STOCK PURCHASE AGREEMENT
The parties to this Stock Purchase Agreement dated May 16, 2000 are
KEY TECHNOLOGY, INC., an Oregon corporation ("Purchaser"), FARMCO, INC., an
Oregon corporation (the "Company"), RO-TECH, INC., an Oregon corporation
("Ro-Tech"), and XXXX X. XXXXXX ("JEM"), an officer of each of the Company and
Ro-Tech and a principal shareholder of the Company and the sole shareholder of
Ro-Tech, and XXXXX X. XXXXXX (a "Shareholder" and collectively with JEM, the
"Shareholders")
R E C I T A L S:
A. The Shareholders currently own all of the issued and
outstanding Common Stock of the Company, owning the number of shares set forth
below:
Name No. of Shares
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Xxxx X. Xxxxxx and Xxxxx X. 100
Xxxxxx, as joint tenants
B. JEM currently owns all of the issued and outstanding Common
Stock of Ro-Tech, owning 100 shares.
C. The Company designs, manufactures, sells and services
automation systems for the food processing industry that process product streams
of discrete pieces to improve food safety and quality, with its principal place
of business located in Redmond, Oregon. Ro-Tech has operated throughout its
corporate existence exclusively as a technology provider and manufacturer for
the Company and for no other accounts or customers. Purchaser desires to acquire
all of the issued and outstanding Common Stock of each of the Company and
Ro-Tech from the Shareholders and JEM, respectively.
In consideration of the premises and the representations and
warranties contained herein, the parties agree as follows:
1. PURCHASE OF STOCK.
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1.1 PURCHASE OF STOCK. Subject to the terms and conditions hereof,
and in reliance upon the representations, warranties, covenants and agreements
herein, (i) the Shareholders will sell all of their shares of Common Stock of
the Company set forth opposite the name of each Shareholder below and (ii) JEM
will sell all of his shares of Common Stock of Ro-Tech set forth his name below,
for an aggregate purchase price of $4,990,200 to be apportioned among the
Shareholders and JEM respectively, as set forth below:
Stock Purchase Agreement 1
SELLING SHAREHOLDER NO. OF SHARES OF THE
OF THE COMPANY COMPANY TO BE SOLD PURCHASE PRICE
Xxxx X. Xxxxxx and 100 $4,740,200
Xxxxx X. Xxxxxx
NO. OF SHARES OF RO-TECH
SELLING SHAREHOLDER OF RO-TECH TO BE SOLD PURCHASE PRICE
Xxxx X. Xxxxxx 100 $250,000
Each Shareholder of the Company and JEM as to Ro-Tech represents that all of the
shares to be sold are free and clear of all liens, encumbrances, options,
charges, pledges, mortgages, deeds of trust, security interests, rights of first
refusal, or other restriction of any kind or nature.
1.2 PAYMENT. Purchaser will pay 100% of the purchase price at
Closing in immediately available funds.
2. CLOSING.
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The closing of the transactions provided for in this Agreement (the
"Closing") shall, unless another date or place is agreed upon in writing by the
parties hereto, take place at the offices of Xxxxxx Xxxx LLP at 1600 Pioneer
Tower, 000 XX Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxx 00000 on June 1, 2000 or on such
other date as the parties may mutually agree (the "Closing Date") and will be
deemed effective as of 12:01 a.m. on the Closing Date. Upon surrender by the
Shareholders and JEM of stock certificates (or evidence of lost certificates
reasonably acceptable to Purchaser) representing all of the outstanding shares
of the Company and Ro-Tech, in each instance duly endorsed for transfer to
Purchaser or accompanied by duly executed stock powers naming Purchaser as the
transferee, and Purchaser shall deliver to each Shareholder and JEM,
respectively, the aggregate purchase price to be paid to the Shareholders and
JEM as called for in Section 1 above.
3. REPRESENTATIONS AND WARRANTIES OF JEM.
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Except as otherwise specifically set forth in the Disclosure Schedules
attached hereto, numbered to correspond with the following subsections of this
Section 3, JEM represents and warrants to Purchaser as follows:
3.1 ORGANIZATION AND GOOD STANDING. Each of the Company and
Ro-Tech is a corporation duly organized, validly existing and in good standing
under the laws of the state of Oregon and has all requisite corporate power and
authority to own, lease and operate its assets and properties and to carry on
its business as now being conducted, and to enter into and perform its
obligations under this Agreement. Each of the Company and Ro-Tech is duly
qualified or licensed to do business and in good standing as a foreign
corporation in each jurisdiction in which the failure to be so qualified would
have a material adverse effect on it. For purposes of this Agreement, the term
"material adverse effect" shall mean any change, event, or effect that is or
reasonably likely to be materially adverse to the business (as presently
conducted), assets
Stock Purchase Agreement 2
(including intangible assets), condition (financial or otherwise), or results of
operations of the Company or Ro-Tech, other than as a result of changes in laws
or regulations of general applicability which are not reasonably anticipated by
the Company or Ro-Tech, or any changes resulting from general economic,
financial, market or industry-wide conditions.
3.2 ARTICLES OF INCORPORATION, BYLAWS. Attached hereto as
Schedule 3.2 are true, complete and correct copies of each of the Company's and
Ro-Tech's Articles of Incorporation and Bylaws as amended through the date
hereof.
3.3 CAPITAL STOCK. The authorized capital stock of the Company
consists of 100,000 shares of Voting Common Stock, 100 shares of which are
issued and outstanding, and 100,000 shares of Nonvoting Common Stock, 400 shares
of which are issued and outstanding. The authorized capital stock of Ro-Tech
consists of 500 shares of Common Stock, 100 shares of which are issued and
outstanding. No other classes of stock of each of the Company and Ro-Tech are
authorized. All outstanding shares of each of the Company's Common Stock are
duly authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights created by statute, the Articles of Incorporation or the
Bylaws of the Company or Ro-Tech, or any agreement to which the Company or
Ro-Tech is a party or by which it is bound, and have been issued in compliance
with federal and state securities laws. All of the outstanding shares of
Nonvoting Common Stock of the Company will be redeemed by the Company prior to
Closing for the aggregate sum of $19,600. There are no outstanding options,
warrants, contracts, calls, commitments, preemptive rights or demands of any
nature relating to the Common Stock of the Company or Ro-Tech and there are no
securities or debt obligations convertible into or exchangeable for the
Company's or Ro-Tech's Common Stock. No person may assert any right for any
violation of any preemptive rights of any past or present shareholder of the
Company or Ro-Tech. There are no voting agreements or purchase or sale
agreements applicable to any of the Company's or Ro-Tech's outstanding Common
Stock. All previously issued shares of the Company's and Ro-Tech's capital stock
previously held by persons other than the Shareholders, have been duly redeemed
and restored to authorized but unissued status. Other than the Company's Common
Stock held by the Shareholders, the Ro-Tech Common Stock held by JEM, and the
400 outstanding shares of the Company's Nonvoting Common Stock to be redeemed
prior to Closing, each of the Company and Ro-Tech has no other capital stock
authorized, issued or outstanding.
3.4 SUBSIDIARIES. Each of the Company and Ro-Tech does not have,
and has never had, any subsidiaries and does not otherwise own or control, and
has not otherwise owned or controlled, directly or indirectly, any equity,
partnership, or similar ownership interest in any corporation, partnership,
association, joint venture or other business entity.
3.5 AUTHORITY RELATIVE TO AGREEMENT. Each of the Company and
Ro-Tech has all requisite corporate power and authority to execute and deliver
this Agreement and perform its obligations hereunder. Each of the Company and
Ro-Tech and their respective Board of Directors and shareholders have taken (or
by the Closing Date will have taken) all actions required by law, their
respective Articles of Incorporation and Bylaws or otherwise to authorize and
approve the execution, delivery and performance of this Agreement. This
Agreement has been duly executed and delivered by each of the Company and
Ro-Tech and
Stock Purchase Agreement 3
upon the execution and delivery of this Agreement by the parties, this Agreement
will be the valid and legally binding obligation of each of the Company and
Ro-Tech enforceable in accordance with its terms, subject as to enforcement only
to bankruptcy, insolvency, reorganization, moratorium or other laws affecting
the enforceability of creditors' rights generally or to general equitable
principles.
