EXHIBIT 10.1
AMENDMENT NO. 1 TO STOCK PURCHASE AND SALE AGREEMENT
THIS AMENDMENT NO. 1 TO STOCK PURCHASE AND SALE AGREEMENT (this
"Amendment") is entered into as of November 29, 2001, by and among Emergent
Information Technologies, Inc., a California corporation ("Parent"), Steven
Myers Holding Inc., a Delaware corporation ("Seller"), and L-3 Communications
Corporation, a Delaware corporation ("Buyer"). Parent, Buyer and Seller are
sometimes collectively referred to herein as the "Parties."
INTRODUCTION
A. The Parties have entered into that certain Stock Purchase and
Sale Agreement dated as of November 19, 2001 (the "Purchase Agreement").
Capitalized terms used herein and which are not otherwise defined shall have the
meanings given to them in the Purchase Agreement.
B. The assets and liabilities of the Test and Measurement operating
division of the Company ("T&M") were included in the Baseline Balance Sheet of
the Company and the employees of T&M were included in the list of Continuing
Employees provided to Buyer, but the Contracts associated with the T&M business
that are set forth on Exhibit A hereto (the "T&M Contracts") were inadvertently
omitted from the Disclosure Schedule because the Company was not a party to the
T&M Contracts.
C. The T&M Contracts shall be assigned to the Company prior to the
Closing pursuant to an Assignment and Assumption Agreement hereto (the "T&M
Assignment").
D. The operations of T&M are conducted in a leased facility located
at 2060 Briargate Parkway in Colorado Springs, Colorado (the "Premises").
E. Item 2 of Section 4.9 of the Disclosure Schedules relating to the
Purchase Agreement contemplates that the rights and obligations of the Company
under the lease agreement in respect of the Premises shall be assigned to and
assumed by Parent or an Affiliate of Parent.
F. The parties hereto desire that upon such assignment and
assumption by Parent or an Affiliate of Parent of the Company's rights and
obligations under the lease agreement in respect of the Premises, the Company
and Parent shall enter into a sublease agreement pursuant to which the Company
shall sublease from Parent that portion of the Premises currently occupied by
T&M business not to exceed approximately 14,000 square feet.
G. The parties desire to make a tentative adjustment at the Closing
to the Base Purchase Price to reflect the reduction of certain current
liabilities of the Company not anticipated at the time the Purchase Agreement
was signed.
H. The parties desire that the Purchase Agreement be amended on the
terms and subject to the conditions of this Amendment.
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NOW, THEREFORE, in consideration of the covenants and agreements contained
in this Amendment and other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the Parties agree as follows:
AGREEMENT
1. T&M Contracts.
(a) Clause (xx) of Section 2.9(a) of the Purchase Agreement hereby is
amended by deleting the word "and" at the end of clause (xx) thereof.
(b) Clause (xxi) of Section 2.9(a) of the Purchase Agreement hereby is
amended to read as follows:
"(xxi) the T&M Contracts; and"
For the avoidance of doubt, the T&M Contracts shall constitute "Contracts" and
"Designated Contracts" for all purposes of the Purchase Agreement, including
Article II.
(c) Section 2.9(a) of the Purchase Agreement hereby is amended by adding
the following new clause (xxii) at the end thereof:
"(xxii) any other Contract not the subject matter of clauses
(i) through (xxi) above that is material to the Company or the
Subsidiary."
(d) Section 2.9 of the Purchase Agreement hereby is amended by adding a
new Section 2.9(d) to read as follows:
"(d) None of the T&M Contracts is a contract that has resulted
in a loss to date or will result in a loss after the date hereof if
performed substantially in accordance with its terms."
(e) Section 6.1(f) of the Purchase Agreement is hereby amended to read as
follows:
"(f) (i) the items set forth in Section 2.10 of the Disclosure
Schedule; (ii) the assignment and transfer to the Company of the T&M
Contracts (including any Damages resulting from, arising out of or
relating to the failure to obtain any Consent in respect of such
assignment and transfer to the Company of the Division Contracts);
(iii) the Assigned Interests and the Assumed Liabilities (as such
terms are defined in the Seller Assignment) (including any Damages
resulting from, arising out of or relating to the failure to obtain
any Consent in respect of the assignment and transfer to an
Affiliate of Parent of the Assigned Interests and the
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assumption by Parent and Seller of the Assumed Liabilities); or (iv)
the failure of Mellon Bank to file or authorize the filing of any
and all UCC termination statements relating to Parent, Seller, the
Company, the Subsidiary or any of their respective Affiliates or
relating to any of the respective properties of any of the foregoing
Persons;"
(f) Section 6.5(b)(i) of the Purchase Agreement is hereby amended to
read as follows:
"(i) Parent and Seller shall not be required to indemnify
Buyer Indemnitees with respect to any claim for indemnification
pursuant to Section 6.1(a) unless and until the aggregate amount of
all claims for indemnification under Section 6.1(a) exceeds
$400,000, at which point Buyer Indemnitees shall be entitled to
indemnification only for the amount by which such claims exceed such
$400,000 amount. After the aggregate amount of all claims exceeds
$400,000, claims may be asserted regardless of amount. The
limitations contained in this Section 6.5(b)(i) shall not apply with
respect to claims for indemnification relating to Section 2.1(a),
Section 2.7, Section 2.9(d) and Section 2.33."
