SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: June 5, 1996
ROBOTIC VISION SYSTEMS, INC.
(Exact name of Registrant as specified in charter)
Delaware 0-8623 11-2400145
(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification
incorporation) Number)
425 Rabro Drive East, Hauppauge, New York 11788
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 273-9700
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Item 5. Other Events.
On May 30, 1996, Registrant consummated an acquisition
transaction contemplated by a Merger Agreement and Plan of
Reorganization dated as of May 29, 1996 (the "Merger Agreement"),
with Northeast Robotics, Inc., a privately owned company located in
New Boston, New Hampshire ("NER"), whereby NER became a wholly-owned
subsidiary of Registrant (the "NER Merger"). NER markets a
line of patented illumination products under the NerliteTM trademark
which allows machine vision systems to perform reliably in
difficult imaging applications involving highly reflective or
uneven surfaces.
The Merger Agreement provided that upon the Effective
Time of the NER Merger (as defined in the Merger Agreement), all of
the then outstanding shares of NER common stock held by NER's three
stockholders would be converted into the right to receive, and
become exchangeable for, an aggregate of 139,037 shares of
Registrant's common stock.
The NER Merger was structured as a tax-free reorganization
and will be accounted for by Registrant as a purchase.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of NER.
Not applicable.*
(b) Pro Forma Financial Information.
Not applicable.*
(c) Exhibits.
(i) Merger Agreement and Plan of Reorga-nization
dated as of May 29, 1996 by and among Robotic
Vision Systems, Inc., NER Acquisition Corp.,
Northeast Robotics, Inc., Timothy P. White,
Peter White, Jr. and Marcel Laflamme.
* NER does not constitute a "significant subsidiary" of
Registrant, as such term is defined in Rule 1-02, promulgated
under Regulation S-X.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
Dated: June 5, 1996 ROBOTIC VISION SYSTEMS, INC.
(Registrant)
By: /s/Robert H. Walker
Robert H. Walker
Executive Vice President
EXHIBIT 7(c)(i)
MERGER AGREEMENT AND PLAN OF REORGANIZATION
THIS MERGER AGREEMENT AND PLAN OF REORGANIZATION is dated
as of the 29th day of May, 1996 by, and among (i) ROBOTIC VISION
SYSTEMS, INC., a Delaware corporation ("Parent"), (ii) NER
ACQUISITION CORP., a Delaware corporation ("Acquirer"), (iii)
NORTHEAST ROBOTICS, INC., a New Hampshire corporation
("Target"), (iv) Timothy P. White and Peter White (collectively,
the "Principal Stockholders") and (v) the other stockholders of
Target listed on the signature pages hereto (the "Other
Stockholders", and together with the Principal Stockholders, the
"Stockholders").
WHEREAS, Target has an authorized capital of 100,000 shares
of common stock, par value $.50 per share ("Target Common
Stock"), of which 1,067 shares are issued and outstanding as of
the date hereof, all of which are held by the Stockholders;
WHEREAS, Acquirer has an authorized capital of 3,000 shares
of common stock, par value $0.01 per share ("Acquirer Common
Stock"), of which 1,000 shares are issued and outstanding and
held by Parent;
WHEREAS, Parent has an authorized capital of 30,000,000
shares of common stock, par value $.01 per share ("Parent Common
Stock"), of which 16,530,872 shares are issued and outstanding
as of May 28, 1996;
WHEREAS, the Boards of Directors of each of Parent,
Acquirer, and Target believe that the merger of Acquirer into
Target (the "Merger") would be advantageous and beneficial to
their respective corporations and stockholders; and
WHEREAS, this Agreement is intended to be and is adopted as
a plan of reorganization within the meaning of Section 368 of
the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the mutual covenants
and agreements hereinafter set forth, the parties hereto agree
that Acquirer shall be merged into Target, upon the terms and
subject to the conditions set forth in this Agreement.
1. THE MERGER.
1.1 Closing and Effective Time of Merger. Subject to the
provisions of Sections 6 and 7, a closing of the transactions
contemplated by this Agreement (the "Closing") shall be held at
the offices of Bingham, Dana & Gould, 150 Federal Street,
Boston, Massachusetts 02110, on or before May 29, 1996, or on
such other date prior to the termination of this Agreement
referred to in Section 12 as may be agreed to by the parties
(the "Closing Date").
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On the Closing Date, Target, Acquirer, and Parent shall cause to be
definitively executed and delivered to one another the Agreements of
Merger substantially in the forms attached hereto as Exhibit A (the
"Agreements of Merger") and Parent shall cause such documents to be
filed with the Secretary of State of each of Delaware and New Hampshire,
respectively, in order to cause the Merger to become effective
under the laws of the State of Delaware and the State of New
Hampshire. The Merger shall become effective on the date and at
the time of the filing of the Agreements of Merger with the
Secretary of State of each of Delaware and New Hampshire (the
"Effective Time"). References herein to the "Surviving
Corporation" shall mean Target on and after the Effective Time.
1.2 Terms and Conditions of Merger. At the Effective
Time, pursuant to this Agreement and the Agreements of Merger:
(a) Acquirer shall be merged with and into Target and the
separate existence of Acquirer shall cease;
(b) Target shall continue as the Surviving Corporation
organized under the laws of the State of New Hampshire, the
authorized capital stock of which shall be 3,000 shares of
common stock, par value $0.01 per share;
(c) the Articles of Incorporation of the Surviving
Corporation shall be the Articles of Incorporation of Target in
effect immediately prior to the Effective Time as amended as
described in the Agreements of Merger;
(d) each share of Target Common Stock issued and
outstanding immediately prior to the Effective Time (other than
any such shares held as treasury stock by Target) shall be
automatically converted (subject to statutory dissenters' rights
of appraisal) into the right to receive that number of shares of
Parent Common Stock as provided in Section 2.1, subject to
adjustment as specified in Section 2.2, with each certificate
representing such shares of Target Common Stock thereupon
representing the right to receive such shares of Parent Common
Stock (subject to statutory dissenters' rights of appraisal);
(e) each issued and outstanding share of the capital stock
of Acquirer shall be converted into and represent the right to
receive one share of common stock, $.01 par value per share, of
the Surviving Corporation, whereupon Parent shall own all of the
issued and outstanding capital stock of the Surviving Corporation;
(f) the By-Laws of the Surviving Corporation shall be the
By-Laws of Target in effect immediately prior to the Effective
Time until amended in accordance with applicable law or such By-Laws;
(g) all of the estate, properties, rights, privileges,
powers and franchises of Target and Acquirer and all of their
property, real, personal and mixed, and all debts due on
whatever account to either of Target or Acquirer shall vest in
the Surviving Corporation, without further act or deed;
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(h) the Surviving Corporation shall be responsible for all
of the liabilities and obligations of each of Target and
Acquirer and the liabilities of Target and Acquirer shall not be
affected nor shall the rights of creditors thereof or of any
persons dealing with Target or Acquirer be impaired; and
(i) the directors and officers of the Surviving
Corporation shall be those specified in the Agreements of
Merger.