3.6 EFFECT OF AGREEMENT. Except as set forth on Schedule 3.6, no
consents, waivers, authorizations or approvals are required to be obtained from
any governmental agencies or are required under the provisions of any
instruments to be obtained from any third party in connection with the execution
and consummation of this Agreement by each of the Company and Ro-Tech or any
Shareholder. The execution and delivery of this Agreement and consummation of
the transactions contemplated hereby will not conflict with or result in the
violation of, or breach of any term or provision of, or constitute a default
under (with or without notice or lapse of time, or both), or give rise to a
right of termination, cancellation, modification or acceleration of any
obligation or loss of any benefit, or result in any lien or other claim upon the
properties or assets of the Company or Ro-Tech under, any provision or
restriction of any loan, note, bond, mortgage, indenture, lease, contract,
agreement, license or other instrument, permit, concession, or franchise to
which the Company or Ro-Tech is a party, or of any statute, law, ordinance, or
judgment, order or decree, rule or regulation of any court or administrative
agency, to which the Company or Ro-Tech is a party or by which it or any of its
assets is bound, nor will it conflict with the provisions of the Articles of
Incorporation or Bylaws of the Company or Ro-Tech, or to the best of JEM's
knowledge, violate any statute, license or regulation of any governmental
authority.
3.7 FINANCIAL STATEMENTS. The Company has provided Purchaser with
true, correct and complete copies of its unaudited balance sheet dated December
31, 1999, its income statement for 12-month period then ended (the "Company
Financial Statements") and unaudited balance sheet and statement of income as of
and for the four-month period ended April 30, 2000 for the Company (the "Company
Interim Financial Statements"), all of which are attached hereto as Schedule 3.7
and incorporated herein by reference. The Company Financial Statements and the
Company Interim Financial Statements are complete and correct in all material
respects and were prepared in accordance with the books and records of the
Company and fairly present the financial position and results of the Company's
operations at and for the periods then ended. JEM has provided Purchaser with an
unaudited balance sheet of Ro-Tech as of March 31, 2000 (the "Ro-Tech Balance
Sheet") as part of Schedule 3.7 which fairly presents the financial position of
Ro-Tech as of such date.
3.8 UNDISCLOSED LIABILITIES. Neither the Company nor Ro-Tech has
any liabilities, indebtedness, expense, claim, deficiency, guaranty, endorsement
or obligations of any kind (including any material claims under any product
warranties), whether accrued, absolute, contingent, known or unknown and whether
due or to become due (whether or not required to be reflected in financial
statements in accordance with generally accepted accounting principles ("GAAP"))
except:
Stock Purchase Agreement 4
(a) with respect to the Company, to the extent set forth
in the Company Financial Statements and the Company Interim Financial Statements
and not heretofore paid or discharged;
(b) with respect to Ro-Tech, to the extent set forth in
the Ro-Tech Balance Sheet;
(c) to the extent specifically set forth in Schedule 3.8;
and
(d) those incurred in or as a result of the ordinary
course of the Company's and Ro-Tech's business since April 30, 2000, all of
which have been consistent with past practices and none of which is material and
adverse.
3.9 ACCOUNTS RECEIVABLE. All accounts receivable shown on the
Company Financial Statements and the Company Interim Financial Statements or
thereafter acquired until the Closing Date arose and are collectible within 90
days from the date recorded. The values at which accounts receivable are carried
reflect the accounts receivable valuation policy of the Company, which is
consistent with its past practices. None of the accounts receivables of the
Company is subject to any claim of offset, recoupment, set off, or counterclaim
and there are no facts or circumstances (whether asserted or unasserted) that
would give rise to any claim. No agreement for deduction or discount has been
made with respect to any such receivables and, no person or entity has any lien,
charge, pledge, security interest, or other encumbrance on any such receivable.
No receivables are contingent upon the performance by the Company of any
obligation or contract.
3.10 ABSENCE OF MATERIAL CHANGES. Since December 31, 1999, there
has not been, occurred or arisen:
(a) any material adverse change in the financial condition
or in the operations of the business of the Company or Ro-Tech from that
reflected by the Company Financial Statements and the Ro-Tech Balance Sheet;
(b) any damage, destruction or loss not adequately covered
by insurance, which uninsured damage, destruction or loss materially and
adversely affects the business or assets of the Company or Ro-Tech, nor has
there been any damage, destruction or loss (determined without regard to
insurance coverage), aggregating more than $5,000;
(c) any declaration, setting aside or payment of any
dividend or any distribution with respect to the Company's or Ro-Tech's capital
stock or any direct or indirect redemption, purchase or other acquisition by the
Company or Ro-Tech of any such stock;
(d) any option or warrant to purchase the Company's or
Ro-Tech's capital stock granted to any person or any deferred compensation
agreement entered into between the Company or Ro-Tech and any of their
respective officers, directors, employees or consultants (except with respect to
the dividend distribution contemplated by Section 3.28);
(e) any strikes, work stoppages or other material labor
trouble;
Stock Purchase Agreement 5
(f) any issuance or sale by the Company or Ro-Tech of any
stocks, bonds or other securities of the Company or Ro-Tech, respectively;
(g) any mortgage, pledge, lien or other encumbrance or
security interest created on any material assets, tangible or intangible, of the
Company or Ro-Tech, or assumed by the Company or Ro-Tech with respect to any
such assets;
(h) any material indebtedness, liability or obligation
(whether absolute, accrued, contingent or otherwise) incurred, or other material
transaction engaged in by the Company or Ro-Tech;
(i) with respect to the Company, any material obligation
or liability discharged or satisfied, other than current liabilities shown on
the Company Financial Statements and the Company Interim Financial Statements
and current liabilities incurred since the date thereof in the ordinary course
of business;
(j) with respect to Ro-Tech, any material obligation or
liability discharged or satisfied, other than current liabilities incurred since
March 31, 2000 in the ordinary course of business;
(k) any action taken by the Company or Ro-Tech to amend,
terminate or waive any material right belonging to the Company or Ro-Tech other
than in the ordinary course of business;
(l) any rights transferred or granted under any
concessions, leases, licenses, agreements, patents, inventions, trademarks,
trade names, copyrights or with respect to any know-how or other intellectual
property;
(m) any wage or salary increase to any officer or employee
not made in the ordinary course of business;
(n) any capital expenditure or any commitment therefor;
(o) any transaction, contract or commitment other than in
the ordinary course of business;
(p) any loss of supplier or suppliers or customer or
customers which has resulted in a material adverse effect on the operations of
the Company or Ro-Tech;
(q) any material change with respect to the operations of
its business, including its method of accounting;
(r) any other event or condition of any character
pertaining to and materially and adversely affecting the results of operation or
business or financial condition of the Company or Ro-Tech;
(s) any amendments or changes to its Articles of
Incorporation or Bylaws;
Stock Purchase Agreement 6
(t) any commencement, notice or threat of any lawsuit
communicated to the officers or directors of the Company or Ro-Tech, or, to the
knowledge of JEM, any reasonable basis for the commencement or threat of any
lawsuit, or, to the knowledge of JEM, any proceeding, audit or investigation
against the Company or Ro-Tech or their respective affairs;
(u) any notice to the Company or Ro-Tech or their
respective officers or directors of any claim or potential claim of ownership by
any person or entity, other than the Company or Ro-Tech, of the Company's
Intellectual Property Rights (defined below) or Ro-Tech's Intellectual Property
Rights (defined below), respectively, owned, developed or created by the Company
or Ro-Tech or of infringement by the Company or Ro-Tech of the intellectual
property rights of another person or entity;
(v) any acquisition or disposition of any of the Company's
or Ro-Tech's material assets or property; or
(w) any increase, amendment or alteration of the payment
obligations or service obligations of any material contract.
3.11 TAX MATTERS. Each of the Company and Ro-Tech has filed on a
timely basis in accordance with the laws and regulations of the appropriate
United States, state and local governmental agencies all tax returns and reports
required to be filed by it and has paid, or made provisions for the payment of,
and made adequate reserves therefor on its books and records for, all taxes
which have become due. All such returns and reports are true, accurate and
complete, and each of the Company and Ro-Tech has paid in full or made adequate
provision for the payment of and made adequate reserves therefor on its books
and records for, all taxes, interest, penalties, assessments or deficiencies
shown to be due on such tax returns and reports. The charges, accruals and
reserves with respect to each of the Company's and Ro-Tech's taxes are
determined in accordance with past practices consistently applied. Each of the
Company and Ro-Tech has made withholding of tax (and transmittals of the same)
required to be made under all applicable tax regulations. Except for statutory
liens relating to taxes not overdue, there are no liens with respect to each of
the Company's or Ro-Tech's taxes upon any of the properties or assets, real or
personal, tangible or intangible, of the Company or Ro-Tech, respectively.
