AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger is made as of February 15, 2000 (this
"Agreement"), by and among KEY TECHNOLOGY, INC., an Oregon corporation
("Parent"), KTC ACQUISITION CORP., an Oregon corporation ("Sub"), and ADVANCED
MACHINE VISION CORPORATION, a California corporation ("AMVC" or "Company").
RECITALS
A. The authorized capital stock of Parent consists of 5 million shares
of Series Preferred Stock, $.01 par value, of which 15,000 shares have been
designated as Series A Junior Participating Preferred Stock, none of which are
issued and outstanding, and 15 million shares of Common Stock ("Parent Common
Stock"), $.01 par value, of which 4,716,460 shares were issued and outstanding
on the close of business on December 31, 1999.
B. The authorized capital stock of Sub consists of 100 shares of Common
Stock, $.001 par value ("Sub Common Stock"), all of which are issued and
outstanding.
C. The authorized capital stock of the Company consists of 60 million
shares of Common Stock, without par value ("Company Common Stock" or the
"Shares"), of which 12,921,884 shares of Class A Common Stock and 47,669 shares
of Class B Common Stock were issued and outstanding at the close of business on
December 31, 1999 and 3,217,529 additional shares were subject to issuance
pursuant to outstanding stock options or warrants ("Company Options")
outstanding, and 3 million shares of Preferred Stock, of which 400,000 shares
have been designated as Series A Junior Participating Preferred Stock, none of
which are issued and outstanding, and 119,106 shares of Series B Preferred Stock
which were issued and outstanding on December 31, 1999.
D. All of the issued and outstanding shares of Sub Common Stock are
owned by Parent.
E. The respective Boards of Directors of Parent, Sub and the Company
deem it advisable and in the best interests of their respective stockholders
that Sub shall merge into the Company pursuant to the articles and certificate
of merger attached hereto as Exhibit A (the "Articles of Merger") and the
applicable provisions of the laws of the States of Oregon and California and
have, by resolutions duly adopted, approved the principal terms of such merger
which are herein set forth, and Sub and the Company have directed that the
principal terms of such merger be submitted to their respective stockholders for
approval.
F. The parties desire to state the terms and conditions of such merger,
the mode of carrying the same into effect, the consideration which the holders
of Company Common Stock, Company Options, Company Series B Stock and Sub Common
Stock are to receive in exchange for such shares upon the merger and such other
details and provisions as are deemed necessary or desirable.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. Definitions.
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For purposes of this Agreement, the following terms have the
meanings specified or referred to in this Section 1:
"ACCOUNTS RECEIVABLE" -- as defined in Section 3.8.
"AFFILIATE" -- as defined by the Commission.
"AGREEMENT" -- as defined in the first paragraph of this Agreement.
"APPLICABLE CONTRACT" -- any Contract (a) under which the Company has
or may acquire any rights, (b) under which the Company has or may become subject
to any obligation or liability, or (c) by which the Company or any of the assets
owned or used by it are or may become bound.
"ARTICLES OF MERGER" -- as defined in the Recitals of this
Agreement.
"BALANCE SHEET" -- as defined in Section 3.4.
"BEST EFFORTS" -- the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such result
is achieved as expeditiously as possible; provided, however, that an obligation
to use Best Efforts under this Agreement does not require the Person subject to
that obligation to take actions that would result in a materially adverse change
in the benefits to such Person of this Agreement and the Contemplated
Transactions.
"BREACH" -- a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been (a) any inaccuracy in or breach of, or any failure to perform or comply
with, such representation, warranty, covenant, obligation, or other provision,
or (b) any claim (by any Person) or other occurrence or circumstance that is or
was inconsistent with such representation, warranty, covenant, obligation, or
other provision, and the term "Breach" means any such inaccuracy, breach,
failure, claim, occurrence, or circumstance.
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"CCL" -- as defined in Section 2.1.
"CLOSING" -- as defined in Section 2.3.
"CLOSING DATE" -- as defined in Section 2.3.
"COMMISSION" -- the United States Securities and Exchange
Commission.
"COMPANY" -- as defined in the first paragraph of this Agreement.
Unless otherwise indicated herein, the term "Company" includes in all instances
the Company and all of its subsidiaries, including without limitation SRC
Vision, Inc. and Ventek, Inc.
"COMPANY COMMON STOCK" -- as defined in the Recitals of this
Agreement.
"COMPANY OPTIONS" -- as defined in the Recitals of this Agreement.
"COMPANY SERIES B STOCK" -- the Company's Series B Preferred Stock.
"COMPANY STOCK RIGHTS PLAN" - The stock rights plan set forth in the
Rights Agreement entered into with American Stock Transfer and Trust Company
dated February 27, 1998.
"CONSENT" -- any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS" -- all of the transactions contemplated
by this Agreement, including:
(a) the Merger;
(b) the performance by Parent, Sub, Company and the Surviving
Stockholders of their respective covenants and obligations under this Agreement;
and
(c) Parent's acquisition and exercise of control over the
Company.
"CONTRACT" -- any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"CONVERSION RATIO" -- as defined in Section 2.5(a)(i).
"COPYRIGHTS" -- as defined in Section 3.21(a)(iii).
"DISCLOSURE LETTER" -- the disclosure letter referenced in Section 3
and to be delivered by the Company to Parent concurrently with the execution of
this Agreement.
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"DISSENTING SHARE" -- means any share of Company Common Stock which
any Stockholder who has exercised his or her dissenter's rights under the CCL
holds of record.
"EFFECTIVE TIME" -- as defined in Section 2.2.
"EMPLOYEE BENEFIT PLAN" -- as defined in Section 3.12(b)(i).
"ENCUMBRANCE" -- any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, restriction on use, voting, transfer, receipt of income, or
exercise of any other attribute of ownership.
"ENVIRONMENT" -- soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES" -- any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law, Occupational Safety and Health Law or any other Legal
Requirement and consisting of or relating to:
(a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective action,
including any investigation, cleanup, removal, containment, or other remediation
or response actions ("Cleanup") required by applicable Environmental Law or
Occupational Safety and Health Law (whether or not such Cleanup has been
required or requested by any Governmental Body or any other Person) and for any
natural resource damages; or
(d) any other compliance, corrective, investigative, or
remedial measures required under Environmental Law or Occupational Safety and
Health Law.
The terms "removal," "remedial," and "response action," include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. ss. 9601 et seq., as amended
("CERCLA").
"ENVIRONMENTAL LAW" -- as defined in Section 3.18.
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"ERISA" -- the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"ERISA AFFILIATE" -- as defined in Section 3.12.
"FACILITIES" -- any real property, leaseholds, or other interests
currently or formerly owned or operated by the Company and any buildings,
plants, or structures currently or formerly owned or operated by the Company.
"FINANCIAL STATEMENTS" -- as defined in Section 3.4.
"GAAP" -- generally accepted United States accounting principles,
applied on a basis consistent with the basis on which the Balance Sheet and the
other financial statements referred to in Section 3.4 were prepared.
"GOVERNMENTAL AUTHORIZATION" -- any approval, consent, license,
permit, waiver, or other authorization issued, granted, or given by or under the
authority of any Governmental Body or pursuant to any Legal Requirement.
"GOVERNMENTAL BODY" -- any:
(a) nation, state, county, city, town, village, district,
or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal); or
(d) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
"HAZARDOUS ACTIVITY" -- the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from the Facilities or any part thereof into the Environment, and any
other act, business, operation, or thing that increases the danger, or risk of
danger, or poses an unreasonable risk of harm to persons or property on or off
the Facilities, or that may affect the value of the Facilities or the Company.
"HAZARDOUS MATERIALS" -- as defined in Section 3.18.
"INTELLECTUAL PROPERTY ASSETS" -- as defined in Section 3.21(a).
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"IRC" -- the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS" -- the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"KNOWLEDGE" -- an individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
(a) such individual is actually aware of such fact or
other matter; or
(b) a prudent individual could be expected to discover or
otherwise become aware of such fact or other matter in the course of conducting
a reasonable investigation concerning the existence of such fact or other
matter.
The Company will be deemed to have "Knowledge" of a particular fact or other
matter if any individual who is serving as a director or officer of the Company
has Knowledge of such fact or other matter.
"LEGAL REQUIREMENT" -- any federal, state, local, or municipal
administrative order, constitution, law, ordinance, principle of common law,
regulation, statute, or treaty.
"MARKS" -- as defined in Section 3.21(a)(i).
"MATERIAL ADVERSE CHANGE" -- a material adverse change in the
business, operations, properties, assets or condition of the Company.
"MATERIAL ADVERSE EFFECT" -- something that has caused or would be
likely to cause a Material Adverse Change.
"MERGER" -- as defined in Section 2.1.
"MULTIEMPLOYER PLAN" -- as defined in Section 3.12(b)(i).
"NASDAQ" -- the National Association of Securities Dealers
Automated Quotation System.
"OCCUPATIONAL SAFETY AND HEALTH LAW" -- any Legal Requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program, whether governmental or
private (including those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working conditions.
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"ORDER" -- any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS" -- an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is substantially consistent with the past
practices of such Person and is taken in the ordinary course of the normal
day-to-day operations of such Person;
(b) such action is not required to be authorized by the board
of directors of such Person (or by any Person or group of Persons exercising
similar authority) and is not required to be specifically authorized by the
parent company (if any) of such Person; and
(c) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors (or by
any Person or group of Persons exercising similar authority), in the ordinary
course of the normal day-to-day operations of other Persons that are in the same
line of business as such Person.
"ORGANIZATIONAL DOCUMENTS" -- (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.
"PARENT'S ADVISORS" -- as defined in Section 5.1.
"PARENT DISCLOSURE LETTER" -- as defined in Section 4.
"PERSON" -- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"PLAN" -- as defined in Section 3.12.
"PROCEEDING" -- any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.
"RELATED PERSON" -- with respect to a particular individual:
(a) each other member of such individual's Family;
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(b) any Person that is directly or indirectly controlled
by such individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of
such individual's Family hold (individually or in the aggregate) a Material
Interest; and
(d) any Person with respect to which such individual or one or
more members of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is
directly or indirectly controlled by, or is directly or indirectly under common
control with such specified Person;
(b) any Person that holds a Material Interest in such
specified Person;
(c) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a
Material Interest;
(e) any Person with respect to which such specified
Person serves as a general partner or a trustee (or in a similar capacity);
and
(f) any Related Person of any individual described in
clause (b) or (c).
For purposes of this definition, (a) the "Family" of an individual includes (i)
the individual, (ii) the individual's spouse and former spouses, (iii) any other
natural person who is related to the individual or the individual's spouse
within the second degree, and (iv) any other natural person who resides with
such individual, and (b) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of voting securities or other voting interests representing at least 5% of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least 5% of the outstanding equity securities or
equity interests in a Person.
"RELEASE" -- any spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping, or other releasing into the
Environment, whether intentional or unintentional.
"REPRESENTATIVE" -- with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, or other representative
of such Person, including legal counsel, accountants, and financial advisors.
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"RIGHTS IN MASK WORKS" -- as defined in Section 3.21.
"SECURITIES ACT" -- the Securities Act of 1933 or any successor law,
and regulations and rules issued pursuant to that Act or any successor law.
"SERIES B PREFERRED" -- as defined in Section 2.5.
"SHARES" -- as defined in the Recitals of this Agreement.
"STOCKHOLDER" -- any Person who owns at the relevant time one or
more of the Shares.
"SUBSIDIARY" -- with respect to any Person (the "Owner"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its Subsidiaries;
when used without reference to a particular Person, "Subsidiary" means a
Subsidiary of the Company.
"TAX" -- any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other fee,
and any related charge or amount (including any fine, penalty, interest, or
addition to tax), imposed, assessed, or collected by or under the authority of
any Governmental Body or payable pursuant to any tax-sharing agreement or any
other Contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency, or fee.
"TAX RETURN" -- any return (including any information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any Legal Requirement relating to any Tax.
"THREAT OF RELEASE" -- a substantial likelihood of a Release that
may require action in order to prevent or mitigate damage to the Environment
that may result from such Release.
"THREATENED" -- a claim, Proceeding, dispute, action, or other
matter will be deemed to have been "Threatened" if any demand or statement has
been made (orally or in writing) or any notice has been given (orally or in
writing), or if any other event has occurred or any other circumstances exist,
that would lead a prudent Person to conclude that such a claim, Proceeding,
dispute, action, or other matter is likely to be asserted, commenced, taken, or
otherwise pursued in the future.
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"TRADE SECRETS" -- as defined in Section 3.21(a)(v).
"TRANSFER AGENT" - the Parent's transfer agent as of the Effective
Time.
"WARRANT" - as defined in Section 2.5.
"WELFARE PLAN" -- as defined in Section 3.12(b)(i).
"WHOLLY OWNED SUBSIDIARY" - as defined in Section 3.3.