2. CONVERSION OF SHARES, PAYMENTS, ETC.
2.1 Conversion of Shares. As provided in Section 1.2(d),
at the Effective Time, each issued and outstanding share of
Target Common Stock shall be automatically converted into the
right to acquire shares of Parent Common Stock in accordance
with the following provisions of this Section 2.1, subject to
adjustment as specified in Section 2.2:
(a) Conversion; Exchange Rate. Subject to adjustment as
specified in Section 2.2 hereof, each share of Target Common
Stock which is issued and outstanding at the Effective Time
(other than any such shares held as treasury stock by Target),
shall be converted (subject to statutory dissenters' rights of
appraisal) into such number of shares of Parent Common Stock as
equals 150,000 divided by the total number of shares of Target
Common Stock issued and outstanding at the Effective Time (and
without regard to the exercise by any holder of Target Common
Stock of statutory dissenters' rights) (the "Exchange Rate"), it
being hereby expressly acknowledged and agreed that irrespective
of the number of shares of capital stock of Target issued and
outstanding at the Effective Time and the number of any
outstanding options, warrants or other rights to purchase shares
of the capital stock of Target at the Effective Time and of the
number of any outstanding securities exchangeable for or
convertible into shares of the capital stock of Target at the
Effective Time, Parent shall be obligated to issue no more than
an aggregate of 150,000 shares of Parent Common Stock (such
number of shares being subject to adjustment as specified in
Section 2.2 and reduction to account for the exercise by any
holder of Target Common Stock of statutory dissenters' rights of
appraisal), in connection with the Merger of Acquirer and
Target.
(b) Procedures. At the Closing, each of the Stockholders
shall surrender to the Parent all certificates representing
shares of Target Common Stock held by such Stockholder, duly
endorsed for transfer, and such certificates will be forthwith
canceled. At the Closing, the Parent will deliver, in exchange
therefor, a certificate representing the number of shares of
Parent Common Stock determined by multiplying the number of
shares of Target Common Stock held by each such Stockholder at
the Effective Time by the Exchange Rate. The aggregate amount
of such shares of Parent Common Stock exchanged pursuant to this
Section 2.1(b), shall hereinafter be referred to as the
"Exchanged Shares." All certificates representing the Exchanged
Shares shall bear the legend referred to in Section 3.33.
<PAGE>
(c) Fractional Shares. No fractional shares of, and no
scrip or fractional share certificates for, Parent Common Stock
will be issued or delivered pursuant to this Agreement, and no
right to vote or receive any dividend or other distribution or
any other right of a stockholder shall attach to any fractional
interest in Parent Common Stock to which any Stockholder would
otherwise be entitled. In lieu thereof, there shall be paid to
each Stockholder who would otherwise have been entitled to a
fractional share of Parent Common Stock pursuant to Section
2.1(b), a cash payment in respect of such fractional interest
determined by valuing Parent Common Stock at its unweighted
average reported closing price on the NASDAQ National Market
System for the 20 trading days ending five trading days before
the Effective Time.
(d) Rights After Effective Time and Until Surrender, etc.
No Stockholder shall be entitled to exercise any rights with
respect to Target after the Effective Time (except prosecution
of statutory dissenters' rights of appraisal). No dividend or
other distribution payable after the Effective Time with respect
to Parent Common Stock shall be paid to the holder of any
unsurrendered certificate representing Target Common Stock until
the holder thereof surrenders such certificate to the Parent as
described in Section 2.1(b), at which time such holder shall
receive all dividends and distributions, without interest
thereon, previously payable but withheld from such holder
pursuant hereto.
(e) Exercise or Exchange of Options. On or before the
Effective Time, all outstanding stock options, warrants and
other rights to purchase Target Common Stock shall be exercised
or exchanged for shares of Target Common Stock. For all
purposes of this Agreement, the shares of Target Common Stock
issued upon exercise or in exchange for such outstanding stock
options, warrants and other rights or upon conversion of such
other securities exchangeable for or convertible into Target
Common Stock shall be deemed to be shares of Target Common Stock
for purposes of this Agreement and the recipients thereof shall
be deemed to be Stockholders and such shares shall be included
in the computation of the Exchange Rate pursuant to Section
2.1(a) hereof.
2.2 Purchase Price Adjustment. In the event that the
average of the reported closing prices of Parent Common Stock on
the NASDAQ National Market System during the twenty (20) trading
days ending five (5) trading days before May 24, 1996 (the
"Closing Price") shall be more than $16.67 per share, then the
Exchange Rate shall be adjusted to equal the amount obtained by
dividing (a) $2,500,500 divided by the Closing Price by (b) the
total number of shares of Target Common Stock issued and
outstanding at the Effective Time. In the event that the
Closing Price shall be less than $13.99 per share, then the
Exchange Rate shall be adjusted to equal the amount obtained by
dividing (a) $2,098,500 divided by the Closing Price by (b) the
total number of shares of Target Common Stock issued and
outstanding at the Effective Time.
<PAGE>
3. REPRESENTATIONS AND WARRANTIES OF TARGET AND THE
PRINCIPAL STOCKHOLDERS. Each of Target and each Principal
Stockholder, jointly and severally, represents and warrants to
the Parent and the Acquirer as follows:
3.1 Organization of Target; Authority. Target is a
corporation duly organized, validly existing and in good
standing under the laws of the State of New Hampshire. Target
is duly qualified and in good standing as a foreign corporation
in all jurisdictions in which the character of the properties
owned or leased or the nature of the activities conducted by it
makes such qualification necessary. Target has delivered to the
Parent complete and correct copies of Target's Articles of
Incorporation and By-Laws and all amendments thereto. Target
has all requisite power and authority to own or lease and
operate its properties and to carry on its business as such
business is now conducted.