Neither the Company nor Ro-Tech has agreed to and is required to make any
material adjustments pursuant to the Code. Each of the Company and Ro-Tech is,
and at all times during its existence has been, an "S Corporation" under and
within the meaning of Section 1361 of the Code, and under all applicable state
tax laws and regulations.
3.12 LITIGATION. There are no actions, suits, hearings, proceedings
or investigations pending or, to the best knowledge of JEM, threatened against
either the Company or Ro-Tech or related to the Company or Ro-Tech which if
determined adversely would likely have a material adverse effect on the Company
or Ro-Tech.
3.13 LEASES AND CONTRACTS. All material leases and contracts to
which each of the Company and Ro-Tech is a party are in good standing, valid and
in full force and effect and have not been amended except as disclosed to the
Purchaser; and there is not under any of such
Stock Purchase Agreement 7
leases or contracts any existing default or any event which with notice or lapse
of time or both would constitute such a default by the Company or Ro-Tech or by
another party thereto; and all real property owned and leased by each of the
Company and Ro-Tech and the uses being made thereof comply with all applicable
zoning laws and restrictions in all material respects. All leases and contracts
with a duration of more than 30 days or requiring aggregate payments to or from
the Company, or to or from Ro-Tech, in excess of $10,000 or that are in any
other respect material to the Company or Ro-Tech are attached as Schedule 3.13.
There is no agreement (non-compete or otherwise), commitment, judgment,
injunction, order or decree to which the Company or Ro-Tech is a party or
otherwise bound which has or may reasonably be expected to have the effect of
prohibiting or impairing any business practice or the conduct of business of the
Company.
3.14 CLAIMS. No liability, whether direct or contingent, has been
asserted against the Company that might have a material adverse effect on the
Company's or Ro-Tech's business.
3.15 LICENSES AND REGULATIONS. All governmental licenses,
approvals, zoning authorizations, registrations and permits, environmental or
otherwise, required in order for each of the Company and Ro-Tech to transact its
business in all material respects have been obtained. Each of the Company and
Ro-Tech has complied with all rules, laws, regulations and orders applicable to
its business, employees and products, and knows of no notice or claim of
violation by the Company or Ro-Tech of any applicable federal, state or local
law, ordinance or regulation or judgment, order, decree or citation of any
individual or administrative authority, including but not limited to importing,
zoning, pollution, environmental or safety laws or regulations or laws or
regulations relating to illegal payments.
3.16 CONFLICTING INTEREST. Except as disclosed in Schedule 3.16, no
shareholder, officer or director of either the Company or Ro-Tech, or any
relative of any of them, has had, or has any direct or indirect equity interest
in any competitor, customer, supplier or other person, firm or corporation which
has had, any material business relationship or material transaction with the
Company or Ro-Tech during the last three fiscal years and up to and including
the date hereof, or which is a party to, or has property which is the subject
of, any material business arrangement with the Company or Ro-Tech. For the
purpose hereof, any spouse, lineal descendant, parent, brother or sister of any
officer or director of the Company or Ro-Tech, and the spouse of any of the
above, shall be deemed a relative of such person.
3.17 CUSTOMERS AND SUPPLIERS. Schedule 3.17 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 27-month period ended March 31, 2000,
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 27-month period ended March 31, 2000. JEM
has no basis to expect any material modification to the Company's relationship
with any such customer or supplier with whom the Company has a written
agreement, contract or other commitment.
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3.18 ORDERS, COMMITMENTS AND RETURNS. Schedule 3.18 contains (a) an
accurate summary of the Company's total backlog of orders as of March 31, 2000
(including all accepted and unfulfilled sales orders) and (b) the aggregate of
all outstanding purchase orders issued by the Company as of March 31, 2000
(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 March 31, 2000,
categorized by vendor, has been provided by the Company to Purchaser in writing.
All such sale and purchase commitments were made in the ordinary course of
business. Except as set forth in Schedule 3.18, 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.
3.19 TITLE TO PROPERTY. Each of the Company and Ro-Tech owns or
leases all the real and personal property currently used in their respective
businesses. All real and personal property owned by each of the Company and
Ro-Tech is marketable and free and clear of all liens and encumbrances. All
buildings, equipment and assets of any kind are in good operating condition,
reasonable wear and tear excepted, and to the best knowledge of JEM do not
currently require any material maintenance or repairs.
3.20 INSURANCE. Schedule 3.20 lists all insurance policies covering
the business properties and assets of each of the Company and Ro-Tech. All such
policies are in full force and effect on the date hereof. All property of each
of the Company and Ro-Tech that is of an insurable nature has been and continues
to be insured in such amount and against such losses as is customary for a
business of a size and in the industry of the Company and Ro-Tech, respectively.
Each of the Company and Ro-Tech is in material compliance with the terms of such
policies and has not failed to pay any premiums when due and has not canceled
any policies listed on Schedule 3.20. JEM has no knowledge of any threatened
termination of, or premium increase with respect to, any of such policies. In
the past 12 months, neither the Company nor Ro-Tech has ever been denied
insurance coverage nor has any insurance policy of either the Company or Ro-Tech
ever been canceled for any reason.
3.21 EMPLOYEES. As of the date of this Agreement, the Company has
19 full-time employees and 1 part-time employee and Ro-Tech has 1 full-time
employee. Schedule 3.21 identifies each employee benefit plan ("Employee Benefit
Plan"). No Employee Benefit Plan is a multiemployer plan and no Employee Benefit
Plan is subject to Title IV of ERISA. Each of the Company and Ro-Tech has paid
and discharged promptly when due all liabilities and obligations with respect to
any Employee Benefit Plan arising under ERISA or the Code of any character which
if unpaid or unperformed might result in the imposition of an encumbrance
against any of the Company's assets. Each Employee Benefit Plan is being
maintained in compliance with its terms and as prescribed by applicable law.
Except as reflected in the Company Financial Statements and the Company Interim
Financial Statements, the Company does not have any liability for or in
connection with or arising out of any retiree, medical, dental and life
insurance benefits provided to the employees or retired employees under the
Employee Benefit Plans. Ro-Tech does not have any liability for or in connection
with or
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arising out of any retiree, medical, dental and life insurance benefits provided
to the employees or retired employees under the Employee Benefit Plans.
3.22 ENVIRONMENTAL PROTECTION.
(a) "Environmental Laws" means the Clean Air Act (42 USC
ss. 7401, et seq.), the Federal Water Pollution Control Act (33 USC ss. 1251, et
seq.), the Solid Waste Disposal Act as amended by the Resource Conservation and
Recovery Act and the Hazardous and Solid Waste Amendments (42 USC ss. 6901, et
seq.), the Comprehensive Environmental Response, Compensation and Liability Act
of 1980 as amended by the Superfund Amendment and Reauthorization Act of 1986
("CERCLA") (42 USC ss. 9601), the Hazardous Materials Transportation Act (49 USC
ss. 1801, et seq.), the Toxic Substances Control Act (15 USC ss. 2601, et seq.)
and all other applicable federal, state, local and foreign environmental
statutes, laws, regulations, ordinances, licenses, permits, judgments, writs,
decrees, injunctions, policy requirements, adopted standards or orders of any
governmental entity in force and effect as of the Closing Date and pertaining to
the protection of the natural environment, including air, water, groundwater,
soil, noise and odor. "Hazardous Substances" means (i) any chemicals, materials
or substances that are as of the date hereof defined as, or listed or included
in the definition of, or otherwise classified as "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous waste,"
"restricted hazardous waste," "infectious waste," "toxic substances" or any
other formulations intended to define, list or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP
toxicity" or words of similar import under any applicable laws or publications
promulgated pursuant thereto, (ii) any oil, petroleum or petroleum derived
substances, (iii) any drilling fluids, produced waters or other wastes
associated with the exploration, development or production of crude oil, natural
gas or geothermal resources, (iv) any flammable substances or explosives, (v)
any radioactive materials, (vi) asbestos in any form which is friable (as that
term is defined in 15 USC ss. 2642), (vii) urea formaldehyde form insulation,
(viii) electrical equipment which contains any oil or dielectric fluid
containing levels of polychlorinated biphenyls in excess of 50 parts per
million, (ix) pesticides or (x) any other chemical, material or substance,
exposure to which is prohibited, limited or regulated by any governmental entity
and which may or could pose a substantial health or safety hazard. "Release"
shall mean the actual, suspected or threatened release, spill emission, leaking,
pumping, escape, injection, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment or into or out of any property
owned or leased by the Company or Ro-Tech. The Company has not Released any
Hazardous Substance in violation of any Environmental Law. A Release shall be
deemed to be suspected if and only if there is significant objective evidence
that a Release has occurred.