2. Merger and Effective Time; Articles of Incorporation; Bylaws;
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Directors; Conversion and Exchange of Shares.
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2.1 THE MERGER. At the Effective Time (as defined in Section 2.2
hereof), Sub shall be merged (the "Merger") into the Company, which shall be
(and is hereinafter sometimes referred to as) the "Surviving Corporation." The
corporate existence of the Company with all its rights, privileges, powers and
franchises shall continue unaffected and unimpaired by the Merger, and as the
Surviving Corporation it shall be governed by the laws of the State of
California and succeed to all rights, privileges, powers, franchises, assets,
liabilities and obligations of Sub in accordance with the Oregon Business
Corporation Act (the "OBCA") and the California Corporation Law (the "CCL"). The
separate existence and corporate organization of Sub shall cease at the
Effective Time and thereupon the Company and Sub shall be a single corporation,
the Company.
2.2 EFFECTIVE TIME OF THE MERGER. The Merger shall become effective
at the time (the "Effective Time") of filing with the Oregon Secretary of State
and the California Secretary of State of Articles of Merger in such form as is
required by, and executed in accordance with, the applicable provisions of the
OBCA and the CCL or at such later time as may be agreed to by Parent and the
Company and specified in the Articles of Merger. The parties will cause the
Articles of Merger to be filed with the Oregon Secretary of State and the
California Secretary of State as soon as practicable after the Closing.
2.3 CLOSING. On the same day as, but immediately prior to the
filing of the Articles of Merger, a closing (the "Closing") will take place for
the purpose of confirming the satisfaction or waiver of the conditions set forth
in Sections 7, 8 and 9 hereof. The Closing will take place as soon as
practicable but not later than three business days after the satisfaction or
waiver of the conditions set forth in such Sections (the date and time of the
Closing being hereinafter referred to as the "Closing Date"), at the offices of
Xxxxxx Xxxx LLP, 1600 Pioneer Tower, 000 XX Xxxxx Xxxxxx, Xxxxxxxx, XX
00000-0000, unless another time or place is agreed to by the parties hereto.
2.4 ARTICLES OF INCORPORATION; BYLAWS; DIRECTORS AND OFFICERS.
(a) ARTICLES OF INCORPORATION. The Articles of Incorporation
of the Company, as in effect immediately prior to the Effective Time, shall be
amended at the Effective Time to change Article III thereof to read in full as
follows: "Authorized Stock. The total number of shares of stock which the
corporation shall have the authority to issue is 100
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shares of common stock, without par value." From and after the Effective Time,
such Articles of Incorporation, as so amended, shall continue as the Articles of
Incorporation of the Surviving Corporation, until amended as provided by law.
(b) BYLAWS. The Bylaws of the Company, as in effect at the
Effective Time, shall continue to be the Bylaws of the Surviving Corporation,
until altered, amended or repealed in accordance with law, the Articles of
Incorporation of the Surviving Corporation and such Bylaws.
(c) DIRECTORS AND OFFICERS. The directors of the Surviving
Corporation at and immediately following the Effective Time shall be Xxxxxx X.
Xxxxxx and Xxxxxx Xxxxxx, to serve in accordance with the Bylaws of the
Surviving Corporation. The officers of the Surviving Corporation at and
immediately following the Effective Time shall be Xxxxxx X. Xxxxxx, President
and Xxxxxx Xxxxxx, Secretary, to serve in accordance with the Bylaws of the
Surviving Corporation.
2.5 CONVERSION AND EXCHANGE OF SHARES. The manner and basis of
converting at the Effective Time Company Common Stock into cash and shares of
Parent's Series B Convertible Preferred Stock, $10.00 par value, having the
rights and preferences set forth in the attached Exhibit 2.5A (the "Series B
Preferred") with the attached redeemable Warrant to purchase shares of Parent's
Common Stock in the form attached as Exhibit 2.5B, the exchange of certificates
therefor, the manner and basis of converting the Company's Series B Stock into
cash, and the manner and basis of converting Company Options outstanding at the
Effective Time shall be as set forth herein.
(a) CONVERSION OF SHARES.
(i) (A) Each share of Company Common Stock (both Class A
and Class B) issued and outstanding immediately prior to the
Effective Time (except Dissenting Shares) shall, by virtue of
the Merger and without any action on the part of the holder
thereof, be converted into the right to receive $1.00 in cash
and one-tenth of a share of Series B Preferred, with each share
of Series B Preferred to be accompanied by a Warrant,
redeemable at any time by the holder for $2.50 in cash and
exercisable at any time to purchase .25 of a share of Parent's
Common Stock at a price of $15.00 per share (such Series B
Preferred shares and attached Warrants to be issued for each
share of Company Common Stock constituting the "Conversion
Ratio").
(B) Each Dissenting Share shall be converted into
the right to receive payment from the Surviving Corporation
with respect thereto in accordance with the provisions of the
CCL.
(ii) Each share of the Company Series B Preferred Stock
outstanding at the Effective Date will be converted into the
right to receive $22.00 per share in cash.
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(iii) Each share of Sub Common Stock issued and
outstanding as of the Effective Time, shall, by virtue of the
Merger and without any action on the part of Parent, the sole
stockholder of Sub, be converted into one share of legally and
validly issued, fully paid and nonassessable Common Stock,
without par value, of the Surviving Corporation. The stock
certificate of Sub evidencing ownership of Sub Common Stock
shall by virtue of the Merger evidence ownership of Common
Stock of the Surviving Corporation.
(iv) In the event of any stock split, combination,
reclassification, recapitalization, exchange, stock dividend or
other distribution payable in Parent Common Stock with respect
to shares of Parent Common Stock (or if a record date with
respect to any of the foregoing should occur) during the period
between the date of this Agreement and the Effective Time, then
the Conversion Ratio will be appropriately adjusted to reflect
such stock split, combination, reclassification,
recapitalization, exchange, stock dividend or other
distribution.
2.6 EXCHANGE OF CERTIFICATES; PAYMENT. Series B Preferred and
attached Warrants into which Company Common Stock shall be converted pursuant to
the Merger shall be deemed to have been issued at the Effective Time. At the
Closing, Parent shall deliver to the Transfer Agent certificates evidencing the
number of shares of Series B Preferred and attached Warrants to which that
Stockholder is entitled under Section 2.5, together with the cash payment
applicable thereto. The Company will cause to be delivered such transmittal
letters, documents and instruments as Parent or Parent's transfer agent may
reasonably request, each in form reasonably acceptable to Parent or such
transfer agent. Parent shall also deliver to the Transfer Agent the payment to
be made pursuant to Section 2.5(a)(ii) above with respect to any shares of
Company Series B Stock outstanding on the Effective Date.
2.7 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All shares
of Series B Preferred and attached Warrants issued upon the surrender for
exchange of shares of Company Common Stock in accordance with the terms hereof
and the cash amount per share to be paid pursuant to Section 2.5 shall be deemed
to have been issued and paid in full satisfaction of all rights pertaining to
such shares of Company Common Stock, and, on and after the Effective Time, there
shall be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Section 2, except that
any validly issued shares of Company Common Stock presented for exchange after
the Effective Time in excess of the number of shares of Common Stock represented
to be outstanding under Section 3.3 as updated at the Closing will by virtue of
the Merger be converted into the right to receive $.001 in cash per share.
2.8 CASH IN LIEU OF FRACTIONAL SHARES. No fractional shares of
Series B Preferred shall be issued in the Merger but, in lieu of any such
fractional shares, each Stockholder who would otherwise have been entitled to a
fractional share of Series B Preferred
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will be paid an amount of cash (without interest) determined by multiplying such
fractional amount by $10.00.
2.9 COMPANY STOCK OPTIONS. All outstanding Company Options are
listed by holder and amount on Schedule 2.9 hereto. All such options will have
been exercised prior to Closing or will by virtue of the Merger be deemed
cancelled.
2.10 DISSENTERS' RIGHTS. Any issued and outstanding Company Shares
held by any Shareholder who, in accordance with California Law, dissents from
the Merger (a "Dissenting Shareholder") and requires appraisal of such
Dissenting Shareholder's shares ("Dissenting Shares") shall not be converted or
cancelled as described elsewhere in this Section 2 but instead shall become the
right to receive from the Surviving Corporation such consideration as may be
determined to be due to such dissenting Shareholder pursuant to California Law;
provided, however, that Dissenting Shares outstanding at the Effective Time and
held by a Dissenting Shareholder who shall after the Effective Time withdraw
such Dissenting Shareholder's demand for appraisal or lose such Dissenting
Shareholder's right of appraisal as provided by California Law shall be deemed
to be converted as of the Effective Time into the right to receive the
consideration that would otherwise have been payable in respect thereof if no
dissent had been made.
3. Representations and Warranties of the Company.
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The Company hereby represents and warrants to Parent that, except as
otherwise provided in the Disclosure Letter by reference in each instance to the
specific subsection numbers of this Section 3:
3.1 ORGANIZATION AND GOOD STANDING.
(a) Part 3.1 of the Disclosure Letter contains a complete and
accurate description of the Company name, jurisdiction of incorporation and
other jurisdictions in which it is authorized to do business. The Company is a
corporation duly organized and validly existing under the laws of California,
with full corporate power and authority to conduct its business as it is now
being conducted, to own or use the properties and assets that it purports to own
or use, and to perform all its obligations under Applicable Contracts. The
Company is duly qualified to do business as a foreign corporation and is in good
standing under the laws of each state or other jurisdiction in which either the
ownership or use of the properties owned or used by it, or the nature of the
activities conducted by it, requires such qualification except where any failure
to so qualify would not have a Material Adverse Effect.
(b) The Company has delivered to Parent correct and complete
copies of its Organizational Documents, as currently in effect.
3.2 AUTHORITY; NO CONFLICT.
(a) The Company has the requisite corporate power and authority
to execute and deliver this Agreement and all other agreements and documents
contemplated hereby and to carry out its obligations hereunder. The execution,
delivery and performance of this Agreement and all other agreements and
documents contemplated hereby and the
13
Consummation of the merger and of the other transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of the
company and no other corporate proceedings on the part of the company are
necessary to authorize this agreement and all other agreements and documents
contemplated hereby or to consummate the transactions so contemplated (other
than, with respect to the merger, the approval and adoption of this agreement by
the company's stockholders in accordance with the ccl and the company's articles
of incorporation). The affirmative vote of the holders of a majority of the
outstanding shares of company common stock and the approving vote of any company
series b stock outstanding in compliance with the ccl is the only vote of the
holders of any class or series of the company's capital stock necessary to
approve this agreement and the transactions contemplated hereby. This agreement
has been duly executed and delivered by the company and constitutes, and all
agreements and documents contemplated hereby when executed and delivered
pursuant hereto for value received will constitute, the valid and binding
obligations of the company.
(b) Except as set forth in Part 3.2 of the Disclosure Letter,
neither the execution and delivery of this Agreement by the Company nor the
consummation or performance of any of the Contemplated Transactions by the
Company will, directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A)
any provision of the Organizational Documents of the Company,
or (B) any resolution adopted by the board of directors or the
stockholders of the Company;
(ii) contravene, conflict with, or result in a violation of, or
give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions or to exercise
any remedy or obtain any relief under, any Legal Requirement or
any Order to which the Company or any Stockholder, or any of
the assets owned or used by the Company, may be subject that
would be likely to have a Material Adverse Effect;
(iii) contravene, conflict with, or result in a violation of
any of the terms or requirements of, or give any Governmental
Body the right to revoke, withdraw, suspend, cancel, terminate,
or modify, any Governmental Authorization that is held by the
Company or that otherwise relates to the business of, or any of
the assets owned or used by, the Company;
(iv) cause Parent, Sub or the Company to become subject to, or
to become liable for the payment of, any material Tax;
(v) cause any of the assets owned by the Company to be
reassessed or revalued in any material way by any taxing
authority or other Governmental Body;
14
(vi) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to
declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Applicable Contract that would have a
Material Adverse Effect; or
(vii) result in the imposition or creation of any material
charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest or
encumbrance upon or with respect to any of the assets owned or
used by the Company.
Except as set forth in Part 3.2 of the Disclosure Letter, the Company will not
be required to give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
3.3 CAPITALIZATION. The authorized equity securities of AMVC
consist of 60 million shares of common stock, without par value, of which
12,870,000 shares are issued and outstanding and 3 million shares of Preferred
Stock, of which 119,106 shares of Company Series B Stock are issued and
outstanding. Schedule 2.9 sets forth all outstanding options or other rights to
acquire any securities of the Company, together with the exercise prices
therefor. All of the outstanding equity securities of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. There are no
Contracts relating to the issuance, sale, or transfer of any equity securities
or other securities of the Company. Since January 1, 1994, none of the
outstanding equity securities or other securities of the Company was issued in
violation of the Securities Act or any applicable securities laws. The Company
owns 100% of all of the outstanding securities, and there are no outstanding
rights to acquire any securities, of Applied Laser Systems, Inc.; SRC Vision,
Inc.; ARC Netherlands BV and Ventek, Inc. (the "Wholly Owned Subsidiaries"). All
representations made in this Section 3 with respect to the Company are also made
with respect to each Wholly Owned Subsidiary when taken in the context of having
a Material Adverse Effect on the Company. Except as set forth in Part 3.3 of the
Disclosure Letter, the Company does not own, and does not have any Contract to
acquire, any equity securities or other securities of any Person (including any
Subsidiary) or any direct or indirect equity or ownership interest in any other
business.