3.2 Approvals; Binding Effect. (a) Target has all
requisite power and full legal right to enter into this
Agreement and to perform all of its agreements and obligations
hereunder, in accordance with its terms. This Agreement has
been duly authorized by Target's Board of Directors and
stockholders, has been duly executed and delivered by Target and
constitutes the legal, valid and binding obligation of Target
enforceable against it in accordance with its terms, except as
the enforceability hereof may be limited by any applicable
bankruptcy, reorganization, insolvency or other laws affecting
creditors' rights generally or by general principles of equity.
(b) Except as set forth on Schedule 3.2(b), the execution
and delivery of this Agreement by Target and the consummation by
Target of the transactions contemplated hereby will not (a)
violate or conflict with any provision of the Articles of
Incorporation or By-Laws of Target, each as amended to date; or
(b) constitute a violation of, or be in conflict with, or
constitute or create a default under, or result in the creation
or imposition of any encumbrance upon any property of Target
pursuant to (i) any agreement or instrument to which Target is
a party or by which any of its properties is bound, or (ii) any
statute, judgment, decree, order, regulation or rule of any
court or governmental or regulatory authority.
<PAGE>
3.3 Due Authorization, Etc. (a) This Agreement has been
duly executed and delivered by each of the Stockholders and
constitutes the legal, valid and binding obligation of each of
the Stockholders enforceable against each of the Stockholders in
accordance with its terms.
(b) The execution, delivery and performance of this
Agreement by each Stockholder and his or her participation in
the consummation of the transactions contemplated hereby are
within such Stockholder's full legal right, power and authority
and do not contravene, permit the termination of or constitute
a default (or an event which, with or without the giving of
notice or the passage of time, or both, will constitute a
default) under any agreement or other instrument binding upon
such Stockholder, and will not result in the creation or
imposition of any lien, charge or encumbrance in favor of any
third party upon any of such Stockholder's assets or properties.
The execution, delivery and performance by the Stockholders of
this Agreement do not violate any provision of applicable law or
regulations or any judgment, injunction, award, law or
regulations or any judgment, injunction, award, decree or order
to which any such Stockholder is subject.
(c) None of the Stockholders has any present plan or
intention to sell or otherwise transfer the shares of Parent
Common Stock to be received in the Merger, except for any sale
or transfer which, when aggregated with the sales and transfers
of the other Stockholders, would not cause the Merger to fail
the "continuity of interest" test for tax-free reorganizations.
3.4 Subsidiaries. Target does not have any Subsidiaries
(as defined in Section 9) and does not own or hold of record
and/or beneficially any shares of any class in the capital of
any corporations. Target does not own any legal and/or
beneficial interests in any partnerships, business trusts or
joint ventures or in any other unincorporated trade or business
enterprises.
3.5 Capitalization. The authorized capital of Target
consists of 100,000 shares of common stock, par value $.50 per
share, 1,067 shares of which are issued and outstanding on the
date hereof. All of the issued and outstanding shares of Target
Common Stock are owned of record and beneficially by the
Stockholders as set forth on Schedule 3.5 hereto and each of
such shares is validly issued and outstanding, fully paid and
non-assessable. Except as set forth on Schedule 3.5, there are
no commitments for the purchase or sale of, and no options,
warrants or other rights to subscribe for or purchase, any
securities of Target.
3.6 Governmental Consents; Transferability of Licenses,
Etc. Except as set forth on Schedule 3.6, no consent, approval
or authorization of, or registration, qualification or filing
with, any governmental agency or authority is required for the
execution and delivery by Target or the Stockholders of this
Agreement or for the consummation by Target of the transactions
<PAGE>
contemplated hereby. Target has and maintains, and the permits
listed on Schedule 3.6 hereto include, all licenses, permits and
other authorizations from all governmental authorities
(collectively, the "Permits") as are necessary or desirable for
the conduct of Target's business. Except as expressly
designated on Schedule 3.6, the transactions contemplated hereby
shall not cause the termination or revocation of or limit in any
way any such Permit, and true and complete copies of such
Permits have previously been delivered to Parent.
3.7 Lawful Issuance. All of the outstanding shares of
Target Common Stock were issued in conformity with all
applicable provisions of the Securities Act of 1933, as amended
(the "Securities Act") and the rules and regulations thereunder,
and in compliance with applicable state securities laws and all
rules and regulations thereunder. There exists no valid right
to rescind any purchase thereof from or issuance thereof by
Target.
3.8 Financial Statements. Target has delivered the
following financial statements (the "Financial Statements") to
Parent, and there are attached as Schedule 3.8 hereto: (a) the
compiled balance sheets of Target as of December 31, 1993,
December 31, 1994 and December 31, 1995 (such balance sheet as
of December 31, 1995 being referred to herein as the "Compiled
Balance Sheet"), and the related statements of income, retained
earnings and cash flows of Target for each of the fiscal years
then ended and (b) the unaudited balance sheet of Target as of
March 31, 1996 and the related statements of income, retained
earnings and cash flows of Target for the three (3) month period
then ended (collectively, the "Interim Financials"). Each of
such balance sheets fairly and accurately presents the financial
condition of Target as of its respective date; and such
statements of income, retained earnings and cash flows fairly
and accurately present the results of operations for the periods
covered thereby.
3.9 Absence of Certain Changes. Except as set forth on
Schedule 3.9, since March 31, 1996 Target has carried on its
business only in the ordinary course, and there has not been (a)
any change in the assets, liabilities, sales, income or business
of Target or in its relationships with suppliers, customers or
lessors, other than changes which were both in the ordinary
course of business and have not been, either in any case or in
the aggregate, materially adverse; (b) any acquisition or
disposition by Target of any asset or property other than in the
ordinary course of business; (c) any damage, destruction or
loss, whether or not covered by insurance, materially and
adversely affecting, either in any case or in the aggregate, the
property or business of Target; (d) any declaration, setting
aside or payment of any dividend or any other distributions in
respect of any of the capital stock of Target; (e) any issuance
of any shares of the capital stock of Target or any direct or
indirect redemption, purchase or other acquisition of any of the
<PAGE>
capital stock of Target, (f) any increase in the compensation,
pension or other benefits payable or to become payable by Target
to any of its officers or employees, or any bonus payments or
arrangements made to or with any of them (other than pursuant to
the terms of any existing written agreement or plan of which
Parent has been supplied complete and correct copies of); (g)
any forgiveness or cancellation of any debt or claim by Target
or any waiver of any right of material value other than
compromises of accounts receivable in the ordinary course of
business; (h) any entry by Target into any transaction other
than in the ordinary course of business; (i) any incurrence by
Target of any obligations or liabilities, whether absolute,
accrued, contingent or otherwise (including, without limitation,
liabilities as guarantor or otherwise with respect to
obligations of others), other than obligations and liabilities
incurred in the ordinary course of business; (j) any mortgage,
pledge, lien, lease, security interest or other charge or
encumbrance on any of the assets, tangible or intangible, of
Target; or (k) any discharge or satisfaction by Target of any
lien or encumbrance or payment by Target of any obligation or
liability (fixed or contingent) other than (A) current
liabilities included in the Compiled Balance Sheet and (B)
current liabilities incurred since the date of the Compiled
Balance Sheet in the ordinary course of business.