(b) To the best knowledge of JEM, the operations of each
of the Company and Ro-Tech are in compliance in all material respects with all
applicable Environmental Laws. Each of the Company and Ro-Tech has obtained all
permits required by any Environmental Law for the current operations of the
Company and Ro-Tech, respectively.
(c) There are no pending or, to the best knowledge of JEM,
threatened Environmental Claims against either the Company or Ro-Tech.
"Environmental Claim" means any claim for personal injury, property damage,
environmental response costs or damage to
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nature resources validly assets or prosecuted by or on behalf of any third party
or government arising out of or related to a release or violation of the
Environmental Laws.
3.23 LABOR MATTERS. There are no work stoppages, formal grievances,
complaints or allegations of unfair labor practices or similar occurrences
between the Company and any of its employees or between Ro-Tech and any of its
employees.
3.24 TRADE NAMES. Except as disclosed on Schedule 3.24, each of the
Company and Ro-Tech owns or is licensed or, to JEM's knowledge, entitled to use
all patents, trademarks, trade names, service marks and copyrights that are used
or currently proposed to be used in the business of the Company and Ro-Tech,
respectively, as it is currently conducted.
3.25 FEES, COMMISSIONS AND EXPENSES. Neither the Company, Ro-Tech
nor their Shareholders has paid or agreed to pay or received any claim with
respect to any brokerage commissions, finders fee or similar compensation in
connection with the transactions contemplated in this Agreement.
3.26 WORKERS' COMPENSATION. There are no notices of assessment or
any other written communications related thereto to which the Company or Ro-Tech
has received from any workers compensation board of similar authorities in any
jurisdiction where the Company or Ro-Tech conducts business and there are no
assessments which are unpaid.
3.27 COMPLIANCE WITH LAWS. Each of the Company and Ro-Tech has
complied in all material respects with and has not received any notices of
violation with respect to, any foreign, federal, state or local statute, law or
regulation.
3.28 SHAREHOLDER DIVIDEND. Neither the Company nor Ro-Tech has made
since January 1, 2000, and will not make prior to Closing, any dividend or other
distribution to Shareholders except as disclosed in the Interim Financial
Statements and on Schedule 3.10.
3.29 INTELLECTUAL PROPERTY. Each of the Company and Ro-Tech owns,
or has a valid and perpetual license under, all patents, trademarks, trade
names, service marks, copyrights, any applications for all of the foregoing,
trade secrets, know-how that are required for the conduct of the business of
each of the Company and Ro-Tech as currently conducted (the "Intellectual
Property Rights"), with sufficient rights for the conduct of each of the
Company's and Ro-Tech's business as currently conducted. Schedule 3.29 lists all
of the Company's Intellectual Property Rights, including licenses thereto and
all of Ro-Tech's Intellectual Property Rights, including licenses thereto.
Except as set forth on Schedule 3.29, each of the Company and Ro-Tech is the (i)
sole and exclusive owner of, with all right, title and interest in and to (free
and clear of any liens) Intellectual Property Rights or (ii) is a licensee under
or otherwise possesses legally enforceable rights under the Intellectual
Property Rights, under valid and binding agreements listed in Schedule 3.29. No
claims against either the Company or Ro-Tech, or to the knowledge of JEM, their
respective licensors or licensees with respect to the Intellectual Property
Rights, have been asserted or are, to the knowledge of JEM, threatened by any
person, nor to the knowledge of JEM are there any valid grounds for any claims
challenging the ownership by the Company or Ro-Tech, or the validity or
effectiveness of any, of Intellectual
Stock Purchase Agreement 11
Property Rights. To the best knowledge of JEM, there is no unauthorized use,
infringement or misappropriation under any Intellectual Property Rights by any
third party, including any employee or former employee of either the Company or
Ro-Tech. To the knowledge of JEM, no Intellectual Property Right or product of
either the Company or Ro-Tech is subject to any outstanding decree, order,
judgment, or stipulation restricting in any manner the licensing thereof by or
to the Company or Ro-Tech. It is each of the Company's and Ro-Tech's policy to
have each employee, consultant or contractor execute a proprietary information
and confidentiality agreement in the form provided as part of Schedule 3.29, and
all of the Company's and Ro-Tech's employees, consultants and contractors,
including all of the Shareholders have executed such an agreement. Each of the
Company and Ro-Tech has taken reasonable and practicable steps designed to
safeguard and maintain the secrecy and confidentiality of, and its proprietary
rights in, all Intellectual Property Rights and the intellectual property rights
of third parties entrusted to it.
3.30 DEFINITION OF MATERIALITY. As used in this Agreement, the word
"material" or "materially" means an obligation, liability or loss of either the
Company or Ro-Tech, as the case may be, in an amount exceeding $10,000.
3.31 DEFINITION OF KNOWLEDGE. As used in this Agreement, the word
"knowledge" means knowledge of a particular fact, circumstance or other matter
if, JEM, any individual who is serving as a director or officer of the Company,
Ro-Tech, or of Purchaser, as the case may be, has, either actual, present
knowledge or constructive knowledge of a matter. Any such individual will be
deemed to have constructive knowledge of any matter that a reasonably prudent
person acting in a similar fiduciary capacity would have in the exercise of good
faith and after due inquiry.
3.32 REPRESENTATIONS COMPLETE. None of the representations and
warranties made by JEM or any Shareholder, nor any statement made in any
schedule or certificate furnished by JEM, the Company, Ro-Tech or any
Shareholder pursuant to this Agreement, contains any untrue statement of a
material fact, or, omits to state any material fact necessary in order to make
the statements contained herein or therein, in light of the circumstances under
which made, not misleading.
3.33 DISCLOSURE. Neither this Agreement nor any schedule attached
hereto, nor any certificate or financial statement delivered by JEM, the Company
or Ro-Tech or to be delivered by JEM, the Company or Ro-Tech at Closing,
contains nor will contain any untrue statement of a material fact or omits to
state a material fact necessary in order to make statements contained herein and
therein not misleading.
4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS AND JEM.
-----------------------------------------------------------
Each Shareholder and JEM, severally but not jointly, further
represents and warrants to Purchaser, subject to such exceptions as are
specifically disclosed in the Disclosure Schedule, as follows:
Stock Purchase Agreement 12
4.1 OWNERSHIP OF SHARES. Such Shareholder is the sole record and
beneficial owner of the shares of Company Common Stock designated as being owned
by such Shareholder opposite such Shareholder's name in Section 1 above. JEM is
the sole record and beneficial owner of the shares of Ro-Tech Common Stock
designated as being owned by JEM opposite his name in Section 1 above. The
Shareholders own beneficially and of record all outstanding shares of the Common
Stock of the Company. JEM owns beneficially and of record all outstanding shares
of Common Stock of Ro-Tech. Such shares are not subject to any liens,
encumbrances, options, charges, pledges, mortgages, deeds of trust, security
interests, rights of first refusal or other restrictions of any kind or nature.
Such Shareholder has not granted any rights to purchase such shares to any other
person or entity. Neither Shareholder is a party to or bound by any option, sale
agreement, shareholder agreement, pledge, proxy, voting trust, power of
attorney, restriction on transfer or other agreement or instrument which relates
to the ownership, voting or transfer of any shares of Common Stock of the
Company and any shares of Common Stock of Ro-Tech, as the case may be, owned by
such Shareholder and JEM, respectively. Each Shareholder has good and marketable
title to the shares of Common Stock of the Company and the shares of Common
Stock of Ro-Tech owned by such Shareholder and JEM, respectively, and has the
sole and absolute right, power and authority to sell, assign and transfer such
shares to Purchaser as provided in this Agreement. Such shares constitute all of
the Company's Common Stock owned, beneficially or of record, by such
Shareholder. Such shares constitute all of Ro-Tech's Common Stock owned,
beneficially or of record, by JEM. Neither Shareholder has any options, warrants
or other rights to acquire Company Common Stock or Ro-Tech Common Stock,
respectively. Neither Shareholder has engaged in any sale or other transfer of
any Company Common Stock or Ro-Tech Common Stock, as the case may be, in
contemplation of the purchase hereunder. Purchaser will acquire good and
unencumbered title to such Common Stock of the Company from each Shareholder
hereunder and such Common Stock of Ro-Tech from JEM hereunder, free and clear of
all liens, and not subsequent to any adverse claim when acquired by Purchaser
pursuant to this Agreement.