3.4 FINANCIAL STATEMENTS. Company has delivered to Parent: an
audited balance sheet of the Company as at December 31, 1999 (the "Balance
Sheet") and the related statements of income, stockholders' equity, and cash
flow for the fiscal year then ended, together with the report thereon of
Pricewaterhouse Coopers LLP, independent certified public accountants (such
financial statements are collectively referred to herein as the "Financial
Statements"). The Financial Statements fairly present the financial condition
and the results of operations, changes in stockholders' equity, and cash flow of
the Company as at the dates of and for the periods referred to therein, all in
accordance with GAAP. The Financial Statements reflect the consistent
application of such accounting principles throughout the periods involved,
except as disclosed in the notes to such financial statements. No financial
statements of any Person other than the Company are required by GAAP to be
included in the consolidated financial statements of the Company.
15
3.5 BOOKS AND RECORDS. Except as described in Part 3.5 to the
Disclosure Letter, the books of account, minute books, stock record books, and
other records of the Company specifically requested by Parent or its
Representatives, all of which have been or prior to the Closing Date will be
made available to Parent, are complete and correct in all material respects.
Except as described in Part 3.5 to the Disclosure Letter, the minute books of
the Company contain accurate and complete records of all meetings held of, and
corporate action taken by, the stockholders, the Boards of Directors, and
committees of the Boards of Directors of the Company, and no meeting of any such
stockholders, Board of Directors, or committee has been held for which minutes
have not been prepared and are not contained in such minute books. At the
Closing Date, all of those books and records will be in the possession of the
Company.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES. Part 3.6 of the Disclosure
Letter contains a complete and accurate list of all real property, leaseholds,
or other interests therein, if any, owned by the Company. Upon request, Company
will deliver to Parent copies of the deeds and other instruments (as recorded)
by which the Company acquired such real property and interests, and copies of
all title insurance policies, opinions, abstracts, and surveys in the possession
of the Company and relating to such property or interests. All material
properties and assets reflected in the Balance Sheet are free and clear of all
charges, claims, community property interests, conditions, equitable interests,
liens, options, pledges, security interests and encumbrances except, with
respect to all such properties and assets, (a) mortgages or security interests
shown on the Balance Sheet as securing specified liabilities or obligations,
with respect to which no default (or event that, with notice or lapse of time or
both, would constitute a default) exists, (b) mortgages or security interests
incurred in connection with the purchase of property or assets after the date of
the Balance Sheet (such mortgages and security interests being limited to the
property or assets so acquired), with respect to which no default (or event
that, with notice or lapse of time or both, would constitute a default) exists
and which mortgages or security interests are listed and described in Part 3.6
of the Disclosure Letter, and (c) liens for current taxes not yet due.
3.7 CONDITION AND SUFFICIENCY OF ASSETS. As of the date of this
Agreement, the buildings, plants, structures, and equipment of the Company are
to the Company's Knowledge structurally sound, are in good operating condition
and repair, and are adequate for the uses to which they are being put, and none
of such buildings, plants, structures, or equipment is in need of maintenance or
repairs except for ordinary, routine maintenance and repairs that are not
material in nature or cost. The building, plants, structures, and equipment of
the Company are sufficient for the continued conduct of the Company's business
after the Closing Date in substantially the same manner as conducted prior to
the Closing Date.
3.8 ACCOUNTS RECEIVABLE. All accounts receivable of the Company
that are reflected on the Balance Sheet or on the accounting records of the
Company (collectively, the "Accounts Receivable") represent or will represent
valid obligations arising from sales actually made or services actually
performed in the Ordinary Course of Business. There is no material contest,
claim, or right of set-off, other than returns in the Ordinary Course of
Business, under any Contract with any obligor of an Accounts Receivable relating
to the amount or validity of such Accounts Receivable.
16
3.9 NO UNDISCLOSED LIABILITIES. Except as set forth in Part 3.9 of
the Disclosure Letter, the Company has no material liabilities or obligations of
any nature (whether known or unknown and whether absolute, accrued, contingent,
or otherwise) except for liabilities or obligations reflected or reserved
against in the Financial Statements for the year ended December 31, 1999 and
current liabilities incurred in the Ordinary Course of Business since the date
thereof.
3.10 TAXES.
(a) Except as described in Part 3.10 of the Disclosure Letter,
the Company has filed or caused to be filed all Tax Returns that are or were
required to be filed by it pursuant to applicable Legal Requirements. Part 3.10
of the Disclosure Letter contains a complete and accurate list of all such Tax
Returns filed since January 1, 1997. The Company has paid, or made sufficient
provision for the full payment of, all Taxes that have or may have become due
pursuant to those Tax Returns or otherwise, or pursuant to any assessment
received by the Company, except such Taxes, if any, as are listed in Part 3.10
of the Disclosure Letter and are being contested in good faith and as to which
adequate reserves (determined in accordance with GAAP) have been provided in the
Financial Statements for the year ended December 31, 1999 and the Interim
Financial Statements.
(b) All deficiencies which have been or may be proposed as a
result of audits of the United States federal and state income Tax Returns of
the Company have been paid, reserved against, settled, or, as described in Part
3.10 of the Disclosure Letter, are being contested in good faith by appropriate
proceedings. Except as described in Part 3.10 of the Disclosure Letter, the
Company has not given or been requested to give waivers or extensions (or is or
would be subject to a waiver or extension given by any other Person) of any
statute of limitations relating to the payment of Taxes of the Company or for
which the Company may be liable.
(c) The charges, accruals, and reserves with respect to Taxes
on the books of the Company are adequate (determined in accordance with GAAP).
There exists no proposed or unpaid actual Tax assessment against the Company
except as disclosed in the Financial Statements for the year ended December 31,
1999, or in Part 3.10 of the Disclosure Letter. Except as disclosed in Part 3.10
to the Disclosure Letter, all Taxes that the Company is or was required by Legal
Requirements to withhold or collect have been duly withheld or collected and, to
the extent required, have been paid to the proper Governmental Body or other
Person.
(d) Except as disclosed in Part 3.10 to the Disclosure Letter,
all Tax Returns filed by the Company are true, correct, and complete in all
material respects. There is no tax sharing agreement that will require any
payment by the Company after the date of this Agreement.
3.11 NO MATERIAL ADVERSE CHANGE. Since the date of the Balance
Sheet, and except as set forth in the Disclosure Letter, there has not been any
Material Adverse Change.
17
3.12 EMPLOYEE BENEFITS.
(a) The Company has no ownership interest in, and does not
contribute to, any credit union which has been established by the Company for
any of its employees.
(b)
(i) Neither the Company nor any affiliate of the Company as
determined under IRCss. 414(b), (c), (m) or (o) ("ERISA
Affiliate") maintains, administers or contributes to, nor do
the employees of the Company or any ERISA Affiliate receive or
expect to receive as a condition of employment, benefits
pursuant to: any employee pension benefit plan (as defined
inss. 3(2) of ERISA) ("Plan"), including, without limitation,
any multiemployer plan as defined in IRC ss. 3(37) of ERISA
("Multiemployer Plan"); any employee welfare benefit plan (as
defined in IRCss. 3(1) of ERISA) ("Welfare Plan"); or any
bonus, deferred compensation, stock purchase, stock option,
stock appreciation, severance, salary continuation, vacation,
sick leave, fringe benefit, incentive, insurance, welfare or
similar plan or arrangement ("Employee Benefit Plan") other
than those Plans, Welfare Plans and Employer Benefit Plans
described in Part 3.12 of the Disclosure Letter. Except as
required by IRCss. 4980B or as disclosed in Part 3.12 of the
Disclosure Letter, neither the Company nor any ERISA Affiliate
has promised any former employee or other individual not
employed by the Company or any ERISA Affiliate medical or other
benefit coverage, maintains or contributes to any plan or
arrangement providing medical benefits to former employees,
their spouses or dependents or any other individual not
employed by the Company.
(ii) All Plans, Welfare Plans and Employee Benefit Plans and
any related trust agreements or annuity contracts (or any
related trust instruments) comply with and are and have been
operated in accordance with each applicable provision of ERISA,
the IRC (including, without limitation, the requirements of IRC
ss. 401(a) to the extent any Plan is intended to conform to
that section), other Federal statutes, state law (including,
without limitation, state insurance law) and the regulations
and rules promulgated pursuant thereto or in connection
therewith. The Company has no Knowledge of any violation of any
of the foregoing by any Plan, Welfare Plan, or Employee Benefit
Plan. Each Welfare Plan which is a group health plan (within
the meaning of ss. 5000(b)(1) of the Code) complies with and
has been maintained and operated in accordance with each of the
requirements of IRC ss. 162(k) as in effect for years beginning
prior to 0000, XXX ss. 4980B for years beginning after December
31, 1988 and Part 6 of Subtitle B of Title I of ERISA. A
favorable determination as to the qualification under the Code
of the Company's Profit Sharing or 401(k) Plan and each
amendment thereto has
18
been made by the IRS, the Profit Sharing Plan at all times has
been and remains qualified under the IRC, and the related trust
at all times has been and remains tax exempt.
(iii) Neither any Plan or Welfare Plan fiduciary nor any Plan
or Welfare Plan has engaged in any transaction in violation of
ss. 406 of ERISA or any "prohibited transaction" (as defined in
ss. 4975(c)(1) of the IRC and there has been no "reportable
event" (as defined in ss. 4043(b) of ERISA) with respect to any
Plan. Neither the Company nor any ERISA Affiliate has failed to
make any contributions or to pay any amounts due and owing as
required by the terms of any Plan, Welfare Plan or Employee
Benefit Plan, or collective bargaining agreement or ERISA or
any other applicable law.
(iv) True and complete copies of each Plan, Welfare Plan and
Employee Benefit Plan, related trust agreements, annuity
contracts, determination letters, summary plan descriptions,
all communication to employees regarding any Plan, Welfare
Plan, or Employee Benefit Plan, annual reports on Form 5500 for
the last three years, and each plan, agreement, instrument and
commitment referred to herein, have been identified in writing
and made available to Parent; all of the foregoing are legally
valid, binding, in full force and effect, and there are no
defaults thereunder, and none of the rights of the Company
thereunder will be impaired by this Agreement or the
consummation of the transaction contemplated hereby. The annual
reports on Form 5500 fully and accurately set forth the
financial and actuarial condition of each Plan and each trust
funding any Welfare Plan. With respect to each Plan, Welfare
Plan and Employee Benefit Plan, the Disclosure Letter sets
forth the name and address of the administrator and trustees
and the policy number and insurer under all insurance policies.
(v) There are no pending or threatened claims by or on behalf
of any of the Plans, Welfare Plans, or Employee Benefit Plans
by any employee or beneficiary covered under any Plans, Welfare
Plans or Employee Benefit Plans or otherwise involving any
Plan, Welfare Plan or Employee Benefit Plan (other than routine
claims for benefits).
19
3.13 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS.
(a) To the Knowledge of the Company, except as set forth in
Part 3.13 of the Disclosure Letter:
(i) the Company is, and at all times has been, in material
compliance with each material Legal Requirement that is or was
applicable to it or to the conduct or operation of its business
or the ownership or use of any of its assets;
(ii) no event has occurred or circumstance exists that (with or
without notice or lapse of time) (A) may constitute or result
in a violation by the Company of, or a failure on the part of
the Company to comply with, any material Legal Requirement, or
(B) may give rise to any obligation on the part of the Company
to undertake, or to bear all or any portion of the cost of, any
remedial action of any nature, that with respect to either of
the preceding, is likely to have a Material Adverse Effect; and
(iii) since January 1, 1997, the Company has not received any
notice or other communication (whether oral or written) from
any Governmental Body or any other Person regarding (A) any
actual, alleged, possible, or potential violation of, or
failure to comply with, any Legal Requirement, or (B) any
actual, alleged, possible, or potential obligation on the part
of the Company to undertake, or to bear all or any portion of
the cost of, any remedial action of any nature, that with
respect to either of the preceding, is likely to have a
Material Adverse Effect.