3.10 Litigation, Etc. Except as set forth on Schedule 3.10
hereto, no action, suit, proceeding or investigation is pending
or threatened against Target (nor is there any basis therefor
known to Target or any of the Principal Stockholders).
3.11 Conformity to Law. Except as set forth on
Schedule 3.11, Target has complied with, and is in compliance
with (a) all laws, statutes, governmental regulations and all
judicial or administrative tribunal orders, judgments, writs,
injunctions, decrees or similar commands applicable to Target or
any of its properties (including, without limitation, any labor,
environmental, occupational health, zoning or other law,
regulation or ordinance) and (b) all unwaived terms and
provisions of all contracts, agreements and indentures to which
Target is a party, or by which Target or any of its properties
is subject. Except as set forth in Schedule 3.11 hereto, Target
has not committed, been charged with, or been under
investigation with respect to, nor does there exist, any
violation of any provision of any federal, state or local law or
administrative regulation in respect of Target or any of its
properties.
3.12 Title to Real and Personal Property, Real Property
Leases, etc. Except as set forth on Schedule 3.12(a) hereto,
Target has good and marketable title to all of its real and
personal properties and assets, including, without limitation,
all those reflected in the Compiled Balance Sheet (except for
properties or assets sold or otherwise disposed of in the
ordinary course of business since the date of the Compiled
<PAGE>
Balance Sheet), all free and clear of all liens, pledges,
charges, security interests, encumbrances or title retention
agreements of any kind or nature. All such properties and
assets are in good condition and repair and are adequate and
sufficient to carry on the business of Target as presently
conducted. Schedule 3.12(b) hereto sets forth a complete and
correct list of all capital assets of Target having a book or
fair market value in excess of $1,000 and all real property
owned or leased by Target (the "Real Property"). There are no
material defects in any such capital assets or Real Property, as
to title or condition, not described on Schedule 3.12(b). None
of the Stockholders nor Target has received any notice that
either the whole or any portion of the Real Property is to be
condemned, requisitioned or otherwise taken by any public
authority. None of the Principal Stockholders nor Target has
any knowledge of any public improvements that may result in
special assessments against or otherwise affect any of the Real
Property. Schedule 3.12(c) hereto sets forth a complete and
correct description of all leases of Real Property to which
Target is a party. Complete and correct copies of all such
leases have been delivered to Parent. Each such lease is valid
and subsisting and no event or condition exists which
constitutes, or after notice or lapse of time or both would
constitute, a default thereunder. The leasehold interests of
Target are subject to no lien or other encumbrance, and Target
is in quiet possession of the properties covered by such leases.
3.13 Real Property; Safety, Zoning and Environmental
Matters.
(a) Schedule 3.13 hereto sets forth complete and
accurate legal descriptions of all real property owned or leased
by Target.
(b) Target and the Principal Stockholders have taken
all necessary steps to investigate the past and present
condition and usage of Target's properties and the operations
conducted thereon, and based on such investigation, except as
set forth on Schedule 3.13:
(i) neither Target nor any operator of any real
property presently or formerly owned, leased or operated by
Target is in violation or alleged violation of any judgment,
decree, order, law, license, rule or regulation pertaining to
environmental matters, including without limitation those
arising under the Resource Conservation and Recovery Act
("RCRA"), the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 as amended ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"), the Federal
Water Pollution Control Act, the Solid Waste Disposal Act, as
amended, the Federal Clean Water Act, the Federal Clean Air Act,
the Toxic Substances Control Act, or any state or local statute,
regulation, ordinance, order or decree relating to health,
safety or the environment (hereinafter "Environmental Laws");
<PAGE>
(ii) none of the Stockholders nor Target has received
notice from any third party, including without limitation any
federal, state or local governmental authority, (A) that Target
or any predecessor in interest has been identified by the United
States Environmental Protection Agency ("EPA") as a potentially
responsible party under CERCLA with respect to a site listed on
the National Priorities List, 40 C.F.R. Part 300 Appendix B
(1986); (B) that any hazardous waste, as defined by 42 U.S.C.
Section 6903(5), any hazardous substance as defined by 42 U.S.C.
Section 9601(14), any pollutant or contaminant as defined by 42 U.S.C.
Section 9601(33) or any toxic substance, oil or hazardous material or
other chemical or substance regulated by any Environmental Laws
("Hazardous Substances") which Target or any predecessor in
interest has generated, transported or disposed of has been
found at any site at which a federal, state or local agency or
other third party has conducted or has ordered that Target or
any predecessor in interest conduct a remedial investigation,
removal or other response action pursuant to any Environmental
Law; or (C) that Target or any predecessor in interest is or
shall be a named party to any claim, action, cause of action,
complaint, (contingent or otherwise) legal or administrative
proceeding arising out of any third party's incurrence of costs,
expenses, losses or damages of any kind whatsoever in connection
with the release of Hazardous Substances;
(iii) (A) no portion of any real property
presently or formerly owned, leased or operated by Target has
been used for the handling, manufacturing, processing, storage
or disposal of Hazardous Substances except in accordance with
applicable Environmental Laws; and no underground tank or other
underground storage receptacle for Hazardous Substances is
located on such properties; (B) in the course of any activities
conducted by Target or operators of any real property presently
or formerly owned, leased or operated by Target, no Hazardous
Substances have been generated or are being used on such
properties except in accordance with applicable Environmental
Laws; (C) all real properties presently or formerly owned,
leased or operated by Target are free from contamination of
every kind, including without limitation, groundwater, surface
water, soil, sediment and air contamination, and such properties
do not contain asbestos in any form, urea formaldehyde foam
insulation, transformers or other equipment containing
polychlorinated biphenyls or any other chemical, material or
substance, exposure to which is prohibited, limited or regulated
by any Environmental Law, or which poses a hazard to the health
and safety of the occupants of such properties or those adjacent
thereto; (D) there have been no releases (i.e., any past or
present releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, disposing
or dumping) or threatened releases of Hazardous Substances on,
upon, into or from any real property presently or formerly
owned, leased or operated by Target except in accordance with
applicable Environmental Laws; (E) there have been no releases
on, upon, from or into any real property in the vicinity of any
<PAGE>
real property presently or formerly owned, leased or operated by
Target which, through soil or groundwater contamination, may
have come to be located on such real property; and (F) in
addition, any Hazardous Substances that have been generated on
any real property presently or formerly owned, leased or
operated by Target have been transported offsite only by
carriers having identification numbers issued by the EPA and
have been treated or disposed of only by treatment or disposal
facilities maintaining valid permits as required under
applicable Environmental Laws, which transporters and facilities
have been and are, to the best of Target's and the Principal
Stockholders' knowledge, operating in compliance with such
permits and applicable Environmental Laws; and
(iv) no real property presently or formerly owned,
leased or operated by Target is or shall be subject to any
applicable environmental cleanup responsibility law or
environmental restrictive transfer law or regulation, by virtue
of the transactions set forth herein and contemplated hereby.