4.2 TAX MATTERS. Each Shareholder has had an opportunity to review
with his or her own tax advisors the tax consequences to such Shareholder of the
purchase and the other transactions contemplated by this Agreement. Each
Shareholder understands that he or she must rely solely on its own advisors and
not on any statements or representations by Purchaser, the Company, Ro-Tech or
any of their agents. Each Shareholder understands that it (and not Purchaser or
the Company or Ro-Tech) shall be responsible for his or her own tax liability
that may arise as a result of the purchase or the other transactions
contemplated by this Agreement.
4.3 ABSENCE OF CLAIMS BY THE SHAREHOLDERS. Neither Shareholder has
any claim against the Company or Ro-Tech, respectively, contingent or
unconditional, fixed or variable under any contract or on any other basis
whatsoever, whether in equity or at law, except for the loan to be paid at
Closing as referenced in Section 8.8 below.
4.4 AUTHORITY. Each Shareholder has all requisite power and
authority to execute, deliver and perform its obligations under this Agreement
and any Related Agreements (as hereinafter defined) to which he or she is a
party and to consummate the transactions contemplated hereby. This Agreement and
the Related Agreements have been duly executed and delivered by such Shareholder
and JEM, and, assuming the due authorization, execution and
Stock Purchase Agreement 13
delivery by Purchaser, constitute a valid and binding obligation of such
Shareholder and JEM, enforceable in accordance with their respective terms,
subject as to enforcement only to bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the enforceability of creditors' rights
generally or to general equitable principles. The "Related Agreements" shall
mean all ancillary agreements required in this Agreement to be executed and
delivered in connection with the transactions contemplated hereby.
4.5 NO CONFLICT. The execution and delivery by each Shareholder of
this Agreement and any Related Agreement to which he or she is a party does not,
and the consummation of the transactions contemplated hereby and thereby will
not, conflict with, result in a breach or default under (with or without notice
or lapse of time, or both), or require the consent under, or give to others the
right of termination, acceleration, suspension, revocation, cancellation or
amendment of (i) any loan or credit agreement, note, bond, mortgage, indenture,
lease, contract or other agreement or instrument, permit, concession, franchise
or license to which such Shareholder or any of its properties or assets is
subject, or (ii) any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to such Shareholder or his or her properties or assets.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
--------------------------------------------
Purchaser represents and warrants to the Company and Ro-Tech as
follows:
5.1 ORGANIZATION AND GOOD STANDING. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
state of Oregon and has all requisite corporate power and authority to own,
lease and operate its assets and properties and to carry on its business as now
being conducted, and to enter into and perform its obligations under this
Agreement. Purchaser is duly qualified or licensed to do business and in good
standing as a foreign corporation in each jurisdiction in which the failure to
be so qualified would have a material adverse effect on the Purchaser.
5.2 AUTHORITY RELATIVE TO AGREEMENT. Purchaser has the corporate
power to execute and deliver this Agreement and to perform its obligations
hereunder. Purchaser has taken (or by the Closing Date will have taken) all
action required by law, its Articles of Incorporation, its Bylaws and otherwise
to authorize the execution, delivery and performance of this Agreement.
5.3 EFFECT OF AGREEMENT. No consents or approvals are required to
be obtained from any governmental agencies or are required under the provisions
of any instruments to be obtained from any third party in connection with the
execution and consummation of this Agreement by Purchaser. The execution and
delivery of this Agreement and consummation of the transactions contemplated
hereby will not result in the breach of any term or provision of, or constitute
a default under, any provision or restriction of any note, mortgage, indenture,
agreement, license or other instrument, or of any judgment, order or decree,
rule or regulation of any court or administrative agency to which Purchaser is a
party or by which it is bound, nor will it conflict with the provisions of the
Articles of Incorporation or
Stock Purchase Agreement 14
Bylaws of Purchaser, or to the best of Purchaser's knowledge, violate any
statute, license or regulation of any governmental authority.
5.4 ENFORCEABILITY. Upon the execution and delivery of this
Agreement by the parties, this Agreement will be the valid and legally binding
obligation of Purchaser enforceable in accordance with its terms, subject as to
enforcement only to bankruptcy, insolvency, reorganization, moratorium or other
laws affecting the enforceability of creditors' rights generally or to general
equitable principles.
6. COVENANTS OF THE PARTIES.
-------------------------
6.1 ACCESS TO INFORMATION. During the period between the execution
of this Agreement and the Closing Date, each of the Company and Ro-Tech shall
give Purchaser and its authorized representatives full access, during normal
business hours, to all properties, books, records, contracts, documents, and
leases of the Company and Ro-Tech and shall furnish or cause to be furnished to
Purchaser and its authorized representatives all information with respect to its
affairs and business as Purchaser or its authorized representatives may
reasonably request. Purchaser shall retain all records in its possession
relating to the operations of the Company and Ro-Tech for periods which coincide
with the periods for indemnification provided for herein.
6.2 PRESERVATION OF BUSINESS. During any period between the
execution of this Agreement and the Closing Date, JEM will cause each of the
Company and Ro-Tech to:
(a) carry on its business diligently, in the ordinary
course and in a reasonable and prudent manner in accordance with past practices;
(b) engage in no transaction out of the ordinary course of
business;
(c) use its best efforts to preserve its existing business
organization and relations with its employees, customers, suppliers and others
with whom it has a business relationship;
(d) not dispose of, sell, lease, license, mortgage,
pledge, lien or encumber any of its assets, except such as are disposed of,
sold, leased, retired and replaced in the ordinary course of business;
(e) conduct its business in compliance with all applicable
laws and regulations;
(f) not make any distribution to shareholders;
(g) not pay any bonuses or make any salary or wage
increases except in the ordinary course, consistent with past practices;
(h) not incur any material liability or obligation
(absolute or contingent) to any person except in the ordinary course of
business;
Stock Purchase Agreement 15
(i) not authorize any additional capital expenditure or
commitment for additions to property, plant or equipment in excess of $20,000;
and
(j) not take any action or omit to take any action which
will cause a breach or default in any material contract or lease of each of the
Company and Ro-Tech.
6.3 MAINTENANCE OF CUSTOMERS. Each of the Company and Ro-Tech
shall use its best efforts to maintain and develop its customer base.
6.4 BEST EFFORTS. Each of the Company, Ro-Tech and the
Shareholders will use their best efforts to cause the Closing of this
transaction to occur on a timely basis.
6.5 ADDITIONAL DOCUMENTS AND FURTHER ASSURANCES. Each of the
Company, Ro-Tech and the Shareholders, at the request of the Purchaser, shall
execute and deliver such other instruments and do and perform such other acts
and things as may be reasonably necessary or desirable for effecting completely
the consummation of this Agreement and the transactions contemplated hereby,
including, without limitation, after the Closing Date, if Purchaser determines
that for public reporting purposes it requires audited financial statements for
any prior fiscal year or interim period of the Company and/or Ro-Tech, each of
the Company, Ro-Tech and the Shareholders will assist and cooperate with the
preparation of such financial statements of the Company and/or Ro-Tech.
6.6 NOTIFICATION. In the event of, or after obtaining knowledge
of the occurrence or threatened occurrence of, any fact or circumstance that
would cause or constitute a breach or violation of any of its representations,
warranties, covenants or other agreements set forth herein, each of the Company,
or Ro-Tech, or the Shareholders to this Agreement promptly will give notice
thereof to the other parties and will use their best efforts to prevent or
remedy such breach.
6.7 PREPARATION OF BALANCE SHEETS. JEM will cause to be prepared
Company balance sheets as follows:
(a) JEM will cooperate with the Purchaser's auditors in
establishing the procedures for obtaining an audited balance sheet of the
Company as of December 31, 1999 (the "Balance Sheet"). The audit will be
conducted by the Purchaser's independent audit firm, but the Company's
designated independent accounting firm will be permitted to observe, participate
in and advise with respect to the audit process, and Purchaser's auditors will
consult with the Company's independent accounting firm prior to publishing its
audit report. The parties will use their best efforts to cause the audit to be
completed by the Closing Date.