(b) Part 3.13 of the Disclosure Letter contains a complete and
accurate list of each material Governmental Authorization that is held by the
Company. Each material Governmental Authorization listed or required to be
listed in Part 3.13 of the Disclosure Letter is valid and in full force and
effect. Except as set forth in Part 3.13 of the Disclosure Letter:
(i) the Company is, and at all times has been, in material
compliance with all of the terms and requirements of each
Governmental Authorization identified or required to be
identified in Part 3.13 of the Disclosure Letter;
(ii) to the Knowledge of the Company, no event has occurred or
circumstance exists that may (with or without notice or lapse
of time) (A) constitute or result directly or indirectly in a
violation of or a failure to comply with any term or
requirement of any Governmental Authorization listed or
required to be listed in Part 3.13 of the Disclosure Letter, or
(B) result directly or indirectly in the revocation,
withdrawal, suspension, cancellation, or termination of, or any
modification to, any Governmental Authorization listed or
required to be listed in Part 3.13 of the Disclosure Letter,
that with respect to either of the preceding, is likely to have
a Material Adverse Effect;
20
(iii) since January 1, 1997, the Company has not received, at
any time, any notice or other communication (whether oral or
written) from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible, or potential
violation of or failure to comply with any term or requirement
of any Governmental Authorization, or (B) any actual, proposed,
possible, or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to any
Governmental Authorization, that with respect to either of the
preceding, is likely to have a Material Adverse Effect; and
(iv) all applications required to have been filed for the
renewal of the material Governmental Authorizations listed or
required to be listed in Part 3.13 of the Disclosure Letter
have been duly filed on a timely basis with the appropriate
Governmental Bodies, and all other filings required to have
been made with respect to such Governmental Authorizations have
been duly made on a timely basis with the appropriate
Governmental Bodies.
The Governmental Authorizations listed in Part 3.13 of the Disclosure Letter
collectively constitute all of the material Governmental Authorizations
necessary to permit the Company to lawfully conduct and operate its business in
the manner it currently conducts and operates such business and to permit the
Company to own and use its assets in the manner in which it currently owns and
uses such assets, except where the failure to have such Governmental
Authorizations would not be reasonably likely to have a Material Adverse Effect.
3.14 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Part 3.14 of the Disclosure Letter,
there is no pending Proceeding:
(i) that has been commenced by or against the Company or that
otherwise relates to or may affect the business of, or any of
the assets owned or used by, the Company; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering
with, any of the Contemplated Transactions.
To the Knowledge of the Company, (1) no such Proceeding has been Threatened, and
(2) no event has occurred or circumstance exists that may give rise to or serve
as a basis for the commencement of any such material Proceeding. Company has
delivered to Parent copies of all pleadings, correspondence, and other documents
relating to each Proceeding listed in Part 3.14 of the Disclosure Letter. The
Proceedings listed in Part 3.14 of the Disclosure Letter taken collectively will
not have a material adverse effect on the business, operations, assets,
condition, or prospects of the Company.
21
(b) To the Knowledge of the Company,
(i) there is no Order to which the Company, or any of the
assets owned or used by the Company, is specifically subject;
and
(ii) no officer, director, agent, or employee of the Company is
specifically subject to any Order that prohibits such officer,
director, agent, or employee from engaging in or continuing any
conduct, activity, or practice relating to the business of the
Company.
3.15 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth in
Part 3.15 of the Disclosure Letter, since the date of the Balance Sheet, the
Company has conducted its business only in the Ordinary Course of Business and
there has not been any:
(a) change in the Company's authorized or issued capital
stock; grant of any stock option or right to purchase shares of capital stock of
the Company; issuance of any security convertible into such capital stock; grant
of any registration rights; purchase, redemption, retirement, or other
acquisition by the Company of any shares of any such capital stock; or
declaration or payment of any dividend or other distribution or payment in
respect of shares of capital stock;
(b) amendment to the Organizational Documents of the Company;
(c) payment or increase by the Company of any bonuses,
salaries, or other compensation to any stockholder, director, officer, or
(except in the Ordinary Course of Business) employee or entry into any
employment, severance, or similar Contract or commitment with any director,
officer, or employee or the adoption of any severance policy applicable to
employees in general;
(d) adoption of, or increase in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings, insurance,
pension, retirement, or other employee benefit plan for or with any employees of
the Company;
(e) damage to or destruction or loss of any asset or property
of the Company, whether or not covered by insurance, materially and adversely
affecting the properties, assets, business, financial condition, or prospects of
the Company, taken as a whole;
(f) entry into, termination of, or receipt of notice of
termination of (i) any material license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or (ii) any
Contract or transaction involving a total remaining commitment by or to the
Company of at least $10,000 (except for Contracts or transactions entered into
in the Ordinary Course of Business with the Company's customers or vendors which
do not exceed, individually, a commitment of $50,000);
(g) sale (other than sales of inventory in the Ordinary Course
of Business), lease, or other disposition of any asset or property of the
Company or mortgage, pledge, or imposition of any lien or other encumbrance on
any material asset or property of the
22
Comapany including the sale, lease, or other disposition of any of the
Intellectual Property Assets, in any case greater than $10,000;
(h) cancellation or waiver of any claims or rights with a
value to the Company in excess of $10,000;
(i) material change in the accounting methods used by the
Company;
(j) any hiring of new employees except as replacements for
persons whose employment with the Company terminated since such date, or the
hiring of any employee at an annual compensation rate of $75,000 or more per
year; or
(k) agreement, whether oral or written, by the Company to do
any of the foregoing.
3.16 CONTRACTS; NO DEFAULTS.
(a) Part 3.16(a) of the Disclosure Letter contains a complete
and accurate list of each, and except as so disclosed there is no:
(i) applicable Contract that involves performance of services
or delivery of goods or materials by the Company of an amount
or value in excess of $25,000;
(ii) applicable Contract that involves performance of services
or delivery of goods or materials to the Company of an amount
or value in excess of $25,000;
(iii) applicable Contract that was not entered into in the
Ordinary Course of Business and that involves expenditures or
receipts of the Company in excess of $5,000;
(iv) lease, rental or occupancy agreement, license, installment
and conditional sale agreement, and other Applicable Contract
affecting the ownership of, leasing of, title to, use of, or
any leasehold or other interest in, any real or personal
property (except personal property leases and installment and
conditional sales agreements having a value per item or
aggregate payments of less than $15,000 and with terms of less
than one year);
(v) contract relating to Intellectual Property Assets to which
the Company is a party or by which the Company is bound, except
for any license implied by the sale of a product and perpetual,
paid-up licenses for commonly available software programs with
a value of less than $2,500 under which the Company is the
licensee, including agreements with current or former
employees, consultants, or contractors regarding the
appropriation or the non-disclosure of any of the Intellectual
Property Assets;
23
(vi) collective bargaining agreement and other Applicable
Contract to or with any labor union or other employee
representative of a group of employees;
(vii) joint venture, partnership, and other Applicable Contract
(however named) involving a sharing of profits, losses, costs,
or liabilities by the Company with any other Person;
(viii) applicable Contract containing covenants that in any
material way purport to restrict the business activity of the
Company or any Affiliate of the Company or limit the freedom of
the Company or any Affiliate of the Company to engage in any
line of business or to compete with any Person;
(ix) applicable Contract providing for payments to or by any
Person based on sales, purchases, or profits, other than direct
payments for goods;
(x) power of attorney that is currently effective and
outstanding;
(xi) applicable Contract for capital expenditures which, by its
terms, provides for an aggregate balance payable thereunder
since December 31, 1999 in excess of $15,000 for any such
Contract;
(xii) written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by
the Company other than in the Ordinary Course of Business; and
(xiii) amendment, supplement, and modification (whether oral or
written) in respect of any of the foregoing.
(b) To the Knowledge of the Company, except as set forth in
Part 3.16(b) of the Disclosure Letter, with respect to each Contract identified
or required to be identified in Part 3.16(a) of the Disclosure Letter:
(i) the Company is, and at all times has been, in material
compliance with all applicable terms and requirements of each
such Contract under which the Company has or had any obligation
or liability or by which the Company or any of the assets owned
or used by the Company is or was bound; and
(ii) each other Person that has or had any obligation or
liability under any material Contract under which the Company
has or had any rights is, and at all times has been, in full
material compliance with all applicable terms and requirements
of such Contract.
24
3.17 INSURANCE.
(a) Company has delivered to or otherwise made available for
inspection by Parent:
(i) true and complete copies of all policies of insurance to
which the Company is a party or under which the Company, or any
director of the Company, is or has been covered at any time
preceding the date of this Agreement;
(ii) true and complete copies of all pending applications for
policies of insurance; and
(iii) any statement by the Company's auditors with regard to
the adequacy of such entity's coverage or of the reserves for
claims.
(b) Part 3.17(b) of the Disclosure Letter describes:
(i) any self-insurance arrangement by or affecting the Company,
including any reserves established thereunder;
(ii) any contract or arrangement, other than a policy of
insurance, for the transfer or sharing of any risk by the
Company; and
(iii) all obligations of the Company to third parties with
respect to insurance (including such obligations under leases
and service agreements) and identifies the policy under which
such coverage is provided.
(c) Part 3.17(c) of the Disclosure Letter sets forth, by year,
for the current policy year and each of the three preceding policy years:
(i) a summary of the loss experience under each policy in
excess of $5,000; and
(ii) a statement describing the loss experience for all claims
that were self-insured, including the number and aggregate cost
of such claims.
(d) Except as set forth on Part 3.17(d) of the Disclosure
Letter:
(i) All policies to which the Company is a party or that
provide coverage to the Company, or any Company-funded policy
providing coverage to any director or officer of the Company:
(A) to the Company's Knowledge, are valid, outstanding, and
enforceable; (B) are sufficient for compliance with all Legal
Requirements and Contracts to which the Company is a party or
by which it is bound; (C) will continue in full force and
effect following the consummation of the Contemplated
25
Transactions and (D) do not provide for any retrospective
premium adjustment or other experienced-based liability on the
part of the Company.
(ii) To the Company's Knowledge, the Company has not received
(A) any refusal of coverage or any notice that a defense will
be afforded with reservation of rights, or (B) any notice of
cancellation or any other indication that any insurance policy
is no longer in full force or effect or will not be renewed or
that the issuer of any policy is not willing or able to perform
its obligations thereunder in connection with any policy of the
Company.
(iii) The Company has paid all premiums due, and has otherwise
performed all of its obligations, under each policy to which
the Company is a party or that provides coverage to the Company
or any director thereof.
(iv) To the Company's Knowledge, the Company has given notice
to the insurer of all claims as to which it has notice that may
be insured thereby.
3.18 ENVIRONMENTAL MATTERS. Except as set forth in Part 3.18
of the Disclosure Letter, to the Knowledge of the Company, the Company is not in
violation, or aware, of any imminent or alleged violation by the Company, of any
federal, state or local law, statute, rule, regulation, judgment, consent decree
or ordinance relating to public health, safety, conservation, waste management,
pollution or the indoor or outdoor Environment, including relating to the
release, discharge, emission, storage, treatment, handling or disposal of
Hazardous Materials (defined below) ("Environmental Law"). The Company is not a
party to, or threatened by, and has not been subject to, any judicial,
administrative or regulatory litigation, claim, notice, proceeding or
investigation arising from the operation or violation of any applicable
Environmental Law, or is aware after diligent inquiry of any grounds or basis
for such a claim. The Company does not have or currently use, store, treat,
dispose or otherwise handle hazardous, toxic, radioactive, infectious or harmful
substances or materials, including, without limitation, asbestos and petroleum,
including, crude oil or any fraction thereof and any material prohibited or
regulated by any Environmental Law ("Hazardous Material") except in compliance
with Environmental Law, or know of any release, threat of release, disposal,
cleanup or presence of any Hazardous Material at, on or under any real property
owned, occupied or operated by the Company except in compliance with
Environmental Law.
26
3.19 EMPLOYEES.
(a) Part 3.19 of the Disclosure Letter contains a complete and
accurate list of the following information for each employee or director of the
Company, including each employee on leave of absence or layoff status, in each
instance identified by employer as to the applicable Wholly Owned Subsidiary or
AMVC: employee name; job title; current compensation paid or payable; vacation
accrued; and vested and unvested Company Options.
(b) To the Knowledge of the Company, no director or employee
of the Company is a party to, or is otherwise bound by, any agreement or
arrangement, including any confidentiality, noncompetition, or proprietary
rights agreement, between such director or employee and any other Person
("Proprietary Rights Agreement") that in any way adversely affects or will
affect (i) the performance of his duties as an employee or director of the
Company, or (ii) the ability of the Company to conduct its business, including
any confidentiality or proprietary rights agreement with the Company. To the
Company's Knowledge, no director, officer, or other key employee of the Company
intends to terminate his employment with the Company, except as set forth in
Part 3.19 of the Disclosure Letter.
(c) Part 3.19 of the Disclosure Letter also contains a
complete and accurate list of the following information, if applicable, for each
former employee or director of the Company, or their dependents, receiving
benefits or scheduled to receive benefits from the Company or Company Plans in
the future: name, pension benefit, pension option election, retiree medical
insurance coverage, retiree life insurance coverage, and other benefits.