(c) Attached as part of Schedule 3.13 is a list of
all documents, reports, site assessments, data, communications
or other materials, in Target's or any of the Stockholders'
possession or to which any of them has access, which contain any
material information with respect to potential environmental
liabilities associated with any real property presently or
formerly owned, leased or operated by Target and relating to
compliance with Environmental Laws or the environmental
condition of such properties and adjacent properties. Target
has furnished to Parent complete and accurate copies of all of
the documents, reports, site assessments, data, communications
and other materials listed on Schedule 3.13 hereto.
3.14 Insurance. Schedule 3.14 hereto lists all policies of
fire, liability, workmen's compensation, life, property and
casualty and other insurance owned or held by Target. Such
policies of insurance are maintained with financially sound and
reputable insurance companies, funds or underwriters and are of
the kinds and cover such risks and are in such amounts and with
such deductibles and exclusions as are consistent with prudent
business practice. All such policies (a) are in full force and
effect, (b) are sufficient for compliance by Target with all
requirements of law and all agreements to which Target is a
party, (c) provide that they will remain in full force and
effect through the respective dates set forth in such Schedule
and (d) will not in any way be affected by, or terminate or
lapse by reason of, the transactions contemplated by this
Agreement. Target is not in default with respect to its
obligations under any of such insurance policies and has not
received any notification of cancellation of any such insurance
policies.
3.15 Contracts. Schedule 3.15 sets forth a complete and
accurate list of all contracts to which Target is a party or by
<PAGE>
which Target is a party or by or to which it or any of its
assets or properties is bound or subject, except (a) contracts
entered into in the ordinary course of business after the date
hereof and prior to the Closing, which will be identified to
Parent in writing prior to the Closing, (b) contracts terminable
by Target upon 30 days' notice or less without the payment of
any termination fee or penalty, and (c) contracts listed in
other Schedules hereto. As used in this Section 3.15, the word
"contract" means and includes every agreement or understanding
of any kind, written or oral, which is legally enforceable by or
against Target, and specifically includes (a) contracts and
other agreements with any current or former officer, director,
employee, consultant or shareholder or any partnership,
corporation, joint venture or any other entity in which any such
person has an interest; (b) agreements with any labor union or
association representing any employee; (c) contracts and other
agreements for the provision of services by Target; (d) bonds or
other security agreements provided by any party in connection
with the business of Target; (e) contracts and other agreements
for the sale of any of Target's assets or properties other than
in the ordinary course of business or for the grant to any
person of any preferential rights to purchase any of Target's
assets or properties; (f) joint venture agreements relating to
the assets, properties or business of Target or by or to which
it or any of its assets or properties are bound or subject; (g)
contracts or other agreements under which Target agrees to
indemnify any party, to share tax liability of any party, or to
refrain from competing with any party; (h) any contracts or
other agreements with regard to Indebtedness; or (i) any other
contract or other agreement whether or not made in the ordinary
course of business. Target has delivered to Parent true,
correct and complete copies of all such contracts, together with
all modifications and supplements thereto. Each of the
contracts listed on Schedule 3.15 hereto or any of the other
Schedules hereto is in full force and effect, Target is not in
breach of any of the provisions of any such contract, nor, to
the knowledge of Target or any of the Principal Stockholders, is
any other party to any such contract in default thereunder, nor
does any event or condition exist which with notice or the
passage of time or both would constitute a default thereunder.
Target has in all material respects performed all obligations
required to be performed by it to date under each such contract.
No approval or consent of any person is needed in order that the
contracts listed on Schedule 3.15 and other Schedules hereto
continue in full force and effect following the consummation of
the transactions contemplated by this Agreement, and no such
contract includes any provision the effect of which may be to
enlarge or accelerate any obligations of Target thereunder or
give additional rights to any other party thereto or will in any
other way be affected by, or terminate or lapse by reason of,
the transactions contemplated by this Agreement.
3.16 Employment of Officers, Employees. Schedule 3.16 sets
forth the name and current annual salary and other compensation
<PAGE>
payable by Target to each exempt non-hourly employee.
3.17 Employee Benefit Plans. (a) Except for the
arrangements set forth on Schedule 3.17(a), Target does not now
maintain or contribute to, and has not in the current or
preceding six (6) calendar years maintained or contributed to,
any pension, profit-sharing, deferred compensation, bonus, stock
option, share appreciation right, severance, group or individual
health, dental, medical, life insurance, survivor benefit, or
similar plan, policy or arrangement, whether formal or informal,
for the benefit of any director, officer, consultant or
employee, whether active or terminated, of Target. Each of the
arrangements set forth on Schedule 3.17(a) is hereinafter
referred to as an "Employee Benefit Plan", except that any such
arrangement which is a multi-employer plan shall be treated as
an Employee Benefit Plan only for purposes of Sections
3.17(d)(iv), (vi) and (viii) and 3.17(g) below.
(b) Target has heretofore delivered to Parent true,
correct and complete copies of each Employee Benefit Plan of
Target, and with respect to each such Plan (i) any associated
trust, custodial, insurance or service agreements, (ii) any
annual report, actuarial report, or disclosure materials
(including specifically any summary plan descriptions) submitted
to any governmental agency or distributed to participants or
beneficiaries thereunder in the current or any of the six (6)
preceding calendar years and (iii) the most recently received
IRS determination letters and any governmental advisory opinions
or rulings.
