
Agreement in any material respect, the Buyer has notified the Sellers
of the breach, and the breach has continued without cure for a period
of 10 days after the notice of breach or (B) if the Closing shall not
have occurred on or before August 15, 1998, by reason of the failure of
any condition precedent under Section 6.1 hereof or Section 6.1 of the
Stock Purchase Agreement (unless the failure results primarily from the
Buyer itself breaching any representation, warranty, or covenant
contained in this Agreement or the Stock Purchase Agreement); and
(3) the Sellers may terminate this Agreement by giving written notice to
the Buyer at any time prior to the Closing (A) in the event the Buyer
has breached any material representation, warranty, or covenant
contained in this Agreement or the Stock Purchase Agreement in any
material respect, the Sellers have notified the Buyer of the breach,
and the breach has continued without cure for a period of 10 days after
the notice of breach or (B) if the Closing shall not have occurred on
or before August 15, 1998, by reason of the failure of any condition
precedent under Section 6.2 hereof or Section 6.2 of the Stock Purchase
Agreement (unless the failure results primarily from either Seller or
UK Parent itself breaching any representation, warranty, or covenant
contained in this Agreement or the Stock Purchase Agreement).
2.10 Effect of Termination. If any Party terminates this Agreement pursuant to
Section 7.1 above, all rights and obligations of the Parties hereunder
shall terminate (except for those under Sections 9.2 and 9.12) without any
Liability of any Party to any other Party (except for any Liability of any
Party then in breach).
Section 3. Indemnification.
Section 1.
<PAGE>
8.1 Indemnifiable Claims.
(1) Notwithstanding the execution of this Agreement and regardless of any
investigations made at any time by or on behalf of Buyer or any
information Buyer or any of its representatives may have, each Seller
and Spectra will and hereby does, jointly and severally, indemnify and
hold Buyer and its Affiliates and their respective officers, directors
and employees harmless from and against any and all liability, claim,
loss, cost, damage or expense whatsoever (including, without
limitation, attorneys' fees and expenses), (collectively, "Losses") (i)
resulting from or arising out of any breach of any representation or
warranty of the Sellers or Spectra contained herein or in any Related
Agreement (for which purpose all references in such representations and
warranties to materiality (including Material Adverse Effect) shall be
disregarded), (ii) resulting from or arising out of any breach of any
covenant or obligation of the Sellers or Spectra contained herein or in
any Related Agreement, (iii) resulting or arising directly or
indirectly, in whole or in part, from or out of the operation or
ownership of the Acquired Assets, the Business or the UK Business on or
prior to the Closing Date, except for any Assumed Liabilities and
Liabilities disclosed in Section 3.12 of the Stock Purchase Agreement,
(iv) resulting or arising directly or indirectly from or out of any
Liabilities of the Sellers, or Spectra and its Affiliates or the UK
Parent or UK Subsidiary whether or not related to the Acquired Assets,
the Business or the UK Business on or including any and all Liability
for Taxes relating to periods prior to the Closing Date, other than
Assumed Liabilities and Liabilities disclosed in on Schedule 3.12 of
the Stock Purchase Agreement (v) resulting from or arising out of any
breach of any representation or warranty of the UK Parent contained in
the Stock Purchase Agreement (for which purpose all references in such
representations and warranties to materiality (including Material
Adverse Effect) shall be disregarded), and (vi) resulting from or
arising out of any breach of any covenant or obligation of the UK
Parent contained in the Stock Purchase Agreement; provided, that except
(A) with respect to matters arising out of product liability and
similar claims and (B) with respect to covenants to be performed after
the Closing, other than covenants relating to the payment of
Liabilities arising from or relating to breaches of representations and
warranties related to Acquired Assets or Assumed Liabilities, the
Sellers and Spectra shall have no liability under this Section 8.1(a)
until the aggregate amount of Losses relating therefrom for which
Sellers and Spectra would, but for this proviso be liable, exceeds on a
cumulative basis $400,000, and then only to the extent the aggregate
amount of such Losses exceeds $400,000, and will not be liable from any
such Losses in excess of $8,000,000 in the aggregate.