3.20 LABOR RELATIONS; COMPLIANCE. The Company has not been, and is
not, a party to any collective bargaining or other labor Contract. There has not
been, there is not presently pending or existing, and to the Company's Knowledge
there is not Threatened, (a) any strike, slowdown, picketing, work stoppage, or
employee grievance process, (b) any Proceeding against or affecting the Company
relating to the alleged violation of any Legal Requirement pertaining to labor
relations or employment matters, including any charge or complaint filed by an
employee or union with the National Labor Relations Board, the Equal Employment
Opportunity Commission, or any comparable Governmental Body, organizational
activity, or other labor or employment dispute against or affecting the Company
or its premises, or (c) any application for certification of a collective
bargaining agent. To the Knowledge of the Company, no event has occurred or
circumstance exists that could provide the basis for any work stoppage or other
labor dispute. There is no lockout of any employees by the Company, and no such
action is contemplated by the Company. Except as disclosed in Part 3.20 of the
Disclosure Letter, the Company has complied in all material respects with all
Legal Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closing. The Company is not liable for the payment of any
compensation, damages, taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements.
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3.21 INTELLECTUAL PROPERTY.
(a) INTELLECTUAL PROPERTY ASSETS. The term "Intellectual
Property Assets" includes:
(i) the Company's name, all fictional business names, trade
names, registered and unregistered trademarks, service marks,
and applications (collectively, "Marks");
(ii) patents, patent applications, and inventions and
discoveries that may be patentable (collectively, "Patents");
(iii) all copyrights and registrations and applications
therefor in both published works and unpublished works
(collectively, "Copyrights");
(iv) all rights in mask works (collectively, "Rights in Mask
Works"); and
(v) all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process
technology, plans, drawings, and blue prints (collectively,
"Trade Secrets");
owned, used, or licensed by the Company as licensee or licensor. All such
Intellectual Property Assets are listed by category as part of Part 3.21 of the
Disclosure Letter.
(b) AGREEMENTS. Part 3.21 of the Disclosure Letter sets forth
a complete and accurate list of all Contracts relating to the Intellectual
Property Assets to which the Company is a party or by which the Company is
bound, except for any license implied by the sale of a product and perpetual,
paid-up licenses for commonly available software programs with a value of less
than $2,500 under which the Company is the licensee. There are no outstanding or
Threatened disputes or disagreements with respect to any such agreement.
(c) KNOW-HOW NECESSARY FOR THE BUSINESS. Except as described
in Part 3.21 of the Disclosure Letter:
(i) The Intellectual Property Assets are all those necessary
for the operation of the Company's business as it is currently
conducted. The Company is the owner of all right, title, and
interest in and to each of the material Intellectual Property
Assets, free and clear of all material liens, security
interests, charges, encumbrances, equities, and other adverse
claims, and has the right to use without payment to a third
party all of the Intellectual Property Assets.
(ii) Except as set forth in Part 3.21 of the Disclosure Letter,
since January 1, 1994 all of the former and current employees
of the Company have executed written Contracts with the Company
that assign to the Company all rights to any inventions,
improvements, discoveries, or information relating to the
business of the Company. To the Company's
28
Knowledge, no employee of the Company has entered into any
Contract that restricts or limits in any way the scope or type
of work in which the employee may be engaged or requires the
employee to transfer, assign, or disclose information
concerning his work to anyone other than the Company.
(d) PATENTS. Except as described in Part 3.21 of the
Disclosure Letter: Part 3.21(d) of the Disclosure Letter contains a complete and
accurate list (including identifying numbers and dates of issuance) and summary
description of all Patents.
(e) TRADEMARKS. Except as described in Part 3.21 of the
Disclosure Letter:
(i) Part 3.21(e) of Disclosure Letter contains a complete and
accurate list (including identifying numbers and dates of
issuance) and summary description of all Marks that have been
registered with the United States Patent and Trademark Office
or that have been submitted to such Office for registration.
The Company is the owner of all right, title, and interest in
and to each of the trademark applications listed thereon, free
and clear of all liens, security interests, charges,
encumbrances, equities, and other adverse claims.
(ii) To the Company's Knowledge, no Xxxx has been or is now
involved in any opposition and, to the Company's Knowledge, no
such action is Threatened with the respect to any of the Marks.
(iii) To the Company's Knowledge, there is no potentially
interfering trademark or trademark application of any third
party.
(iv) No Xxxx is infringed or, to the Company's Knowledge, has
been challenged or threatened in any way. To the Company's
Knowledge, none of the Marks used by the Company infringes or
is alleged to infringe any trade name, trademark, or service
xxxx of any third party.
(v) All products and materials containing a registered Xxxx
xxxx the proper federal registration notice where permitted by
law.
(f) COPYRIGHTS. The Company has filed no copyright
applications with the United States Copyright Office except as set forth on Part
3.21(f) of the Disclosure Letter. No Copyright is infringed or, to Stockholder's
Knowledge, has been challenged or threatened in any way. To the Company's
Knowledge, none of the subject matter of any of the Copyrights infringes or is
alleged to infringe any copyright of any third party or is a derivative work
based on the work of a third party.
29
(g) TRADE SECRETS.
(i) With respect to each material Trade Secret, the
documentation relating to such Trade Secret is current,
accurate, and sufficient in detail and content to identify and
explain it and to allow its full and proper use without
reliance on the knowledge or memory of any individual.
(ii) The Company has taken all reasonable precautions to
protect the secrecy, confidentiality, and value of their Trade
Secrets.
(iii) The Company has good title and an absolute (but not
necessarily exclusive) right to use the Trade Secrets. No Trade
Secret is subject to any adverse claim or has been challenged
or threatened in any way that is likely to have a Material
Adverse Effect on the Company's business, assets or financial
condition.
(h) COMPLIANCE WITH LEGAL AND CONTRACTUAL REQUIREMENTS. Except
as disclosed on Part 3.21(h) of the Disclosure Letter, the Company has all
material software and other Intellectual Property Asset licenses, and has paid
all royalties and fees with respect thereto required to be paid prior to the
date of this Agreement, necessary to operate its business in compliance with all
material contractual requirements and Legal Requirements to which it may be
subject.
3.22 CERTAIN PAYMENTS. Since January 1, 1997, to the Knowledge of
the Company neither the Company nor any director, officer, agent, or employee of
the Company, or any other Person associated with or acting for or on behalf of
the Company, has directly or indirectly, in violation of any Legal Requirement,
(a) made any contribution, gift, bribe, rebate, payoff, influence payment,
kickback, or other payment to any Person, private or public, regardless of form,
whether in money, property, or services (i) to obtain favorable treatment in
securing business, (ii) to pay for favorable treatment for business secured, or
(iii) to obtain special concessions or for special concessions already obtained,
for or in respect of the Company or any Affiliate of the Company, or (b)
established or maintained any fund or asset that has not been recorded in the
books and records of the Company.
3.23 RELATIONSHIPS WITH RELATED PERSONS. No director or officer of
the Company has, or since January 1, 1997 has had, any interest in any property
(whether real, personal, or mixed and whether tangible or intangible), used in
or pertaining to the Company's business. Except as described in Part 3.23 to the
Disclosure Letter, no director or officer of the Company is, or since January 1,
1997 has owned (of record or as a beneficial owner) an equity interest or any
other financial or profit interest in, a Person that has (i) had business
dealings or a material financial interest in any transaction with the Company
other than business dealings or transactions conducted in the Ordinary Course of
Business with the Company at substantially prevailing market prices and on
substantially prevailing market terms, or (ii) engaged in competition with the
Company with respect to any line of the products or services of the Company (a
"Competing Business") in any market presently served by the Company. Except as
30
set forth in Part 3.23 of the Disclosure Letter, no director or officer of the
Company is a party to any Contract with, or has any claim or right against, the
Company.
3.24 BROKERS OR FINDERS. The Company has incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement.
3.25 S-4 REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS.
None of the information supplied by the Company for inclusion or incorporation
by reference in the S-4 Registration Statement or the Proxy Statement/Prospectus
will (a) in the case of the S-4 Registration Statement, at the time it becomes
effective, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading or (b) in the case of the Proxy Statement/Prospectus, at the time
of mailing the Proxy Statement/Prospectus, and at the time of the Company
Shareholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. If at any time prior to the Effective Time any event with
respect to the Company or its Principal Shareholders, officers or directors
shall occur that is required to be described in the Proxy Statement/Prospectus
or the S-4 Registration Statement, the Company shall notify Parent thereof by
reference to this Section 3.25 and cooperate with Parent in preparing and filing
with the Commission and, as required by law, disseminating to the shareholders
of the Company an amendment or supplement which accurately describes such event
or events in compliance with all provisions of applicable law.
3.26 CUSTOMERS AND SUPPLIERS. Part 3.26 of the Disclosure Letter
sets forth: (a) a complete and accurate list of the customers of the Company
accounting for 2% or more of the Company's sales during the 24-month period
ended December 31, 1999, showing the approximate total sales by the Company to
each such customer during such period and (b) a complete and accurate list of
the suppliers of the Company from whom the Company has purchased 5% or more of
the goods or services purchased by the Company during the 24-month period ended
December 31, 1999.
3.27 ORDERS, COMMITMENTS AND RETURNS. Part 3.27 of the Disclosure
Letter contains (a) an accurate summary of the company's total backlog of orders
as of December 31, 1999 (including all accepted and unfulfilled sales orders)
and (b) the aggregate of all outstanding purchase orders issued by the Company
as of December 31, 1999 (which include all contracts or commitments for the
purchase by the Company of merchandise, materials or other supplies). A list of
all outstanding purchase orders for inventory components in excess of $10,000 as
of December 31, 1999, categorized by vendor, has been provided by the Company to
Parent in writing. All such sale and purchase commitments were made in the
Ordinary Course of Business. Except as set forth in Part 3.27 of the Disclosure
Letter, there are no outstanding claims in excess of $50,000 in the aggregate or
$10,000 individually against the Company to return products or merchandise by
reason of alleged failure to conform to customer expectations, defective
products, missed delivery dates or otherwise, or of products in the possession
of customers under an understanding that such products would be returnable.
31
3.28 DISCLOSURE. No representation or warranty of the Company in
this Agreement and no statement in the Disclosure Letter omits to state a
material fact necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not misleading.
4. Representations and Warranties of Parent.
-----------------------------------------
Except as provided in the Parent's Disclosure Letter (the "Parent
Disclosure Letter"), Parent represents and warrants to the Company as follows:
4.1 ORGANIZATION AND GOOD STANDING. Each of Parent and Sub is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Oregon, with full corporate power and authority to conduct
its business as it is now being conducted and to own or use the properties and
assets that it purports to own or use. Each of Parent and Sub is duly qualified
to do business as a foreign corporation and is in good standing under the laws
of each state or other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by it,
requires such qualification.
4.2 AUTHORITY; NO CONFLICT.
(a) Each of Parent and Sub has the requisite corporate power
and authority to execute and deliver this Agreement and all other agreements and
documents contemplated hereby and to carry out its obligations hereunder. The
execution, delivery and performance of this Agreement and all other agreements
and documents contemplated hereby and the consummation of the Merger and of the
other transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of each of Parent and Sub and no other
corporate proceedings on the part of Parent or Sub are necessary to authorize
this Agreement and all other agreements and documents contemplated hereby or to
consummate the transactions so contemplated. This Agreement has been duly
executed and delivered by each of Parent and Sub and constitutes, and all
agreements and documents contemplated hereby when executed and delivered
pursuant hereto for value received will constitute, the valid and binding
obligations of each of Parent and Sub.
(b) Neither the execution and delivery of this Agreement by
Parent and Sub, nor the consummation or performance of any of the Contemplated
Transactions by Parent or Sub, will, directly or indirectly (with or without
notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A)
any provision of the Organizational Documents of either Parent
or Sub, or (B) any resolution adopted by the board of directors
or the stockholders of either Parent or Sub;
(ii) contravene, conflict with, or result in a violation of, or
give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions or to exercise
any remedy or obtain any relief under, any Legal Requirement or
any Order to which Parent or Sub, or any of the assets owned or
used by Parent or Sub, may be subject;
32
(iii) contravene, conflict with, or result in a violation of
any of the terms or requirements of, or give any Governmental
Body the right to revoke, withdraw, suspend, cancel, terminate,
or modify, any Governmental Authorization that is held by
Parent or Sub or that otherwise relates to the business of, or
any of the assets owned or used by, Parent or Sub;
(iv) cause Parent, Sub or the Company to become subject to, or
to become liable for the payment of, any Tax;
(v) cause any of the assets owned by the Company to be
reassessed or revalued by any taxing authority or other
Governmental Body;
(vi) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to
declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel,
terminate, or modify, any contract to which Parent or Sub is a
party; or
(vii) result in the imposition or creation of any charge,
claim, community property interest, condition, equitable
interest, lien, option, pledge, security interest or
encumbrance upon or with respect to any of the assets owned or
used by Parent or Sub.