(b) JEM will cause the Company to cooperate with
Purchaser's independent audit firm in establishing an updated unaudited March
31, 2000 balance sheet and a balance sheet and income statement as of the
Closing Date, by rolling forward the information established by the December 31,
1999 audit and undertaking such additional procedures as may be required to
obtain such balance sheet and income statement information as may be required by
Purchaser.
Stock Purchase Agreement 16
6.8 TAX RETURNS; DISTRIBUTION. Purchaser shall cause the Company and
Ro-Tech to prepare within the 60-day period following the Closing tax returns
for the short year ended on the Closing Date and appropriate K-1s for the
Shareholders of both the Company and Ro-Tech will be issued in a timely manner.
Purchaser will cause the Company to distribute to the Shareholders by February
28, 2001 an amount equal to 80% of the net taxable income for the period from
January 1, 2000 to the Closing Date for the Company and Ro-Tech on an aggregate
basis.
6.9 STOCK REDEMPTION. JEM will cause the Company to redeem prior
to Closing all of the Company's outstanding shares of Nonvoting Common Stock
from the three holders thereof at an aggregate redemption price to be paid by
the Company of $19,600.
7. CONDITIONS TO PURCHASER'S OBLIGATIONS.
--------------------------------------
Each and every obligation of Purchaser to be performed on the Closing
Date or thereafter, as the case may be, shall be subject to the satisfaction
prior thereto of the following conditions, any of which may be waived in writing
by Purchaser:
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations
and warranties made by the Company, Ro-Tech, the Shareholders and JEM in this
Agreement and documents to be provided by the Company, Ro-Tech, the Shareholders
and JEM pursuant to this Agreement shall be true in all material respects on and
as of the Closing Date with the same effect as though such representations and
warranties had been made or given on and as of the Closing Date. Each of the
Company, Ro-Tech, JEM and the Shareholders shall have performed all obligations
and complied with all covenants required to be performed or complied with by
them prior to the Closing Date under this Agreement. Purchaser shall have
received a certificate signed by the Shareholders to the foregoing effect.
7.2 NO MATERIAL ADVERSE CHANGE. There shall have been no loss or
destruction of any material assets of the Company or Ro-Tech or any material
adverse change in the Company's or Ro-Tech's financial condition or the
occurrence of any event or condition of any character that has had or is
reasonably likely to have a material adverse effect on the Company or Ro-Tech.
7.3 NECESSARY CONSENTS. All consents and approvals required to
consummate the transactions herein provided shall have been obtained.
7.4 CERTIFIED RESOLUTIONS. Each of the Company and Ro-Tech shall
have supplied Purchaser with a certified copy of resolutions duly adopted by its
Board of Directors approving the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby.
7.5 OPINION OF COUNSEL FOR THE COMPANY AND RO-TECH. Purchaser
shall have received on the Closing Date from counsel to each of the Company and
Ro-Tech a written opinion addressed to it in form and substance satisfactory to
Purchaser and its counsel to the effect that:
Stock Purchase Agreement 17
(a) Each of the Company and Ro-Tech is a corporation
validly existing under the laws of the state of Oregon, with full corporate
power and authority to own or lease the assets and to carry on its business as
now conducted;
(b) Each of the Company and Ro-Tech has corporate power to
execute, deliver and perform this Agreement and to issue the shares being sold
under this Agreement, and all corporate action required to be taken by the
Company and Ro-Tech to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated by this
Agreement has been duly and properly taken;
(c) The shares to be acquired by Purchaser will be duly
issued, fully paid and nonassessable;
(d) This Agreement has been duly authorized, executed and
delivered by each of the Company, Ro-Tech, the Shareholders and JEM and is valid
and enforceable in accordance with its terms, subject as to enforcement only to
bankruptcy, insolvency, reorganization, moratorium or other laws affecting the
enforceability of creditors' rights generally or to general equitable
principles;
(e) Such counsel has not been consulted on or engaged to
represent the Company or Ro-Tech concerning and is not otherwise aware of any
claims, suits, investigations, actions or other proceedings threatened or
pending in any forum which could materially affect this transaction or the
Company's or Ro-Tech's business; and
(f) The execution and delivery of this Agreement and the
consummation of the transactions contemplated herein will not conflict with,
result in any breach or violation by the Company or Ro-Tech of, or constitute a
default by the Company or Ro-Tech under, its Articles of Incorporation or Bylaws
or any agreement or instrument to which the Company or Ro-Tech is a party or by
which the Company or Ro-Tech is bound and of which such counsel has knowledge.
7.6 PROCEEDINGS AND INSTRUMENTS SATISFACTORY. All proceedings,
corporate or other, undertaken by the Company and Ro-Tech in connection with the
transactions contemplated by this Agreement, and all documents incident thereto,
shall be reasonably satisfactory in form and substance to Purchaser and its
counsel, and the Company and Ro-Tech shall have made available to Purchaser for
examination the originals or true and correct copies of all records and
documents relating to the business and affairs of the Company and Ro-Tech which
Purchaser may reasonably request in connection with such transactions.
7.7 NO LITIGATION. No investigation, suit, action or other
proceeding shall be threatened or pending before any court or governmental
agency or other agency or authority which seeks or is likely to result in the
restraint or prohibition of, or the obtaining of material damages or other
material relief in connection with, this Agreement or the consummation of the
transactions contemplated hereby.
Stock Purchase Agreement 18
7.8 EMPLOYMENT AGREEMENT. Purchaser shall have entered into an
Employment Agreement with JEM for a term of three years in the form of Exhibit B
providing for compensation of $75,000 per year and a five-year noncompetition
covenant.
7.9 COMPANY INCOME. Purchaser shall have received information from
the Company sufficient to satisfy Purchaser, in its sole discretion, that the
Company's pre-tax income for the period since January 1, 2000 and through the
Closing Date is not less than $300,000.
7.10 LEASE AGREEMENT. The Company shall have entered into an
Amendment to the existing Lease Agreement with Xxxx and Xxxxx Xxxxxx for that
certain property owned by them located at 000 XX 0xx Xxxxxx, xx Xxxxxxx, Xxxxxx
in the form of Exhibit C for a term of five years with a five-year renewal
option.
7.11 BALANCE SHEET. The audited Balance Sheet to be prepared by
Purchaser's independent auditors shall have been prepared prior to Closing and
shall not reflect any material variation from the December 31, 1999 balance
sheet included in the Company Financial Statements.
7.12 REDEMPTIONS. All nonvoting shares of the Company's Common
Stock will have been redeemed for the aggregate sum of $19,600, and the
documentation for such redemptions shall be acceptable to and approved by
Purchaser.
8. CONDITIONS TO THE SHAREHOLDERS' OBLIGATIONS.
--------------------------------------------
Each and every obligation of the Shareholders to be performed on the
Closing Date or thereafter, as the case may be, shall be subject to the
satisfaction prior thereto of the following conditions, any of which may be
waived in writing by the Company:
8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations
and warranties made by Purchaser in this Agreement and in documents to be
provided by Purchaser pursuant to this Agreement shall be true in all material
respects on and as of the Closing Date with the same effect as though such
representations and warranties had been made or given on and as of the Closing
Date. Each of the Company and Ro-Tech shall have received the certificate of an
authorized officer of Purchaser to the foregoing effect.
8.2 NECESSARY CONSENTS. All consents and approvals required shall
have been obtained so that Purchaser may fully carry out the transactions
provided for in this Agreement and fully perform its obligations hereunder.
8.3 CERTIFIED RESOLUTIONS. Purchaser shall have furnished the
Company and Ro-Tech with a certified copy of resolutions duly adopted by the
Board of Directors of Purchaser authorizing and ratifying the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby.
8.4 PROCEEDINGS AND INSTRUMENTS SATISFACTORY. All proceedings,
corporate or other, undertaken by Purchaser in connection with the transactions
contemplated by this
Stock Purchase Agreement 19
Agreement, and all documents incident thereto, shall be reasonably satisfactory
in form and substance to counsel for the Company and Ro-Tech.
8.5 EMPLOYMENT AGREEMENT. Purchaser shall have entered into an
Employment Agreement with JEM for a term of three years in the form of Exhibit B
providing for compensation of $75,000 per year.