<PAGE>
(2) The Buyer will and hereby does indemnify and hold the Seller and
Spectra harmless from and against any Losses (i) resulting from or
arising out of any breach of any representation or warranty of the
Buyer contained herein, the Stock Purchase Agreement or in any Related
Agreement, other than any employment agreements with former employees
of the Business (for which purpose all references in such
representations and warranties to materiality (including material
adverse effect) shall be disregarded, (ii) resulting from or arising
out of any breach of any covenant or obligation of Purchaser or Spectra
contained herein, the Stock Purchase Agreement or in any Related
Agreement, (iii) resulting or arising directly or indirectly from or
out of the operation of the Acquired Assets after the Closing Date, or
(iv) resulting or arising directly or indirectly from or out of any
Assumed Liabilities, provided, however, that the Buyer shall not be
obligated to so indemnify any Sellers to the extent that such payments
are attributable to a breach by the Sellers or Spectra of any
representation, warranty or covenant made by the Sellers or Spectra
contained in this Agreement; provided, that except with respect to
covenants to be performed after the Closing, the Buyer shall have no
liability under this Section 8.1(b) until the aggregate amount of
Losses relating thereto for which the Buyer would, but for this proviso
be liable, exceeds on a cumulative basis $400,000 and then only to the
extent the aggregate amount of such Losses exceeds $400,000, and will
not be liable from any Losses in excess of $8,000,000 in the aggregate.
(3) All indemnification payments made hereunder shall be deemed to be
adjustments to the Purchase Price. In determining the amount of Losses
to which an indemnified party is entitled under this Section 8, full
allowance shall be made for (i) any accruals or reserves shown on the
Closing Balance Sheets or any proceeds recovered pursuant to the
indemnified party's insurance policies or from any third party and for
any tax benefit resulting from the indemnified party's loss, claim or
damages. In the event that any such proceeds or recovery are received
by an indemnified party after payment of an indemnity claim by an
indemnifying party hereunder, the indemnified party shall promptly pay
the amount of such proceeds or other recovery to the indemnifying party
to the extent of the indemnifying party's prior payment.
<PAGE>
8.2 Notice of Claim. If any action is brought by a third person against
any person entitled to indemnification pursuant to Section 8.1 (a "Claimant") in
respect of a claim under Section 8.1 above (an "Indemnifiable Claim"), the
Claimant shall promptly notify Spectra, the Sellers or Buyer, as the case may
be, in writing of the institution of such action (but the failure so to notify
shall not relieve either Spectra, the Sellers, or Buyer as the case may be (the
"Indemnifying Party"), from any liability the Indemnifying Party may have except
to the extent such failure materially prejudices the Indemnifying Party). Unless
otherwise agreed to by the Indemnifying Party, the Indemnifying Party shall
assume and direct the defense of such action, including the employment of
counsel, and all fees, costs and expenses incurred in connection with defending
or settling the Indemnifiable Claim shall be borne solely by the Indemnifying
Party; provided, however, that such counsel shall be satisfactory to the
Claimant in the exercise of its reasonable judgment and that the Indemnifying
Party shall not compromise any claim without the prior written consent of the
Claimant, which consent shall not be unreasonably withheld. If the Indemnifying
Party shall undertake to compromise or defend any such asserted liability, it
shall promptly notify the Claimant of its intention to do so, and the Claimant
agrees to cooperate fully with the Indemnifying Party and their counsel in the
compromise or, or defense against, any such asserted liability. Notwithstanding
an election by the Indemnifying Party to assume the defense of such action or
proceeding, the Claimant shall have the right to employ separate counsel and to
participate in the defense of such action or proceeding, and the Indemnifying
Party shall bear the reasonable fees, costs and expenses of such separate
counsel (and shall pay such fees, costs and expenses at least quarterly), if (a)
the use of counsel chosen by the Indemnifying Party to represent the Claimant
would present such counsel with a conflict of interest; (b) the defendants in,
or targets of, any such action or proceeding include both a Claimant and an
Indemnifying Party, and the Claimant shall have reasonably concluded that there
may be legal defenses available to it or to other Claimants which are different
from or additional to those available to the Indemnifying Party and
representation of both the Claimant and the Indemnifying Party by the same
counsel would be inappropriate according to the applicable standards of
professional conduct (in which case the Indemnifying Party shall not have the
right to direct the defense of such action or proceeding on behalf of the
Claimant); or (c) the Indemnifying Party, as the case may be, shall authorize
the Claimant to employ separate counsel at the expense of the Indemnifying
Party. All costs and expenses incurred in connection with a Claimant's
cooperation shall be borne by the Indemnifying Party. In any event, the Claimant
shall have the right at its own expense to participate in the defense of such
asserted liability.
8.3 Manner of Payment. Except as otherwise provided, any
indemnification to a Claimant under any provision of this Agreement (including
Section 8.1 above) shall be effected by wire transfer of immediately available
funds from the Indemnifying Party to an account designated by the Claimant
within 15 days after the final determination thereof.