Except as set forth in Part 4.2 of the Parent Disclosure Letter, neither Parent
nor Sub is or will be required to give any notice to or obtain any Consent from
any Person in connection with the execution and delivery of this Agreement or
the consummation or performance of any of the Contemplated Transactions.
4.3 COMMISSION REPORTS. Parent has heretofore delivered or made
available to the Company true and complete copies of all reports, registration
statements and other documents (in each case together with all amendments
thereto) filed by Parent with the Commission since January 1, 1998 (such
reports, registration statements, definitive proxy statements and other
documents, together with any amendments thereto, are sometimes collectively
referred to as the "Parent Commission Filings"). The Parent Commission Filings
constitute all of the documents (other than preliminary material) that Parent
was required to file with the Commission since such date. As of their respective
dates, each of the Parent Commission Filings complied in all material respects
with the applicable requirements of the Securities Act, the Exchange Act and the
rules and regulations under each such Act, and none of the Parent Commission
Filings contained as of such date any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
4.4 CERTAIN PROCEEDINGS. There is no pending Proceeding that has
been commenced against Parent or Sub that challenges, or may have the effect of
preventing,
33
delaying, making illegal, or otherwise interfering with, any of the Contemplated
Transactions. To Parent's Knowledge, no such Proceeding has been Threatened.
4.5 BROKERS OR FINDERS. Neither Parent, Sub nor their respective
agents have incurred any obligation or liability, contingent or otherwise, for
brokerage or finders' fees or agents' commissions or other similar payment in
connection with this Agreement.
4.6 INTERIM OPERATIONS OF SUB. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby and has not engaged
in any business activities or conducted any operations other than in connection
with the transactions contemplated hereby.
4.7 COMPANY STOCK OWNERSHIP. Neither Parent nor any of its
Subsidiaries owns any shares of Company Common Stock or any securities
convertible into Company Common Stock except as set forth in Part 4.7 of the
Parent Disclosure Letter.
4.8 S-4 REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS.
None of the information supplied by Parent for inclusion or incorporation by
reference in the S-4 Registration Statement will at the time it becomes
effective contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If at any time prior to the Effective Time any event with
respect to Parent shall occur that is required to be described in the S-4
Registration Statement, Parent shall notify Company thereof by reference to this
Section 4.8 and cooperate with Company in preparing and filing with the
Commission and, as required by law, disseminating to the shareholders of the
Company an amendment or supplement which accurately describes such event or
events in compliance with all provisions of applicable law.
4.9 DISCLOSURE. No representation or warranty of Parent in this
Agreement and no statement in Parent's Disclosure Letter omits to state a
material fact necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not misleading.
5. Covenants of Company Prior to Effective Time.
--------------------------------------------
5.1 ACCESS AND INVESTIGATION. Between the date of this Agreement
and the earlier to occur of the Effective Time or termination of this Agreement
under Section 10, Company will, and will cause its Representatives to, (a)
afford Parent and its Representatives (collectively, "Parent's Advisors") full
and free access to the Company's personnel, properties (including subsurface
testing), contracts, books and records, and other documents and data, (b)
furnish Parent and Parent's Advisors with copies of all such contracts, books
and records, and other existing documents and data as Parent may reasonably
request, and (c) furnish Parent and Parent's Advisors with such additional
financial, operating, and other data and information as Parent may reasonably
request.
5.2 OPERATION OF THE BUSINESSES OF THE COMPANY. Between the date
of this Agreement and the earlier to occur of the Effective Time or termination
of this Agreement under Section 10, Company will:
34
(a) conduct the business of the Company only in the Ordinary
Course of Business;
(b) not grant, nor (except as required under applicable Company
plans) accelerate the vesting of, any options with respect to any shares of the
capital stock of the Company;
(c) use its Best Efforts to preserve intact the current
business organization of the Company, keep available the services of the current
officers, employees, and agents of the Company, and maintain the relations and
goodwill with suppliers, customers, landlords, creditors, employees, agents, and
others having business relationships with the Company;
(d) confer with Parent concerning operational matters of a
material nature; and
(e) otherwise report periodically to Parent concerning the
status of the business, operations, and finances of the Company.
5.3 NEGATIVE COVENANT. Except as otherwise expressly permitted by
this Agreement, between the date of this Agreement and the earlier to occur of
the Effective Time and termination of this Agreement under Section 10, Company
will not, without the prior consent of Parent, take any affirmative action, or
fail to take any reasonable action within its control, as a result of which any
of the changes or events (including without limitation the entering into of any
applicable Contract described therein) listed in Section 3.15 is likely to
occur.
5.4 REQUIRED APPROVALS. As promptly as practicable after the date
of this Agreement, Company will make all filings required by Legal Requirements
to be made by them in order to consummate the Contemplated Transactions. Between
the date of this Agreement and the earlier to occur of the Effective Time or
termination of this Agreement under Section 10, Company will (a) cooperate with
Parent with respect to all filings that Parent elects to make or is required by
Legal Requirements to make in connection with the Contemplated Transactions, and
(b) cooperate with Parent in obtaining all required consents.
5.5 NOTIFICATION. Between the date of this Agreement and the
earlier to occur of the Effective Time or termination of this Agreement under
Section 10, Company will promptly notify Parent in writing if Company becomes
aware of any fact or condition that causes or constitutes a Breach of any of
Company's representations and warranties as of the date of this Agreement.
Should any such fact or condition require any change in the Disclosure Letter if
the Disclosure Letter were dated the date of the occurrence or discovery of any
such fact or condition, Company will promptly deliver to Parent a supplement to
the Disclosure Letter specifying such change. During the same period, Company
will promptly notify Parent of the occurrence of any Breach of any covenant of
Company in this Section 5 or of the occurrence of any event that may make the
satisfaction of the conditions in Sections 7 or 9 impossible or unlikely.
35
5.6 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS. Except for the
indebtedness listed on Schedule 5.6 or as expressly provided otherwise in this
Agreement, Company will cause all indebtedness owed by any Stockholder or any
Related Person of Company to be paid in full prior to the Closing Date.
5.7 NO SOLICITATIONS.
(a) The Company shall not, directly or indirectly, through any
Shareholder, officer, director, employee, representative or agent of the Company
or any of its Subsidiaries, solicit or encourage (including by way of furnishing
information) the initiation of any inquiries or proposals regarding any merger,
sale of substantial assets, sale of shares of capital stock (including, without
limitation, by way of a tender offer) or similar transactions involving the
Company or any of its Subsidiaries (any of the foregoing inquiries or proposals
being referred to herein as an "Acquisition Proposal"); provided, however, that
nothing contained in this Agreement shall prevent the Board of Directors of the
Company from referring any Third Party to this Section 5.7 or from making a copy
of this Section 5.7 available to any Third Party. Nothing contained in this
Section 5.7 shall prevent the Board of Directors of the Company from
considering, negotiating, approving and recommending to the shareholders of the
Company (after consulting with its financial advisors, and determining after
consulting with counsel that the Board of Directors is required to do so in
order to discharge properly its fiduciary duties) a Superior Proposal. A
"Superior Proposal" shall mean an unsolicited bona fide Acquisition Proposal
made by a Third Party on terms that a majority of the members of the Company's
Board of Directors determines in their good faith reasonable judgment (based on
the advice of an independent financial advisor) would be more favorable to the
Company's shareholders than the transactions contemplated by this Agreement and
for which any required financing is committed or which, in the good faith
reasonable judgment of a majority of such members (after consultation with an
independent financial advisor), is reasonably capable of being financed by such
Third Party.
(b) The Company shall promptly (but in no case later than one
business day) notify Parent after receipt of any Acquisition Proposal or any
request for nonpublic information relating to the Company or any of its
Subsidiaries in connection with an Acquisition Proposal or for access to the
properties, books or records of the Company or any of its Subsidiaries by any
Person that informs the Board of Directors of the Company or such Subsidiary
that it is considering making, or has made, an Acquisition Proposal. Such notice
to Parent shall be made orally and in writing and shall indicate in reasonable
detail the identity of the offeror and the terms and conditions of such
proposal, inquiry or contact.
(c) If the Board of Directors of the Company receives a request
for material nonpublic information by a party who makes a bona fide Acquisition
Proposal and the Board of Directors of the Company determines that such proposal
is a Superior Proposal then, and only in such case, the Company may, subject to
the execution of a confidentiality agreement substantially similar to that then
in effect between the Company and Parent, provide such party with access to
information regarding the Company. The Company will promptly (but in no case
later than 24 hours) notify Parent of any determination by the Company's Board
of Directors that a "Superior Proposal" has been made.
36
(d) The Company shall immediately cease and cause to be
terminated any existing discussions or negotiations with any parties (other than
Parent and Sub) conducted heretofore with respect to any of the foregoing. The
Company agrees not to release any Third Party from an confidentiality or
standstill agreement to which the Company is a party.
(e) The Company shall ensure that the officers, directors and
employees of the Company and its Subsidiaries, and any investment banker or
other advisor or representative retained by the Company, are aware of the
restrictions described in this Section 5.7.
5.8 MEETING OF SHAREHOLDERS. The Company will take all action
necessary in accordance with applicable law and its Articles of Incorporation
and Bylaws to convene a meeting of its Shareholders (the "Company Shareholders
Meeting") as promptly as practicable to consider and vote upon the Merger.
Subject to the fiduciary duties of the Company's Board of Directors under
applicable law as advised by counsel, the Board of Directors of the Company
shall recommend and declare advisable such approval, and the Company shall as
promptly as possible following dissemination of the Proxy Statement/Prospectus
take all lawful action to solicit, and use all reasonable efforts to obtain,
such approval.
5.9 REGISTRATION STATEMENT/PROXY MATERIALS. The Company will, as
promptly as practicable, cooperate with Parent to prepare and file with the
Commission preliminary proxy materials that will constitute a proxy statement in
connection with the vote of Company's Shareholders with respect to the Merger,
together with any amendments thereof or supplements thereto (in each case, in
the form or forms mailed to the Company's shareholders, the "Proxy
Statement/Prospectus"). Parent will also prepare and file with the SEC a
registration statement on Form S-4 (the "S-4 Registration Statement"),
containing the definitive Proxy Statement/Prospectus, in connection with the
registration under the Securities Act of the Series B Preferred shares issuable
upon conversion of the Company Shares and the other transactions contemplated
hereby. Parent and the Company will use all reasonable efforts to have the S-4
Registration Statement declared effective as promptly as practicable, and also
will take any other action required to be taken under federal or state
securities laws, and will use all reasonable efforts to cause the Proxy
Statement/Prospectus to be mailed to shareholders of the Company at the earliest
practicable date. If at any time prior to the Effective Time any event relating
to or affecting the Company or Parent shall occur as a result of which it is
necessary, in the opinion of counsel for the Company or of counsel for Parent,
to supplement or amend the S-4 Registration Statement in order to make such
document not misleading in light of the circumstances existing at the time
approval of the shareholders of the Company is sought, the Company and Parent
will forthwith prepare and file with the SEC an amendment or supplement to the
S-4 Registration Statement so that such document, as so supplemented or amended,
will not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
5.10 TERMINATION OF COMPANY STOCK RIGHTS PLAN. Between the date
hereof and the Effective Time, the Company's Board of Directors will terminate
the Company Stock Rights Plan.
37
5.11 BEST EFFORTs. Between the date of this Agreement and the
earlier to occur of the Effective Time and termination of this Agreement under
Section 10, Company will use its Best Efforts to cause the conditions in
Sections 7, 8 and 9 to be satisfied.
6. Covenants of Parent and Sub Prior to Effective Time.
---------------------------------------------------
6.1 APPROVAL OF PARENT. Parent, as the sole shareholder of Sub,
will act by written consent to approve the Merger and the adoption of this
Agreement by Sub, which consent Parent and Sub represent and warrant will
constitute the requisite approval of the Merger and this Agreement by Sub.
6.2 APPROVALS OF GOVERNMENTAL BODIES. As promptly as practicable
after the date of this Agreement, Parent and Sub will, and will cause each of
their Related Persons to, make all filings required by Legal Requirements to be
made by them to consummate the Contemplated Transactions. Between the date of
this Agreement and the earlier to occur of the Effective Time, Parent will, and
will cause each Related Person to, (a) cooperate with Company and Stockholders
with respect to all filings that Company elect to make or are required by Legal
Requirements to make in connection with the Contemplated Transactions, and (b)
cooperate with Company in obtaining all required consents.
6.3 CONDUCT OF BUSINESS OF SUB. During the period from the date of
this Agreement to the earlier to occur of the Effective Time or termination of
this Agreement under Section 10, Sub shall not engage in any activities of any
nature except as provided in or contemplated by this Agreement.