(g) Section 6.5(b)(ii) of the Purchase Agreement is hereby amended to
read as follows:
"(ii) The aggregate liability of Parent and Seller for
monetary Damages with respect to claims for indemnification pursuant
to Section 6.1(a) shall not exceed $10,000,000, subject, however, to
the other provisions of this Section 6.5. The limitations contained
in this Section 6.5(b)(ii) shall not apply with respect to claims
for indemnification relating to Section 2.1(a), Section 2.7, Section
2.9(d) and Section 2.33."
(h) Section 11.1 of the Purchase Agreement is hereby amended by:
(i) amending the definition of "Transaction Documents" to read as
follows:
""Transaction Documents": means (i) this Agreement, (ii) the
Transition Services Agreement, (iii) the T&M Assignment, (iv) the
Seller Assignment, and (v) each certificate, instrument or document
to be executed and delivered by any Party on or prior to the Closing
pursuant to this Agreement."; and
(ii) adding the following new definitions at the end thereof:
""Seller Assignment": means the assignment and assumption
agreement dated as of November 29, 2001, among the Company, Parent
and Steven Myers & Associates, Inc., a California corporation, in
respect of the assignments contemplated by Sections 4.10 and 4.12.
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"T&M Contracts": means those Contracts in respect of the Test
and Measurement operating division of the Company and which are set
forth on Exhibit A of Amendment No.1 to this Agreement dated as of
November 29, 2001."
(i) The first paragraph of Section 2.9(a) of the Disclosure Schedule
relating to the Purchase Agreement hereby is amended to add a new
clause g. at the end thereof, which clause g. reads as follows:
"g. T&M Contracts".
(j) Appendix 2.9 attached to the Disclosure Schedule hereby is amended
by adding Exhibit A hereto at the end thereof.
(k) Item 2 of Section 4.9 of the Disclosure Schedules relating to the
Purchase Agreement hereby is amended to read as follows:
"2. Briargate Facility. The Company and Parent shall cause the
rights and obligations pursuant to the lease agreement for the
facility located at 2060 Briargate Parkway, Colorado Springs, CO, to
be assigned to and assumed by Parent or an Affiliate of Parent
(other than the Company or the Subsidiary). Thereafter, the Company
and Parent shall enter into a sublease agreement pursuant to which
the Company shall sublease from Parent or such Affiliate that
portion of the facility currently occupied by the Test and
Measurement operating division of the Company (not to exceed
approximately 14,000 square feet), within such facility on terms
(including, without limitation, the base rent per square foot) and
conditions substantially identical to the terms of the existing
lease agreement for such facility."
(l) The number "14,048" set forth in the portion of Appendix 2.9 to the
Disclosure Schedule entitled "Leased Real Property" is hereby
amended to read as follows:
"48,089".
(m) The assignment by Parent of the T&M Contracts pursuant to the T&M
Assignment shall not constitute a breach of the obligations of
Parent or Seller under the Purchase Agreement.
2. Good Standing. Article II of the Purchase Agreement is hereby amended by
adding at the end thereof the following new Section 2.33:
"2.33 Good Standing. Notwithstanding anything herein
(including elsewhere in this Article II) or in the Disclosure
Schedule to the contrary, as of the Closing Date each of the Company
and the Subsidiary is in good standing under the laws of its
respective jurisdiction of
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incorporation and is qualified to conduct business and is in good
standing under the laws of each jurisdiction set forth in Section
2.1(b) of the Disclosure Schedule and Annex 2.1(b) of the Disclosure
Schedule. The foregoing shall not be in limitation of Section
2.1(b)."
3. Adjustment of Purchase Price.
(a) Section 1.2 of the Purchase Agreement hereby is amended to read
as follows:
"1.2 Purchase Price. (a) The purchase price to be paid by
Buyer at the Closing for all the Company Shares initially shall be
Thirty-Eight Million and 00/100 Dollars ($38,000,000) (the "Initial
Purchase Price"). The Initial Purchase Price shall be adjusted
pursuant to Section 1.2(b), and as so adjusted, shall be referred to
herein as the "Base Purchase Price". The Base Purchase Price shall
be subject to adjustment after the Closing as described in Section
1.4 and Section 1.5. The Base Purchase Price as adjusted pursuant to
Sections 1.4 and 1.5 shall be referred to herein as the "Adjusted
Purchase Price".
(b) Parent and Seller have delivered to Buyer a good
faith estimate of the Closing Date Net Working Capital (the
"Preliminary Closing Date Net Working Capital") resulting from the
decrease in certain current liabilities of the Company since
November 19, 2001, such decrease resulting in the Preliminary
Closing Date Net Working Capital being equal to $11,518,000. At the
Closing, the Initial Purchase Price shall be increased
dollar-for-dollar by the amount that the Preliminary Closing Date
Net Working Capital is greater than the Target Net Working Capital.