8.4 Limitations. The rights of indemnification provided by this Section
8 shall be subject to the following limitations:
(4) no claimant shall have a right to make a claim under Section 8.1(a)(i)
or (v) hereof resulting from or arising out of any breach of any of the
representations and warranties in Sections 3.14 and 3.23 hereof and
Sections 3.14 under the Stock Purchase Agreement after the date when
the applicable statutes of limitations with respect to the liabilities
in question expire (giving effect to any extensions or waivers
thereof), plus sixty (60) days;
(5) no claimant shall have a right to make a claim under Section 8.1(a)(i)
hereof resulting from or arising out of any breach of any of the
representations and warranties in Section 3.25 hereof and Section 3.22
under the Stock Purchase Agreement after the fifth anniversary of the
Closing Date; and
(6) no claimant shall have a right to make a claim under Section 8.1(a)(i)
or (a)(v) hereof resulting from or arising out of any breach of any of
the representations and warranties contained in this Agreement or the
Stock Purchase Agreement (other than those in Sections 3.14, 3.23 and
3.25 hereof and under Sections 3.14 and 3.22 of the Stock Purchase
Agreement) after December 31, 1999.
<PAGE>
provided that, any claim for indemnification subject to (a), (b) or (c) above
shall continue past the time set forth in (a), (b) or (c) above, as applicable,
if notice of the inaccuracy or breach thereof giving rise to such right or
potential right of indemnity shall have been given by the claimant to the
indemnifying party prior to such time.
8.5 Exclusive Remedy. The parties hereto agree that, from and after the
date hereof, their sole and exclusive remedy for monetary damages with respect
to any and all claims arising out of or in connection with the transactions
contemplated by this Agreement and the Stock Purchase Agreement shall be
pursuant and subject to the conditions contained in the indemnification
provisions set forth in this Section 8, except for claims relating to fraud.
Section 6. Miscellaneous.
3.2 Survival of Representations and Warranties. All of the representations and
warranties of the Parties contained in this Agreement shall survive the
Closing hereunder, subject to the limitations contained in Section 8.4.
3.3 Press Releases and Public Announcements. No Party shall issue any press
release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other Party;
provided, however, that any Party may make any public disclosure it
believes in good faith is required by applicable law or any listing or
trading agreement concerning its publicly-traded securities (in which case
the disclosing Party will use its best efforts to give the other Party
reasonable opportunity to review such disclosure and to approve its
contents).
3.4 No Personal Liability. Neither this Agreement nor any certificate
delivered hereunder shall create or be deemed to create or permit any
personal liability or obligation on the part of any officer, director,
employee, agent, representative or investor of the Buyer.
3.5 No Third-Party Beneficiaries. This Agreement shall not confer any rights
or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
3.6 Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, to the extent they related in any
way to the subject matter hereof.
3.7 Succession and Assignment. This Agreement shall be binding upon and inure
to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the other Party; provided, however, that the Buyer may (i)
assign any or all of its rights and interests hereunder to one or more of
its Affiliates, (ii) designate one or more of its Affiliates to perform
its obligations hereunder (in the case of (i) or (ii) the Buyer
nonetheless shall remain responsible for the performance of all of its
obligations hereunder), and (iii) assign its rights hereunder (other than
the right to purchase the Acquired Assets) to any bank or other Person
providing financing to the Buyer or its Affiliates.
1.1
<PAGE>
3.8 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which together will
constitute one and the same instrument.
3.9 Headings. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
3.10 Notices. All notices, requests, demands, claims, and other communications
hereunder shall be in writing. Any notice, request, demand, claim or other
communication hereunder shall be deemed duly given when delivered
personally to the recipient or sent to the recipient by telecopy (receipt
confirmed) or two business days after sent by reputable overnight express
courier service (charges prepaid), and addressed to the intended recipient
as set forth below:
If to the Sellers:
Spectra Precision Credit Corp.
c/o Spectra Precision, Inc.
5475 Kellenburger Road
Dayton, Ohio 45424
Attention: Steve Berglund
Telecopy: (937) 233-8976
with a copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103-2793
Attention: Carmen Romano
Telecopy: (215) 994-2222
If to the Buyer:
LINC Capital, Inc.
303 East Wacker Dr.
Chicago, Illinois 60601
Attention: Allen P. Palles
Telecopy: (312) 946-7304
<PAGE>
with a copy to:
Kirkland & Ellis
200 E. Randolph
Chicago, Illinois 60601
Attention: Jill Sugar Factor
Telecopy: (312) 861-2200
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
3.11 Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Ohio without giving
effect to any choice or conflict of law provision or rule (whether of the
State of Ohio or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Ohio.
3.12 Amendments and Waivers. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by the
Buyer, Spectra and the Sellers. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent
such occurrence.
3.13 Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any
other situation or in any other jurisdiction.