6.4 ACCESS AND INVESTIGATION. Between the date of this Agreement
and the earlier to occur of the Effective Time or termination of this Agreement
under Section 10, Parent will, and will cause its Representatives to, (a) afford
Company and its Representatives (collectively, "Company's Advisors") full and
free access to the Company's books and records, and other documents and data,
(b) furnish Company and Company's Advisors with copies of all such documents and
data as Company may reasonably request, and (c) furnish Company and Company's
Advisors with such additional financial, operating, and other data and
information as Company may reasonably request.
6.5 NOTIFICATION. Between the date of this Agreement and the
earlier to occur of the Effective Time or termination of this Agreement under
Section 10, Parent will promptly notify Company in writing if Parent becomes
aware of any fact or condition that causes or constitutes a Breach of any of
Parent's representations and warranties as of the date of this Agreement. Should
any such fact or condition require any change in the Parent Disclosure Letter if
the Disclosure Letter were dated the date of the occurrence or discovery of any
such fact or condition, Parent will promptly deliver to Company a supplement to
the Disclosure Letter specifying such change. During the same period, Parent
will promptly notify Company of the occurrence of any Breach of any covenant of
Parent in this Section 6 or of the occurrence of any event that may make the
satisfaction of the conditions in Sections 8 or 9 impossible or unlikely.
6.6 REGISTRATION STATEMENT/PROXY MATERIALS. Parent will prepare
and file with the SEC a registration statement on Form S-4 (the "S-4
Registration Statement"), containing the
38
definiteive Proxy Statement/Prospectus, in connection with the registration
under the Securities Act of the Series B Preferred shares issuable upon
conversion of the Company Shares and the other transactions contemplated hereby.
Parent will use all reasonable efforts to have the S-4 Registration Statement
declared effective as promptly as practicable, and also will take any other
action required to be taken under federal or state securities laws, and will use
all reasonable efforts to assist the Company to cause the Proxy
Statement/Prospectus to be mailed to shareholders of the Company at the earliest
practicable date. If at any time prior to the Effective Time any event relating
to or affecting the Parent shall occur as a result of which it is necessary, in
the opinion of counsel for the Company or of counsel for Parent, to supplement
or amend the S-4 Registration Statement in order to make such document not
misleading in light of the circumstances existing at the time approval of the
shareholders of the Company is sought, Parent will with Company's cooperation
forthwith prepare and file with the SEC an amendment or supplement to the S-4
Registration Statement so that such document, as so supplemented or amended,
will not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
6.7 BEST EFFORTS. Between the date of this Agreement and the
earlier to occur of the Effective Time or termination of this Agreement under
Section 10, Parent and Sub will use their Best Efforts to cause the conditions
in Sections 7, 8 and 9 to be satisfied.
6.8 NASDAQ LISTING. Within 120 days following the Closing, the
Company will cause the Series B Shares and attached Warrants issued in the
Merger to be listed on Nasdaq.
7. Conditions Precedent to Parent's and Sub's Obligation to Close.
--------------------------------------------------------------
The obligation of Parent and the obligation of Sub to effect the
Merger and the other Contemplated Transactions shall be subject to the
fulfillment, at or prior to the Closing Date, of the following conditions:
7.1 REPRESENTATIONS AND WARRANTIES TRUE AT THE EFFECTIVE TIME.
Each of the Company's representations and warranties in this Agreement must have
been accurate in all respects as of the date of this Agreement, and the
representations and warranties contained in Sections 3.2, 3.3, 3.11, 3.14 (to
the extent of any Proceeding under Section 3.14(a)(ii) or any Proceeding under
Section 3.14(a)(i), excluding matters set forth in the Disclosure Letter, that
may result in an uninsured loss in excess of $2 million), 3.24 and 3.25 must be
accurate in all respects as of the Closing Date as if made on and as of the
Closing Date, without giving effect to any supplement to the Disclosure Letter,
and the Company shall have delivered to Parent a certificate to such effect
signed by the Chief Executive Officer of the Company.
7.2 THE COMPANY'S PERFORMANCE. All of the covenants and
obligations of the Company to be performed or complied with pursuant to the
terms of this Agreement on or before the Closing Date shall have been fully
performed in all material respects, and at the Closing Date the Company shall
have delivered to Parent a certificate to such effect signed by the Chief
Executive Officer of the Company.
39
7.3 AUTHORITY. All action required to be taken by, or on the part
of, the Company and its stockholders to authorize the execution, delivery and
performance of this Agreement and the Articles of Merger and the consummation of
the transactions contemplated hereby and thereby shall have been duly and
validly taken by the Company's Board of Directors and by the holders of the
Company's outstanding Common Stock and Preferred Stock.
7.4 DELIVERIES. Company shall have delivered to Parent the
following:
(a) The corporate minute book and stock book of Company.
(b) Resignations of the each of the existing directors and
officers of the Company, to be effective upon the Closing Date.
(c) An opinion of Xxxx & Xxxxx, P.C., counsel to the Company,
dated the Closing Date, substantially in the form of Exhibit 7.4(c) hereto.
(d) A certificate of the Secretary of the Company, dated the
Closing Date, in the form of Exhibit 7.4(d) hereto.
7.5 CERTAIN LITIGATION. There must not be in effect any Legal
Requirement or any injunction or other Order that (a) prohibits the Merger or
the other Contemplated Transactions, and (b) has been adopted or issued, or has
otherwise become effective, since the date of this Agreement.
7.6 CONSENTS OBTAINED. All consents and approvals of Governmental
Entities or third parties necessary for consummation of the Merger shall have
been obtained.
7.7TERMINATION OF AGREEMENTS. The agreements listed on Exhibit 7.7
between the Company and FMC Corporation shall have been terminated prior to the
Effective Date. The Company shall have terminated the Company Stock Rights Plan.
7.8 ACTION BY COMPANY SERIES B STOCK. Either (i) all shares of the
Company Series B Stock shall have been redeemed prior to the shareholders
meeting referenced in Section 5.8 or the holder thereof shall have voted in
favor of the Merger as part of such meeting.
8. Conditions Precedent to Company's Obligation to Close.
-----------------------------------------------------
The obligation of the Company to effect the Merger and the
other Contemplated Transactions is subject to the satisfaction, at or prior to
the Closing, of each of the following conditions:
8.1 ACCURACY OF REPRESENTATIONS. Each of Parent's representations
and warranties in this Agreement must have been accurate in all respects as of
the date of this Agreement and must be accurate in all respects as of the
Closing Date as if made at the Closing Date and Parent shall have delivered to
Company a certificate to such effect signed by the Chief Executive Officer of
the Parent.
40
8.2 PARENT'S AND SUB'S PERFORMANCE. All of the covenants and
obligations of the Parent and of Sub to be performed or complied with pursuant
to the terms of this Agreement on or before the Closing Date shall have been
fully performed in all material respects, and at the Closing Date the Parent and
Sub shall have delivered to Company a certificate to such effect signed by the
Chief Executive Officer of the Parent.
8.3 AUTHORITY. All action required to be taken by, or on the part
of, the Parent and Sub to authorize the execution, delivery and performance of
this Agreement and the Articles of Merger and the consummation of the
Contemplated Transactions shall have been duly and validly taken by Parent and
Sub.
8.4 DELIVERIES. Parent and Sub shall have delivered to Company and
Stockholders the following:
(a) An opinion of Xxxxxx Xxxx LLP, counsel to Parent and Sub,
dated the Closing Date, substantially in the form of Exhibit 8.4(a) hereto.
(b) A certificate of the Secretary of each of Parent and of
Sub, dated the Closing Date, in the form of Exhibit 8.4(b) hereto.
8.5 FAIRNESS OPINION. The Company shall have received an opinion
as to the fairness of the Merger transaction to the Company's stockholders in
form acceptable to the Company's board of directors.
8.6 CERTAIN LITIGATION. There must not be in effect any Legal
Requirement or any injunction or other Order that (a) prohibits the Merger or
the other Contemplated Transactions, and (b) has been adopted or issued, or has
otherwise become effective, since the date of this Agreement.
9. Conditions to Obligations of Each Party.
---------------------------------------
The obligations of each party to effect the Merger and the
other Contemplated Transactions shall be subject to the fulfillment, at or prior
to the Closing Date, of the following conditions:
9.1 COMMISSION APPROVAL. The S-4 Registration Statement with
respect to the issuance of the Series B Preferred shares issuable pursuant to
the Merger shall have been declared effective.
9.2 APPROVAL BY COMPANY'S COMMON AND PREFERRED STOCK. The holders
of the requisite number of the Company's Common Stock under the CCL and the
holder of any Company Series B Stock outstanding at the date of the Company's
special meeting of shareholders held pursuant to Section 5.8 shall have voted
such shares in favor of the transaction.
10. Termination.
-----------
10.1 TERMINATION EVENTS. This Agreement may, by notice given prior
to or at the Closing, be terminated after the date hereof and prior to the
Closing:
41
(a) by Parent if a material Breach of any provision of this
Agreement has been committed by Company, and in any such case such Breach has
not been waived by Parent or is not cured by Company within ten days following
receipt of notice of the Breach;
(b) by Parent if any of the conditions in Section 7 has not
been satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Parent to comply with
its obligations under this Agreement) and Parent has not waived such condition
on or before the Closing Date;
(c) by Parent or the Company if at the Company Shareholders
Meeting (including any adjournment or postponement thereof), the requisite vote
of the holders of the Company's Common Stock or Preferred Stock shall not have
been obtained;
(d) by Parent if (i) the Board of Directors of the Company
shall fail to recommend, or shall withdraw, modify or change its recommendation
of, this Agreement or the Merger in a manner adverse to Parent or shall have
resolved to do any of the foregoing; (ii) the Board of Directors of the Company
shall have resolved to recommend, or have recommended, to the shareholders of
the Company an Superior Proposal; or (iii) a tender offer or exchange offer for
25% or more of the outstanding shares of Company voting stock is commenced and
the Board of Directors of the Company has resolved to recommend, or has
recommended, that the shareholders of the Company tender their shares in such
tender offer or exchange offer;
(e) by Company if a material Breach of any provision of this
Agreement has been committed by Parent or Sub, and in any such case such Breach
has not been waived or is not cured within ten days following receipt of notice
of the Breach;
(f) by Company if any of the conditions in Section 8 has not
been satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Company to comply with
their obligations under this Agreement) and Company has not waived such
condition on or before the Closing Date;
(g) by Company or Parent if Company's Board of Directors has
voted to approve a Superior Proposal;
(h) by mutual consent of Parent and Company; or
(i) by Parent or Company if the Closing has not occurred (other
than through the failure of any party seeking to terminate this
Agreement to comply fully with its obligations under this
Agreement) on or prior to October 31, 2000, or such later date
as the parties may agree upon.
10.2 EFFECT OF TERMINATION. Except as expressly provided otherwise
herein, each party's right of termination is in addition to any other rights it
may have under this Agreement or otherwise, and the exercise of a right of
termination will not be an election of remedies. If this Agreement is terminated
by a party because the other party failed to satisfy a condition, then
termination of this Agreement shall be deemed to be an election of remedies, and
neither party shall have any further right or claim with respect to the other
party; provided, however, that if this Agreement is terminated by a party
because of the other party's failure to
42
comply with any of its covenants under this Agreement, the terminating party's
right to pursue all legal remedies will survive such termination unimpaired.
11. General Provisions.
------------------
11.1 FEES AND EXPENSES.
(a) Except as set forth in subsection (b) of this Section 11.1
or as otherwise provided herein, all fees and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expenses, whether or not the Merger is consummated;
provided, however, that Parent shall pay 100% of all fees and expenses, other
than attorneys and accountants fees (as to which each party shall bear its own
expenses), incurred in connection with the printing and filing of the Proxy
Statement/Prospectus (including any preliminary materials relating thereto) and
the S-4 Registration Statement (including financial statements and exhibits) and
any amendments or supplements thereto (together, the "Proxy Expenses"); provided
further, however, that Company shall pay 100% of the Proxy Expenses in the event
the Merger is not approved by the holders of the Company's Common Stock and
Preferred Stock.
(b) The Company shall pay Parent a fee of $2 million upon the
earliest to occur of any of the following events:
(i) the termination of this Agreement by Parent pursuant to
Section 10.1(d);
(ii) the termination of this Agreement by Parent pursuant to
Section 10.1(a); or
(iii) the termination of this Agreement by the Company or
Parent pursuant to Section 10.1(g).
(c) The Company shall pay Parent a fee of $500,000 upon the
termination of this Agreement by Parent or the Company pursuant to Section
10.1(c) as a result of the failure to receive the requisite approval of the
Company's outstanding Common Stock or Preferred Stock, or by Parent pursuant to
Section 10.1(b) based on a failure of the condition in Section 7.5, or by the
Company pursuant to Section 10.1(f) based on the failure of the condition set
forth in Section 8.6, if in any such event within 24 months from the date of
this Agreement the Company enters into an agreement to be acquired by any third
party (including any current AMVC shareholder) or a majority of AMVC Common
Stock is acquired by a third party in a tender offer.