8.6 OPTION PLAN. JEM shall have received evidence satisfactory to
him that Purchaser has reserved for grant 15,000 stock options for future grants
to key employees of the Company.
8.7 LEASE AGREEMENT. The Company shall have entered into an
Amendment to the existing Lease Agreement with Xxxx and Xxxxx Xxxxxx for that
certain property owned by them located at 000 XX 0xx Xxxxxx, xx Xxxxxxx, Xxxxxx
in the form of Exhibit A for a term of five years with a five-year renewal
option.
8.8 LOAN AGREEMENT. At Closing, the Company shall have paid the
Loan payable to JEM as reflected on the Interim Financial Statements in the
amount of $501,772.
9. TERMINATION OF AGREEMENT.
-------------------------
9.1 TERMINATION. This Agreement may be terminated on or before the
Closing Date:
(a) by written consent of each of Purchaser and JEM;
(b) by Purchaser if any of the conditions in Section 7 are
not satisfied (or waived by Purchaser at its discretion) by the Closing Date, or
by Shareholders if any of the conditions in Section 8 are not satisfied (or
waived by Shareholders at their discretion) by the Closing Date; or
(c) by Purchaser after written notice providing the
Company or Ro-Tech a reasonable opportunity to cure, if there has been a
material misrepresentation in the warranties or representations given by the
Company or Ro-Tech or any Shareholder under this Agreement or any material
failure by the Company or Ro-Tech or any Shareholder to perform any covenant
under this Agreement; or
(d) by the Company or Ro-Tech after written notice
providing Purchaser a reasonable opportunity to cure if there has been a
material misrepresentation in the warranties or representations given by
Purchaser under this Agreement or any material failure by Purchaser to perform
any covenant under this Agreement.
In the event of termination by any party as above provided, prompt
written notice shall be given to the other party.
Stock Purchase Agreement 20
9.2 EFFECT OF TERMINATION; RIGHT TO PROCEED. In the event that
this Agreement shall be terminated pursuant to Section 9.1, all further
obligations of the parties under this Agreement shall terminate without further
liability of any party to any other party. Nevertheless, if any of the
conditions specified in Section 7 have not been satisfied, Purchaser, in
addition to any other rights which may be available to it, shall have the right
to proceed with the transactions contemplated hereby, and if any of the
conditions specified in Section 8 have not been satisfied, the Company, Ro-Tech
and the Shareholders, in addition to any other rights which may be available to
them, shall have the right to proceed with the transactions contemplated hereby.
9.3 RETURN OF THE COMPANY'S OR RO-TECH'S DOCUMENTS IN THE EVENT OF
TERMINATION. In the event of the termination of this Agreement for any reason,
Purchaser shall deliver to the Company and Ro-Tech all documents, work papers,
and other material obtained from the Company or Ro-Tech relating to the
transactions contemplated hereby, whether so obtained before or after the
execution hereof.
10. INDEMNIFICATION.
----------------
10.1 INDEMNIFICATION OBLIGATION.
(a) Subject to Section 10.5 below, JEM shall indemnify,
defend and hold Purchaser, the Company and Ro-Tech, and their directors,
officers, affiliates, employees and agents, harmless against any and all claims,
losses, damages (including, without limitation, settlement costs and any
reasonable legal or other expenses for defending any actions brought by third
parties with respect to covered claims) (collectively, "Damages") incurred by
Purchaser, the Company or Ro-Tech in connection with each and all of the matters
set forth in subsections (b) below. Damages determined under this Section 10.1
shall be calculated to be net of any tax benefit that will be received by the
party to be indemnified as a result of any Damages incurred by the party to be
indemnified.
(b) The matters to be indemnified against under this
Section 10 include: (i) any breach of any representation or warranty of JEM, the
Company, Ro-Tech or the Shareholders contained herein or in any instrument
delivered at the Closing by JEM, the Company, Ro-Tech or any of the Shareholders
pursuant to this Agreement; (ii) the breach of any covenant, agreement or
obligation of JEM, the Company, Ro-Tech or any of the Shareholders contained in
this Agreement or any other instrument contemplated by this Agreement; and (iii)
any claim made by or on behalf of a third party arising solely by reason of the
conduct of JEM, the Company's or Ro-Tech's business prior to Closing.
10.2 CLAIMS AND DEFENSE BY THE SHAREHOLDERS.
(a) CLAIMS. Whenever any claim or claims shall arise for
indemnification under this Section 10.2, the indemnified party shall notify JEM
of the claim(s) pursuant to Section 10.3 hereunder. Such notice shall set forth,
when known, the facts constituting the basis for such claim(s) and the amount or
estimate of the amount of the liability arising from such claim(s). Purchaser
shall not settle or compromise any claim by a third party for which Purchaser is
entitled to indemnification under this Section 10 without the prior written
Stock Purchase Agreement 21
consent of JEM, unless: (i) suit shall have been instituted against the
Purchaser or the Company or Ro-Tech or, in the case of a claim for unpaid taxes,
an assessment shall have been made for such taxes by the applicable taxing
authority; and (ii) JEM shall not have taken control of such suit within 30 days
after notification thereof as provided in this Section 10.2(a).
(b) DEFENSE BY JEM. In connection with any claim giving
rise to indemnity under this Section 10.2 resulting from or arising out of any
claim or legal proceeding by a person other than the Purchaser, JEM, at his sole
cost and expense, may, upon written notice to Purchaser assume the defense of
any such claim or legal proceeding, provided that JEM acknowledges his
obligation to indemnify the Purchaser in respect of the claims asserted therein.
If JEM assumes the defense of any such claim or legal proceeding, JEM shall
select counsel that is reasonably acceptable to Purchaser to conduct the defense
of such claims or legal proceedings and at his sole cost and expense shall take
all steps necessary in the defense or settlement thereof. JEM shall not consent
to a settlement of, or the entry of any judgment arising from, any such claim or
legal proceeding, without the prior written consent of Purchaser, unless JEM
admits in writing his liability to hold Purchaser and the Company and Ro-Tech
harmless from and against any losses, damages, expenses and liabilities arising
out of such settlement and concurrently with such settlement JEM pays the full
amount of all losses, damages, expenses and liabilities to be paid by JEM in
connection with such settlement. Purchaser, Ro-Tech and the Company shall
cooperate fully in the defense of any such claim or action by taking such
actions as JEM may reasonably request. Purchaser, Ro-Tech and the Company shall
be entitled to participate in (but not control) the defense thereof with their
own counsel and at their own expense. If JEM does not assume the defense of any
such claim or litigation resulting therefrom in accordance with the terms
hereof, Purchaser, Ro-Tech or the Company may defend against such claim or
litigation in such manner as it may deem appropriate, including but not limited
to, settling such claim or litigation, after giving notice of the same to JEM,
on such terms as Purchaser may deem appropriate. JEM shall cooperate fully in
the defense of any such claim or litigation by taking such action as Purchaser
may reasonably request. JEM shall be entitled to participate in (but not
control) the defense of any action which JEM has elected to allow Purchaser to
defend with his own counsel and at his own expense.
10.3 NOTICE. Purchaser agrees that in the event of any occurrence
that may give rise to a claim by an indemnified party against JEM under this
Section 10.2, Purchaser will give notice thereof to JEM; provided, however, that
failure to timely give the notice provided in this Section 10.2 shall not be an
absolute defense to the liability of JEM for such claim, but JEM may recover
from the Purchaser any actual damages arising from the Purchaser's failure to
give such timely notice.
10.4 WAIVER. Purchaser agrees that it will not waive any statute of
limitations or defense that would increase the liability of JEM under this
Section 10 without the written consent of JEM.
10.5 LIMITATION ON DAMAGES. Notwithstanding the above
indemnification provisions, no claim may be made by Purchaser under this
Agreement unless and until all Damages incurred have aggregated to an amount in
excess of $10,000, except that no such
Stock Purchase Agreement 22
limitation will apply with respect to any breach of Sections 3.3, 3.5, 3.9,
3.10, 3.16, 3.25 or 3.28, Section 4, or any intentional misrepresentation or
fraud.
10.6 SURVIVAL. This Section 10 shall survive for a period of two
years subsequent to the Closing Date, except that claims based on a breach of
Sections 3.3, 3.11, 3.16, or 3.22 shall be governed by the applicable statute of
limitations, is intended to be for the benefit of, and enforceable by, the
Company, Ro-Tech and Purchaser, and such parties' heirs and representatives, and
shall be binding on all successors and assigns of Purchaser.