3.14 Expenses. Each of the Buyer on the one hand, and the Sellers and Spectra
on the other will bear its own costs and expenses (including legal fees
and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby.
<PAGE>
3.15 Construction. The Parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any
of the provisions of this Agreement. Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise. The word "including" shall mean including without limitation.
The mere listing (or inclusion of a copy) of a document or other item on a
Schedule shall not be deemed adequate to disclose an exception to a
representation or warranty made herein (unless the representation or
warranty has to do with the existence of the document or other item
itself). The Parties intend that each representation, warranty, and
covenant contained herein shall have independent significance. If any
Party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of
the relative levels of specificity) which the Party has not breached shall
not detract from or mitigate the fact that the Party is in breach of the
first representation, warranty, or covenant.
3.16 Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made
a part hereof.
3.17 Specific Performance. Each of the Parties acknowledges and agrees that the
other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Party shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in
any action instituted in any court of the United States or any state
thereof having jurisdiction over the Parties and the matter (subject to
the provisions set forth in Section 9.17 and Section 9.18 below), in
addition to any other remedy to which it may be entitled, at law or in
equity.
3.18 Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Dayton, Ohio in any
action or proceeding arising out of or relating to this Agreement and the
transactions contemplated hereby and agrees that all claims in respect of
the action or proceeding may be heard and determined in any such court.
Each of the Parties waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond,
surety, or other security that might be required of any other Party with
respect thereto. Nothing in this Section 9.17 however, shall affect the
right of any Party to serve legal process in any manner permitted by law
or in equity. Each Party agrees that a final judgment in any action or
proceeding so brought shall be conclusive and may be enforced by suit on
the judgment or in any other manner provided by law or in equity.
<PAGE>
3.19 Arbitration. If a Party makes a good faith determination that a breach (or
potential breach) of any of the non-competition or exclusivity provisions
of this Agreement by another party may result in damages or consequences
that will be immediate, severe and incapable of adequate redress after the
fact, that party may seek a temporary restraining order or other immediate
injunctive relief without first seeking relief through arbitration. After
the court has ruled on the request for a temporary restraining order or
injunctive relief, the parties will thereafter proceed with arbitration of
the dispute and stay the litigation pending arbitration. Subject to the
foregoing, any dispute arising out of this Agreement, or its performance
or breach, shall be resolved by binding arbitration under the Commercial
Arbitration Rules (the "AAA Rules") of the American Arbitration
Association (the "AAA"). This arbitration provision is expressly made
pursuant to and shall be governed by the Federal Arbitration Act, 9 U.S.C.
Sections 1-14. The Parties agree that pursuant to Section 9 of the Federal
Arbitration Act, a judgment of a United States District Court of competent
jurisdiction shall be entered upon the award made pursuant to the
arbitration. A single arbitrator shall be selected according to the AAA
Rules within ten days of the submission to the AAA of the response to the
statement of claim or the date on which any such response is due,
whichever is earlier. The arbitrator shall conduct the arbitration in
accordance with the Federal Rules of Evidence. The arbitrator shall decide
the amount and extent of pre-hearing discovery which is appropriate. The
arbitrator shall have the power to enter any award of monetary and/or
injunctive relief (including the power to issue permanent injunctive
relief and also the power to reconsider any prior request for immediate
injunctive relief by any of the Parties and any order as to immediate
injunctive relief previously granted or denied by a court in response to a
request therefor by any of the Parties), including the power to render an
award as provided in Rule 43 of the AAA Rules; provided, the arbitrator
shall not have the power to award any punitive or exemplary damages (the
parties hereby waiving and releasing any rights that they may have to
recover punitive and exemplary damages). The arbitrator shall award the
prevailing Party its costs and reasonable attorneys' fees, and the losing
Party shall bear the entire cost of the arbitration, including the
arbitrator's fees. Any arbitration shall be held in Dayton, Ohio for any
claim brought by the Parties hereto. In addition to the above courts, the
arbitration award may be enforced in any court having jurisdiction over
the Parties and the subject matter of the arbitration. Notwithstanding the
foregoing, the parties irrevocably submit to the nonexclusive jurisdiction
of the state and federal courts situated in Dayton, Ohio in any action to
enforce an arbitration award and with respect to any request for a
temporary restraining order or injunctive relief.
* * * * *
<PAGE>
39
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
LINC CAPITAL, INC.
By:_______________________________
Title: _____________________________
SPECTRA PRECISION CREDIT
CORP.
By: _______________________________
Title: _____________________________
SPECTRA PRECISION FUNDING CORPORATION
By:_______________________________
Title: _____________________________
SPECTRA PRECISION, INC
By: _______________________________
Title: _____________________________