(b) The first paragraph of Section 1.4(a) of the Purchase Agreement
hereby is amended to read as follows:
"(a) Calculation of Adjustment. The Base Purchase Price
(i.e., the Initial Purchase Price, as adjusted pursuant to Section
1.2(b)), as the same may have been adjusted pursuant to Section 1.5,
shall be: (i) increased dollar-for-dollar by the amount that the
Closing Date Net Working Capital is greater than the Preliminary
Closing Date Net Working Capital; or (ii) decreased
dollar-for-dollar by the amount that the Closing Date Net Working
Capital is less than the Preliminary Closing Date Net Working
Capital."
For the avoidance of doubt, the last two paragraphs of Section 1.4(a) of the
Purchase Agreement are not amended hereby.
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(c) Wherever the term "Target Net Working Capital" is used in Section
1.4(b) of the Purchase Agreement, such term hereby is amended to read as
follows:
"Target Net Working Capital and the Preliminary Closing Date
Net Working Capital".
4. Net Operating Loss Carryovers Adjustment. The last sentence of Section
1.5(a) of the Purchase Agreement hereby is amended to read as follows:
"The Parties agree to treat any amount so transferred as an
adjustment to the Base Purchase Price, as the same may have been
adjusted pursuant to Section 1.4."
5. Conditions to Obligations of Buyer. Section 5.1(a) of the Purchase
Agreement hereby is amended to read as follows:
"(a) Representations and Warranties. The representations and
warranties of Parent and Seller set forth in this Agreement that are
qualified as to materiality or Company Material Adverse Effect shall
be true and correct and such representations and warranties that are
not so qualified shall be true and correct in all material respects
at and as of the Closing Date as if made on 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, or true and correct in all material respects, as
applicable, as of such date."
6. Lockbox and Similar Accounts. Article II of the Purchase Agreement is
hereby amended by adding at the end thereof the following new Section 2.34:
"2.34 Lockbox Account, etc. None of Parent, Seller, the
Company and their respective Affiliates has any lockbox account,
blocked account and other similar accounts into which payments from
third parties to the Company or the Subsidiary are made."
7. Decreased Payables. Since November 19, 2001, there has been a decrease
in the current liabilities of the Company as a result of the payment by the
Company of certain current liabilities estimated to be in an aggregate amount of
$1,800,000 (the "Decreased Payables"). The payment by the Company of the
Decreased Payables shall not constitute a breach by Parent or Seller under the
Purchase Agreement, and Buyer shall hold harmless and indemnify the Seller
Indemnitees for any losses or damages (including reasonable attorneys' fees)
that Parent or Seller may owe to any third party (other than the creditors in
respect of the Decreased Payables, those Persons that received the payments of
the Decreased Payables and their respective Affiliates) as a result of such
payment of the Decreased Payables. Neither Buyer nor any of its Affiliates shall
have
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any right of contribution against Parent or Seller if any third party makes any
claim against Buyer or any of its Affiliates to the extent such claim relates to
the payment by the Company of the Deferred Payables (it being understood and
agreed that this sentence shall not affect or otherwise limit the
representations, warranties, covenants and agreements of Parent and Seller
contained in the Purchase Agreement).
8. Payment of Base Purchase Price. The Parties hereby agree that the Base
Purchase Price payable at the Closing shall be paid by Buyer directly to the
parties set forth on Exhibit B hereto in the amounts set forth below their names
and pursuant to the wire transfer instructions set forth below their names.
9. Counterparts; Facsimile Signatures. This Amendment may be executed with
counterpart signature pages or in two or more counterparts, each of which shall
be deemed an original but all of which together shall constitute one and the
same instrument. This Amendment may be executed by facsimile signature.
10. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York without giving effect
to any choice or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of laws of any
jurisdiction other than those of the State of New York.
11. Internal References. All references in the Purchase Agreement to "this
Agreement," "herein" and "hereunder" and all similar references shall be deemed
to refer to the Purchase Agreement as amended by this Amendment.
12. No Other Effect. This Amendment is entered into as permitted by
Section 10.10 of the Purchase Agreement. Except as expressly amended hereby, the
Purchase Agreement shall remain in full force and effect.
[The remainder of this page has been intentionally left blank - Signature
page follows]
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[Signature Page to Amendment No. 1 to Stock Purchase and Sale Agreement]
IN WITNESS WHEREOF, the Parties hereto have executed this Amendment No. 1
to Stock Purchase and Sale Agreement as of the date first above written.
EMERGENT INFORMATION TECHNOLOGIES, INC.
By: /s/ Steven S. Myers
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Name: Steven S. Myers
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Title: President and Chief Executive Officer
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STEVEN MYERS HOLDING INC.
By: /s/ Steven S. Myers
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Name: Steven S. Myers
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Title: President and Chief Executive Officer
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L-3 COMMUNICATIONS CORPORATION
By: /s/ Christopher C. Cambria
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Name: Christopher C. Cambria
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Title: Senior Vice President
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