11. BROKERAGE; PUBLICITY; OTHER AGREEMENTS.
---------------------------------------
11.1 BROKERAGE. Each of the Company and Ro-Tech represents and
warrants to Purchaser that it has not engaged the services of any broker or
finder with respect to this Agreement or the transactions contemplated herein,
and each of the Company and Ro-Tech agrees to indemnify Purchaser for and hold
it harmless from any claim for brokers' or finders' fees or compensation in
connection with the transactions herein provided for by any person, firm or
corporation claiming such a right because engaged by the Company or Ro-Tech.
Purchaser represents and warrants to the Company and Ro-Tech that it has not
engaged the services of any broker or finder in connection with this Agreement
or the transactions contemplated herein and agrees to indemnify the Company and
Ro-Tech for and hold it harmless from any claims for brokers' or finders' fees
or compensation in connection with the transactions herein provided for by any
person, firm or corporation claiming such a right because engaged by Purchaser.
11.2 PUBLICITY. Each party to this Agreement agrees that it will
treat this Agreement and all negotiations and communications between them
relating to this Agreement, the transactions contemplated by this Agreement or
otherwise, and all information disclosed to a party by the other party, as
confidential. No party to this Agreement will make any public announcements or
otherwise communicate with any news media with respect to this Agreement or any
of the transactions contemplated by this Agreement without prior approval of the
other party, which approval will not unreasonably be withheld or delayed, as to
the timing and contents of any such announcement as may be reasonable under the
circumstances; provided however, that nothing contained herein will prevent any
party from promptly making all filings with governmental entities that may, in
its reasonable judgment, be required or advisable in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated by this Agreement, or from making any disclosures required by legal
requirements, so long as such party gives timely notice to the other parties of
the anticipated disclosure and cooperates with the other party in designing
reasonable procedural and other safeguards to preserve, to the maximum extent
possible, the confidentiality of all information furnished by the other party
pursuant to this Agreement.
11.3 OTHER AGREEMENTS. The execution, delivery and performance of
this Agreement shall not have any effect upon any existing agreements or
arrangements between Purchaser and the Company or the Purchaser and Ro-Tech, or
any contracts that either party may have with third parties.
Stock Purchase Agreement 23
12. ADDITIONAL PROVISIONS.
----------------------
12.1 TAX RETURNS. The Shareholders and JEM shall pay all income
taxes of the Company and Ro-Tech for all periods prior to Closing, whenever
incurred or assessed. From and after the Closing Date, Purchaser, Ro-Tech and
the Company, on the one hand, and the Shareholders, on the other hand, shall
make available to the other, as reasonably requested, all information, records
or documents relating to the tax liabilities of the Company and Ro-Tech for all
periods ending on or prior to the Closing Date, and will preserve such
information, records or document until the expiration of any applicable statute
of limitations or extensions thereof.
12.2 EXPENSES. Whether or not the transactions contemplated by this
Agreement are consummated, Purchaser and the Shareholders shall each pay their
own expenses in connection with the transactions contemplated by this Agreement,
including the fees and expenses of their respective counsel.
12.3 LITIGATION EXPENSES. In the event of any litigation to enforce
or declare any of the provisions of this Agreement, the prevailing party shall
recover and the losing party shall pay the reasonable attorney fees incurred by
the prevailing party at the trial and upon any appeals therefrom, as determined
by the respective courts.
12.4 NATURE AND SURVIVAL OF REPRESENTATIONS. All statements by the
parties hereto contained in this Agreement and any certificate, instrument or
document delivered by or on behalf of any of the parties pursuant to this
Agreement, shall be deemed representations and warranties. All representations
and warranties made by JEM, the Company, Ro-Tech and the Shareholders to the
Purchaser in this Agreement or pursuant hereto, shall survive the consummation
of the transactions contemplated by this Agreement, except to the extent waived
in writing by the Purchaser, for a period of two years subsequent to the Closing
Date and any claims for indemnification hereunder must be initiated if at all
within such period. No representations and warranties of the Purchaser contained
in this Agreement will survive beyond the Closing Date. This Section 12.4 will
not limit any covenant or agreement of the parties to this Agreement that by its
terms requires performance after the Closing Date.
12.5 ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement and understanding between the parties as to the subject matter hereof,
and supersedes all prior discussions, agreements and understandings of every
kind and nature between them. No party shall be bound by any condition,
definition, warranty or representation, other than expressly set forth or
provided for in this Agreement, or as may be, on or subsequent to the date
hereof, set forth in writing and signed by the party to be bound thereby. This
Agreement may not be changed or modified, except by agreement in writing, signed
by all of the parties hereto.
12.6 PARTIES IN INTEREST. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the successors in interest of the respective parties hereto. Nothing
contained herein, express or implied, is intended nor shall be construed to
confer or give any person, firm or corporation other than the parties hereto any
rights or remedies under or by reason of the Agreement.
Stock Purchase Agreement 24
12.7 SUBSTITUTION OF AFFILIATE. Purchaser shall have the right, at
any time on or prior to the Closing Date, by written notice to the Company and
Ro-Tech, to designate in its place and stead as the party to whom the shares
shall be issued, an affiliate of Purchaser, which affiliate shall then execute
this Agreement and which shall then succeed to all rights and be liable to
perform all the obligations of Purchaser under this Agreement.
12.8 GOVERNING LAW. This Agreement shall be construed and
interpreted according to the laws of the state of Oregon.
12.9 NOTICES. All notices or other communications which are
required or permitted hereunder shall be sufficient if delivered personally,
sent by facsimile or delivered by a recognized overnight courier service or by
certified mail, postage prepaid, as follows:
If to Purchaser: Key Technology, Inc.
000 Xxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxx, President
with a copy to: Xxxxxx Xxxx LLP
1600 Pioneer Tower
000 XX Xxxxx Xxx.
Xxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxx
If to Company, Ro-Tech or to Farmco, Inc.
the Shareholders: 000 XX 0xx Xxxxxx
Xxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxx, President
Xxxx X. Xxxxxx
00000 Xxxxxxxxx Xx.
Xxxx, XX 00000
Tel: (000) 000-0000
Stock Purchase Agreement 25
Xxxxxx, Xxxxxxx & Xxxxx
with a copy to: 000 Xxxx Xxxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxx, XX 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxx
Any party may, by written notice to the other, change its address for
purposes of this Agreement. All such notices and other communications hereunder
shall be deemed given (i) upon confirmation of delivery, if sent by facsimile,
(ii) upon delivery, if sent by recognized overnight courier service or personal
delivery and (iii) upon the date the certified mail receipt is signed if sent
certified mail.
12.10 WAIVER. Waiver by any party of the strict performance of any
of the provisions of this Agreement shall not be construed as a waiver of or
prejudice that party's right to subsequently require strict performance of, the
same or any other provision of this Agreement.
12.11 SECTION HEADINGS. The headings of the sections of this
Agreement are for the convenience of the parties only and shall not be construed
as affecting the terms of this Agreement or be used in the interpretation of the
terms of this Agreement.
12.12 COUNTERPARTS. This Agreement may be executed in counterparts
and when each party has signed at least one counterpart, the Agreement shall be
fully binding. Each counterpart shall be considered an original, and all of
them, taken together, shall constitute a single Agreement.
Stock Purchase Agreement 26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
Purchaser: KEY TECHNOLOGY, INC.
By /s/ Xxxxxx X. Xxxxxx
--------------------------------
The Company: FARMCO, INC.
By /s/ Xxxx X. Xxxxxx
--------------------------------
Xxxx X. Xxxxxx, President
Ro-Tech: RO-TECH, INC.
By /s/ Xxxx X. Xxxxxx
--------------------------------
Xxxx X. Xxxxxx, President
Shareholders:
By /s/ Xxxx X. Xxxxxx
--------------------------------
Xxxx X. Xxxxxx
00000 Xxxxxxxxx Xx.
Xxxx, Xxxxxx 00000
Tel:
Fax:
By /s/ Xxxxx X. Xxxxxx
--------------------------------
Xxxxx X. Xxxxxx
00000 Xxxxxxxxx Xx.
Xxxx, Xxxxxx 00000
Tel:
Fax:
Stock Purchase Agreement 27