(c) Each Employee Benefit Plan is and has heretofore been
maintained and operated in compliance with the terms of such
Plan and with the requirements prescribed (whether as a matter
of substantive law or as necessary to secure favorable tax
treatment) by any and all statutes, governmental or court
orders, or governmental rules or regulations in effect from time
to time, including but not limited to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") and the
Internal Revenue Code of 1986, as amended ("Code") and
applicable to such Plan. Each Employee Benefit Plan which is
intended to qualify under Section 401(a) of the Code has been
determined to be so qualified by the IRS and nothing has
occurred since the date of the last such determination which has
resulted or is likely to result in the revocation of such
determination.
(d) Except as set forth on Schedule 3.17(d),
(i) there is no pending or threatened legal action,
proceeding or investigation, other than routine claims for
benefits, concerning any Employee Benefit Plan or to the best
knowledge of the Principal Stockholders and Target any fiduciary
or service provider thereof and, to the best knowledge of the
Principal Stockholders and Target, there is no basis for any
such legal action or proceeding;
<PAGE>
(ii) no liability (contingent or otherwise) to the Pension
Benefit Guaranty Corporation ("PBGC") or any multi-employer plan
has been incurred by Target or any affiliate thereof (other than
insurance premiums satisfied in due course);
(iii) no reportable event, or event or condition which
presents a material risk of termination by the PBGC, has
occurred with respect to any Employee Benefit Plan, or any
retirement plan of an affiliate of Target, which is subject to
Title IV of ERISA;
(iv) no Employee Benefit Plan nor any party in interest
with respect thereof, has engaged in a prohibited transaction
which could subject Target directly or indirectly to liability
under Section 409 or 502(i) of ERISA or Section 4975 of the
Code;
(v) no communication, report or disclosure has been made
which, at the time made, did not accurately reflect the terms
and operations of any Employee Benefit Plan;
(vi) no Employee Benefit Plan provides welfare benefits
subsequent to termination of employment to employees or their
beneficiaries (except to the extent required by applicable state
insurance laws and Title I, Part 6 of ERISA);
(vii) no benefits due under any Employee Benefit Plan have
been forfeited subject to the possibility of reinstatement
(which possibility would still exist at or after Closing); and
(viii) Target has not undertaken to maintain any Employee
Benefit Plan for any period of time and each such Plan is
terminable at the sole discretion of the sponsor thereof,
subject only to such constraints as may be imposed by applicable
law.
(e) With respect to each Employee Benefit Plan for which
a separate fund of assets is or is required to be maintained,
full payment has been made of all amounts that Target is
required, under the terms of each such Plan, to have paid as
contributions to that Plan as of the end of the most recently
ended plan year of that Plan, and no accumulated funding
deficiency (as defined in Section 302 of ERISA and Section 412
of the Code), whether or not waived, exists with respect to any
such Plan. The current value of the assets of each such
Employee Benefit Plan, as of the end of the most recently ended
plan year of that Plan, exceeded the current value of all
accrued benefits under that Plan.
(f) The execution of this Agreement and the consummation
of the transactions contemplated hereby will not result in any
payment (whether of severance pay or otherwise) becoming due
from any Employee Benefit Plan to any current or former
director, officer, consultant or employee of Target or result in
the vesting, acceleration of payment or increases in the amount
of any benefit payable to or in respect of any such current or
former director, officer, consultant or employee.
<PAGE>
(g) No Employee Benefit Plan is a multi-employer plan.
(h) For purposes of this Section 3.17, "multi-employer
plan", "party in interest", "current value", "accrued benefit",
"reportable event" and "benefit liability" have the same meaning
assigned such terms under Sections 3, 4043(b) or 4001(a) of
ERISA, and "affiliate" means any entity which under Section 414
of the Code is treated as a single employer with Target.
3.18 Labor Relations. Except as set forth on
Schedule 3.18, Target is in full compliance with all federal and
state laws respecting employment and employment practices, terms
and conditions of employment, wages and hours and
nondiscrimination in employment, and is not engaged in any
unfair labor practice. Except as set forth on Schedule 3.18,
there is no charge pending or threatened against Target alleging
unlawful discrimination in employment practices before any court
or agency and there is no charge of or proceeding with regard to
any unfair labor practice against Target pending before the
National Labor Relations Board. There is no labor strike,
dispute, slow-down or work stoppage actually pending or
threatened against or involving Target. No one has petitioned
within the last five (5) years, and no one is now petitioning,
for union representation of any of Target's employees. None of
the employees of Target is or ever has been covered by any
collective bargaining agreement, and no collective bargaining
agreement is currently being negotiated by Target. Except as
fully described on Schedule 3.18 hereto, Target has not
experienced any work stoppage during the last five years.
3.19 Potential Conflicts of Interest. Except as set forth
on Schedule 3.19, no officer, director or stockholder of Target
(a) owns, directly or indirectly, any interest in (excepting not
more than 1% stock holdings for investment purposes in
securities of publicly held and traded companies) or is an
officer, director, employee or consultant of any Person which is
a competitor, lessor, lessee, customer or supplier of Target;
(b) owns, directly or indirectly, in whole or in part, any
tangible or intangible property which Target is using or the use
of which is necessary for the business of Target; or (c) has any
cause of action or other claim whatsoever against, or owes any
amount to, Target, except for claims in the ordinary course of
business, such as for accrued vacation pay, accrued benefits
under Employee Benefit Plans and similar matters and agreements.
3.20 Intellectual Property. (a) Schedule 3.20(a) hereto,
sets forth a complete and accurate list of (i) all patents,
trademarks, trade names and copyrights registered in the name of
Target or used by Target, all applications therefor, and all
licenses and other agreements relating thereto, and (ii) all
agreements relating to Intellectual Property (as defined below)
which Target has licensed or authorized for use by others or
which has been licensed or authorized for use to Target.