(d) Parent shall pay the Company a fee of $2 million upon
termination of this Agreement by the Company pursuant to Section 10.1(e) after a
Breach by Parent of this Agreement, or pursuant to Section 10.1(f) based upon a
failure of the conditions set forth in Sections 8.1 through 8.4.
(e) The fees payable pursuant to Sections 11.1(b), (c) or
11.1(d) shall be paid within one business day after the first to occur of the
events described in
43
Sections 11.1(b), (c) or 11.1(d), as the case may be, and the expenses payable
pursuant to Section 11.1(a) shall be paid within five business days after
receipt of written documentation of the amount of expenses so payable; provided,
however, that in no event shall Parent or the Company, as the case may be, be
required to pay such fees or expenses to the other, if, immediately prior to the
termination of this Agreement, the party to receive the fees or expenses was in
material breach of its obligations under this Agreement.
11.2 PUBLIC ANNOUNCEMENTS. Any public announcement or similar
publicity with respect to this Agreement or the Contemplated Transactions will
be issued, if at all, at such time and in such manner as Parent and Company
mutually determine. The Company and Parent will consult with each other
concerning the means by which the Company's employees, customers, and suppliers
and others having dealings with the Company will be informed of the Contemplated
Transactions.
11.3 LEGAL PROCEEDINGS. In the event any legal proceeding is
initiated by either party in connection with this Agreement the parties
expressly consent to exclusive jurisdiction and venue with the state or federal
courts located in Portland, Oregon, with the prevailing party entitled to
recover attorney fees and other costs incurred in all pretrial, trial or
appellate proceedings.
11.4 NOTICES. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand, (b) sent by facsimile, provided
that a copy is mailed by certified mail, return receipt requested, (c) received
by the addressee, if sent by certified mail, return receipt requested, or (d)
when received by the addressee, if sent by a nationally recognized overnight
delivery service (receipt requested), in each case to the appropriate addresses
and facsimile numbers set forth below (or to such other addresses and facsimile
numbers as a party may designate by notice to the other parties):
Company: Advanced Machine Vision Corporation
Attn: Xxxxxxx X. Xxxxx
0000 Xxxxxxxx Xxx, Xxxxx 000
Xxxxxxx, XX 00000
With copy to: Xxxx & Xxxxx, P.C.
Attn: Xxxxxxx X. Xxxxx
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Parent: Key Technology, Inc.
Attn: Xxxxxx X. Xxxxxx
000 Xxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
44
With copy to: Xxxxxx Xxxx LLP
Attn: Xxxxxx X. Xxxxxxxx
1600 Pioneer Tower
000 XX Xxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
11.5 FURTHER ASSURANCES. The parties agree (i) to furnish upon
request to each other such further information, (ii) to execute and deliver to
each other such other documents, and (iii) to do such other acts and things, all
as the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
11.6 WAIVER. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any delay
by any party in exercising any right, power, or privilege under this Agreement
or the documents referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
11.7 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes
all prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the amendment.
11.8 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. Neither
party may assign any of its rights under this Agreement without the prior
consent of the other parties, which will not be unreasonably withheld, except
that Parent may assign any of its rights under this Agreement to any present or
future Subsidiary of Parent. Subject to the preceding sentence, this Agreement
will apply to, be binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties. Nothing expressed or referred
to in this Agreement will be construed to give any Person other than the parties
to this Agreement any legal or equitable right, remedy, or claim under or with
respect to this Agreement or any provision of this Agreement. This Agreement and
all of its provisions and conditions are for the sole and exclusive benefit of
the parties to this Agreement and their successors and assigns.
11.9 SEVERABILITY. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will
45
remain in full force and effect. Any provision of this Agreement held invalid
or unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.
11.10 SECTION HEADINGS; CONSTRUCTION. The headings of Sections in
this Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Section" or "Sections" refer
to the corresponding Section or Sections of this Agreement. All words used in
this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word "including"
does not limit the preceding words or terms.
11.11 TIME OF ESSENCE. With regard to all dates and time periods
set forth or referred to in this Agreement, time is of the essence.
11.12 GOVERNING LAW. This Agreement will be governed by the laws of
the State of Oregon without regard to conflicts of laws principles.
[Remainder of Page Intentionally Left Blank]
46
11.13 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
KEY TECHNOLOGY, INC.
By: /S/ XXXXXX X. XXXXXX
Xxxxxx X. Xxxxxx
KTC ACQUISITION CORP.
By: /S/ XXXXXX X. XXXXXX
Xxxxxx X. Xxxxxx
ADVANCED MACHINE VISION
CORPORATION
By: /S/ XXXXXXX X. XXXXX
Xxxxxxx X. Xxxxx
47
AMENDMENT NO. 1 TO
AGREEMENT AND PLAN OF MERGER
Key Technology, Inc. ("Parent"), KTC Acquisition Corp. ("Sub")
and Advanced Machine Vision Corporation ("Company") entered into an Agreement
and Plan of Merger effective February 15, 2000. The parties hereby enter
into this Amendment No. 1 as of February 25, 2000 to provide for the
following additions and modifications to the Merger Agreement:
1. Insurance Coverage.
------------------
Parent shall cause the Surviving Corporation to provide, for an
aggregate period of not less than six years from the Effective Time, the
Company's current directors and officers an insurance and indemnification policy
that provides coverage for events occurring prior to the Effective Time (the
"D&O Insurance") that is substantially similar to the Company's existing policy
or, if substantially equivalent insurance coverage is unavailable, the best
available coverage; provided, however, that the Surviving Corporation shall not
be required to pay an annual premium for the D&O Insurance in excess of 200% of
the last annual premiums paid prior to the date hereof but in such case shall
purchase as much coverage as possible for such amount.
2. Increase in Board of Directors.
------------------------------
Within 30 days of the Effective Date, or the date that Key acquires
a majority of the outstanding Common Stock of AMVC if such event occurs prior to
the Effective Date, Key's Board of Directors will create a vacancy by expanding
the size of the Board of Directors by one member and will fill that vacancy by
the appointment of a nominee designated by AMVC's Board of Directors who is
acceptable to Key's chief executive officer.
3. Amendment of Section 7.1.
------------------------
Section 7.1 of the Merger Agreement is restated in its entirety to
read as follows:
"7.1 Representations and Warranties True at the Effective Time. Each
of the Company's representations and warranties in this Agreement must have been
accurate in all respects as of the date of this Agreement, and the
representations and warranties contained in Sections 3.2, 3.3, 3.11, 3.14 (to
the extent of any Proceeding under Section 3.14(a)(ii) or any Proceeding under
Section 3.14(a)(i), excluding matters set forth in the Disclosure Letter, that
may result in an uninsured loss in excess of $2 million), 3.24 and 3.25 must be
accurate in all respects as of the Closing Date as if made on and as of the
Closing Date, without giving effect to
any supplement to the Disclosure Letter, and the Company shall have delivered
to Parent a certificate to such effect signed by the Chief Executive Officer of
the Company."
4. Construction.
------------
This Amendment is part of the Merger Agreement, and is governed by
the general terms and conditions thereof.
KEY TECHNOLOGY, INC.
By: /S/ XXXXXX X. XXXXXX
-----------------------
Xxxxxx X. Xxxxxx
President
KTC ACQUISITION CORP.
By: /S/ XXXXXX X. XXXXXX
---------------------
Xxxxxx X. Xxxxxx
President
ADVANCED MACHINE VISION
CORPORATION
By: /S/ XXXXXXX X. XXXXX
---------------------
Xxxxxxx X. Xxxxx
President
2
AMENDMENT NO. 2 TO
AGREEMENT AND PLAN OF MERGER
Key Technology, Inc. ("Parent"), KTC Acquisition Corp. ("Sub")
and Advanced Machine Vision Corporation ("Company") entered into an Agreement
and Plan of Merger effective February 15, 2000 and Amendment No. 1 effective
February 25, 2000. The parties hereby enter into this Amendment No. 2
effective as of April 24, 2000 to provide for the following modifications to
the Merger Agreement:
1. Amendment of Sections 2.5 and 2.6.
---------------------------------
Key, Sub and AMVC hereby agree that, effective with the execution
and delivery of this Agreement, Sections 2.5 and 2.6 of the Merger Agreement are
amended and restated to read as follows:
"2.5 CONVERSION AND EXCHANGE OF SHARES. The manner and basis of
converting at the Effective Time Company Common Stock into cash and shares
of Parent's Series B Convertible Preferred Stock, $10.00 par value, having
the rights and preferences set forth in the attached Exhibit 2.5A (the
"Series B Preferred") with the attached redeemable Warrant to purchase
shares of Parent's Common Stock in the form attached as Exhibit 2.5B, the
exchange of certificates therefor, the manner and basis of converting the
Company Series B Preferred Stock into Parent's Series C Convertible
Preferred Stock, $20.00 par value, having the rights and preferences set
forth in the attached Exhibit 2.5C (the "Series C Preferred") with the
attached redeemable Warrant to purchase shares of Parent's Common Stock in
the form attached as Exhibit 2.5B and the manner and basis of converting
Company Options outstanding at the Effective Time shall be as set forth
herein.
Conversion of Shares.
--------------------
(i) (A) Each share of Company Common Stock (both Class A and
Class B) issued and outstanding immediately prior to the Effective Time
(except Dissenting Shares) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive $1.00 in cash and one-tenth of a share of Series B Preferred, with
each share of Series B Preferred to be accompanied by a Warrant,
redeemable at any time by the holder for $2.50 in cash and exercisable at
any time to purchase .25 of a share of Parent's Common Stock at a price of
$15.00 per share
(such Series B Preferred shares and attached Warrants to be issued for
each share of Company Common Stock constituting the "AMVC Common
Conversion Ratio").
(B) Each Dissenting Share shall be converted into the
right to receive payment from the Surviving Corporation with respect
thereto in accordance with the provisions of the CCL.
(ii) Each share of the Company Series B Preferred Stock
outstanding at the Effective Date shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted
into the right to receive one share of Series C Preferred, with each
share of Series C Preferred to be accompanied by a Warrant,
redeemable at any time by the holder for $2.50 in cash and
exercisable at any time to purchase .25 of a share of Parent's
Common Stock at a price of $15.00 per share (such Series C Preferred
shares and attached Warrants to be issued for each share of Company
Series B Preferred Stock constituting the "Series B Conversion
Ratio" and, together with the AMVC Conversion Ratio, the "Conversion
Ratios").
(iii) Each share of Sub Common Stock issued and outstanding as
of the Effective Time, shall, by virtue of the Merger and without
any action on the part of Parent, the sole stockholder of Sub, be
converted into one share of legally and validly issued, fully paid
and nonassessable Common Stock, without par value, of the Surviving
Corporation. The stock certificate of Sub evidencing ownership of
Sub Common Stock shall by virtue of the Merger evidence ownership of
Common Stock of the Surviving Corporation.
(iv) In the event of any stock split, combination,
reclassification, recapitalization, exchange, stock dividend or
other distribution payable in Parent Common Stock with respect to
shares of Parent Common Stock (or if a record date with respect to
any of the foregoing should occur) during the period between the
date of this Agreement and the Effective Time, then the Conversion
Ratios will be appropriately adjusted to reflect such stock split,
combination, reclassification, recapitalization, exchange, stock
dividend or other distribution.
2.6 Exchange of Certificates; Payment. Series B Preferred and
attached Warrants into which Company Common Stock shall be converted
pursuant to the Merger and Series C Preferred and attached Warrants into
which Company Series B Preferred Stock shall be converted pursuant to the
Merger shall be deemed to have been issued at the Effective Time. At the
Closing, Parent shall deliver to the Transfer Agent certificates
evidencing the number of shares of Series B Preferred and attached
Warrants to which that Stockholder is entitled under Section 2.5, together
with the cash payment applicable thereto. The Company will cause to be
delivered such transmittal letters, documents and instruments as Parent or
Parent's transfer agent may reasonably request, each in form reasonably
acceptable to Parent or such transfer agent. Parent shall also deliver to
the Transfer Agent certificates evidencing the number of shares of Series
C Preferred and attached Warrants to be issued pursuant to section 2.5(ii)
above with respect to any shares of Company Series B Preferred Stock
outstanding on the Effective Date."
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2. Construction.
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This Amendment is part of the Merger Agreement, and is governed by
the general terms and conditions thereof.
KEY TECHNOLOGY, INC.
By: /S/ XXXXXX X. XXXXXX
-----------------------
Xxxxxx X. Xxxxxx
President
KTC ACQUISITION CORP.
By: /S/ XXXXXX X. XXXXXX
---------------------
Xxxxxx X. Xxxxxx
President
ADVANCED MACHINE VISION
CORPORATION
By: /S/ XXXXXXX X. XXXXX
---------------------
Xxxxxxx X. Xxxxx
President
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