(b) Except as set forth in Schedule 3.20(b) hereto or as
provided in the Royalty Agreement (as defined in Section 6.9),
(i) no royalties are paid or payable by Target on or with
respect to any of the patents, patent applications, trademarks,
trade names or copyrights listed in Schedule 3.20(a) hereto, or
any of the inventions (whether patentable or non-patentable) or
trade secrets used by Target in the development, manufacture,
testing or production of its products, and (ii) each of the
inventions (whether patentable or non-patentable) or trade
secrets used by Target in the development, manufacture, testing
or production of its products, have, through assignment,
agreement, operation of law or otherwise, become the sole
property of Target; provided that the Parent and the Acquirer
acknowledge that other third parties may, without the knowledge
of Target or its Principal Stockholders, have ownership rights
in the same or similar trade secrets as those owned by Target,
which ownership rights would not preclude Target's ownership
rights with respect to such trade secrets. Schedule 3.20(b)
hereto, lists all software programs currently used by Target
(other than commercially available software programs, such as
"Word Perfect", purchased by Target in the ordinary course of
business) in the development, manufacture, testing or production
of its products, and for each such program the name and title of
the Person or Persons responsible for the creation of such
program. Except as provided in the Royalty Agreement, no
royalties are paid or payable by Target on or with respect to
any of the software programs listed in Schedule 3.20(b) hereto,
and each of the software programs listed in Schedule 3.20(b)
hereto, have, through assignment, agreement, operation of law or
otherwise, become the sole property of Target. Schedule 3.20(b)
hereto, lists all contracts relating to the development of
Intellectual Property between Target and any other Person who
was not an employee of Target at the time Intellectual Property
was developed pursuant to such contract by such Persons for the
Target.
(c) Except to the extent set forth in Schedule 3.20(c)
hereto or as provided in the Royalty Agreement, Target owns or
has the right to use all Intellectual Property used in its
business as presently conducted, and the consummation of the
transactions contemplated hereby will not alter or impair any
such right, in each case, subject to the possibility of
infringement by Target of third parties' intellectual property
rights of which neither it nor the Principal Stockholders has
knowledge.
(d) Except as set forth in Schedule 3.20(d) hereto,
neither Target, nor, to the knowledge of Target or any of the
Principal Stockholders, the other party or parties thereto, is
in breach of any license, sublicense or other agreement relating
to Intellectual Property. Target has complied with all of its
obligations of confidentiality in respect of the Intellectual
Property of others and knows of no violation of such obligations
<PAGE>
of confidentiality as are owed to Target. To the knowledge of
Target and the Principal Stockholders, no employee, agent or
consultant of Target is subject to confidentiality restrictions
in favor of any third Person the breach of which would subject
Target to any material liability or which would adversely affect
Target's access to Intellectual Property used by it. No claims
have been asserted against Target, and no claims are pending, by
any Person regarding the use of any such Intellectual Property,
or challenging or questioning the validity or effectiveness of
any license or agreement relating to Intellectual Property, and
to the knowledge of Target and the Principal Stockholders, there
is no basis for such claim. To the knowledge of Target and the
Principal Stockholders, the use by Target of any of its
Intellectual Property, including but not limited to such
Intellectual Property listed in any part of Schedule 3.20
hereto, does not infringe on the rights of any Person.
(e) As used herein, "Intellectual Property" means patents,
inventions (whether patentable or unpatentable), trade secrets,
know-how, trademarks and associated goodwill, service marks,
trade dress, logos, trade names, copyrights, mask works and
registrations and applications for each of the foregoing, and
computer software programs, computer data bases and related
documentation and materials.
3.21 Suppliers and Customers. Schedule 3.21 hereto sets
forth the ten (10) largest suppliers and ten (10) largest
customers of Target as of the date hereof. The relationships of
Target with such suppliers and customers are good commercial
working relationships and, except as set forth on Schedule 3.21,
no supplier or customer of material importance to Target has
cancelled or otherwise terminated, or threatened to cancel or
otherwise to terminate, its relationship with Target or has
during the last twelve (12) months decreased materially, or
threatened to decrease or limit materially, its services,
supplies or materials for use by Target or its usage or purchase
of the services or products of Target except for normal cyclical
changes related to customers' businesses. None of the Principal
Stockholders nor Target has any knowledge that any such supplier
or customer intends to cancel or otherwise substantially modify
its relationship with Target or to decrease materially or limit
its services, supplies or materials to Target, or its usage or
purchase of Target's services or products, and to the knowledge
of the Principal Stockholders and Target, the consummation of
the transactions contemplated hereby will not adversely affect
the relationship of Target with any such supplier or customer.
3.22 Accounts Receivable. All accounts and notes
receivable reflected on the Compiled Balance Sheet, and all
accounts and notes receivable arising subsequent to the date of
such Compiled Balance Sheet, have arisen in the ordinary course
of business, represent valid obligations owing to Target and
have been collected or are collectible in the aggregate recorded
amounts thereof in accordance with their terms, subject only to
consistently recorded reserves for bad debts.
<PAGE>
3.23 No Undisclosed Liabilities. Except to the extent (a)
reflected or reserved against in the Compiled Balance Sheet, (b)
incurred in the ordinary course of business after the date of
the Compiled Balance Sheet and discharged prior to Closing or
(c) described on any Schedule hereto, Target has no liabilities
or obligations of any nature, whether accrued, absolute,
contingent or otherwise (including without limitation as
guarantor or otherwise with respect to obligations of others),
other than performance obligations with respect to Target's
contracts that would not be required to be reflected or reserved
against on a balance sheet prepared in accordance with generally
accepted accounting principles or in the footnotes thereto.
3.24 Conduct of Business. Except to the extent disclosed
on Schedule 3.24 or any other Schedule hereto, since December
31, 1995, Target has conducted its business in compliance with
the provisions of Section 5 hereof, as if each of those
provisions applied to the conduct of such businesses at all
times since such date.
3.25 Taxes. Target is, and at all times since its date of
incorporation has been, qualified as a corporation for which a
valid election to be taxed under the provisions of Subchapter S,
Chapter 1, Subtitle A of the Internal Revenue Code has been
filed and is in effect under Subchapter S, and has a
corresponding election in effect under the tax law of the State
of New Hampshire for each taxable year during the same time
period. Target has duly filed with the appropriate government
agencies all of the income, sales, use, employment and other tax
returns and reports required to be filed by it. No waiver of
any statute of limitations relating to taxes has been executed
or given by Target. All taxes, assessments, fees and other
governmental charges upon Target or upon any of its properties,
assets, revenues, income and franchises which are owed by Target
with respect to the period ending on or before the Closing Date
have been paid, other than those currently payable without
penalty or interest of which will be accurately reflected on
Target's books and records at Closing. Target has withheld and
paid all taxes required to be withheld or paid in connection
with amounts paid or owing to any employee, creditor,
independent contractor or third party. No federal tax return of
Target is currently under audit by the IRS (as defined in
Section 9), and no other tax return of Target is currently under
audit by any other taxing authority. Neither the IRS nor any
other taxing authority is now asserting or threatening to assert
against Target any deficiency or claim for additional taxes or
interest thereon or penalties in connection therewith or any
adjustment that would have an adverse effect on Target.
<PAGE>
3.26 Indebtedness. Except for Indebtedness described on
Schedule 3.26 hereto, Target has no Indebtedness outstanding at
the date hereof. Except as disclosed on Schedule 3.26 hereto,
Target is not in default with respect to any outstanding
Indebtedness or any instrument relating thereto and no such
Indebtedness or any instrument or agreement relating thereto
purports to limit the issuance of any securities by Target or
the operation of the business of Target. Complete and correct
copies of all instruments (including all amendments,
supplements, waivers and consents) relating to any Indebtedness
of Target have been furnished to Parent.
3.27 Bank Accounts, Signing Authority, Powers of Attorney.
Except as set forth on Schedule 3.27 hereto, Target has no
account or safe deposit box in any bank and no Person has any
power, whether singly or jointly, to sign any checks on behalf
of Target to withdraw any money or other property from any bank,
brokerage or other account of Target or to act under any power
of attorney granted by Target at any time for any purpose.
Schedule 3.27 also sets forth the names of all persons
authorized to borrow money or sign notes on behalf of Target.
3.28 Inventory. The inventory and supplies of Target are
adequate for present needs, and are in usable and saleable
condition in the ordinary course of business, subject only to
appropriate reserves for obsolescence.
3.29 Minute Books. The minute books of Target made
available to Parent for inspection accurately record therein all
actions taken by Target's Board of Directors and shareholders.
3.30 Broker. None of the Stockholders nor Target has
retained, utilized or been represented by any broker, agent,
finder or intermediary in connection with the negotiation or
consummation of the transactions contemplated by this Agreement.
3.31 Ownership of Parent Common Stock. As of the date
hereof, neither Target nor, to the knowledge of Target or any of
the Principal Stockholders, any directors or officers of Target
(i) beneficially own, directly or indirectly, or (ii) are
parties to any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of, in each
case, shares of Parent Common Stock, which in the aggregate
represent 5% or more of the outstanding shares of Parent Common
Stock entitled to vote generally in the election of directors.
3A. REPRESENTATIONS AND WARRANTIES OF TARGET AND ALL OF
THE STOCKHOLDERS. Each of Target and each Stockholder, jointly
and severally, represents and warrants to the Parent and the
Acquirer as follows:
<PAGE>
3.33 Securities Act Matters. Each Stockholder severally
represents and warrants to, and agrees with, Parent and Acquirer
as follows:
(a) Such Stockholder is acquiring the shares of Parent
Common Stock to be acquired by such Stockholder pursuant to the
Merger (the "Shares") for such Stockholder's account for
investment and not with a view to the distribution thereof.
Such Stockholder acknowledges that the Shares are not registered
under the Securities Act and agrees that such Stockholder will
not sell or otherwise dispose of all or any portion of the
Shares, otherwise than pursuant to registration under the
Securities Act or under Rule 144 promulgated thereunder or other
similar rule if then available, without first obtaining (i) a
written opinion of counsel satisfactory to counsel for Parent
and addressed to the Parent to the effect that the contemplated
sale or other disposition of Shares will not be in violation of
the Securities Act or (ii) a 'no-action' letter from the Staff
of the Securities and Exchange Commission (the "Commission") to
the effect that such Staff will take no action in respect of the
contemplated sale or other disposition (a copy of which shall be
furnished to Parent prior to any transfer of the Shares in
question). In conformity therewith, such Stockholder agrees
that the certificates(s) for all Shares issued hereunder shall
bear the following legend:
"These securities have not been registered under the
Securities Act of 1933 and may not be sold or otherwise disposed
of, in whole or in part, other than pursuant to registration
under said Act or in conformity with the limitations of Rule 144
or other similar rule as then in effect, without first obtaining
(i) a written opinion of counsel satisfactory to the Company's
counsel to the effect that the contemplated sale or other
disposition will not be in violation of said Act or (ii) a
'no-action' letter from the Staff of the Securities and Exchange
Commission to the effect that such Staff will take no action in
respect of the contemplated sale or other disposition."
Such Stockholder acknowledges that such Stockholder was
informed by Parent that because the Shares are unregistered,
they must be held, and the economic risk of the investment must
be borne, indefinitely unless and until the Shares are
subsequently registered under the Securities Act or an exemption
from such registration is available.
(b) Such Stockholder acknowledges that neither the
offering of shares of Parent Common Stock nor any offering
literature used in connection therewith has been reviewed by the
Commission or by the securities administrator of any state.
(c) Such Stockholder has received copies of the Parent's
Annual Report to Stockholders for 1995, Parent's Annual Report
on Form 10-K for its fiscal year ended December 31, 1995 and
Parent's Quarterly Report on Form 10-Q for the fiscal quarter
<PAGE>
ended March 31, 1996 (the "SEC Material"). Parent has made
available to such Stockholder or such Stockholder's purchaser
representative, if any, the opportunity to ask questions of, and
receive answers from, Parent or persons acting on its behalf
concerning the terms and conditions of the Merger and to obtain
any additional information that such Stockholder or such
Stockholder's purchaser representative may deem necessary to
verify the accuracy of the information contained in the SEC
Material.
(d) Such Stockholder is able to bear the risk of loss of
all value of the shares of Parent Common Stock to be received by
him and has such knowledge and experience in financial and
business matters so that such Stockholder is capable of
evaluating the merits and risks of an investment in Parent.
3.34 Disclosure. No representation or warranty by Target
or any of the Stockholders in this Agreement or in any exhibit,
schedule, written statement, certificate or other document
delivered or to be delivered to Parent pursuant hereto or in
connection with the consummation of the transactions
contemplated hereby contains or will contain any untrue
statement of a material fact or omits or will omit to state a
material fact required to be stated therein or necessary to make
the statements contained therein not misleading or necessary in
order to provide Parent and Acquirer with proper and complete
information as to the business, condition, operations and
prospects of Target. There is no fact which the Stockholders
have not disclosed to Parent and Acquirer in writing which
materially adversely affects, or so far as any Stockholder can
now foresee will materially adversely affect, the business or
condition (financial or other) of Target or the ability of the
Stockholders to perform this Agreement or any of the
transactions contemplated hereby.
4. REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUIRER.
Parent and Acquirer represent and warrant to Target and each of
the Stockholders as follows:
4.1 Organization of Parent and Acquirer; Authority. Each
of Parent and Acquirer is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware. Each of Parent and Acquirer has all requisite power
and authority to execute and deliver this Agreement and to carry
out all of the actions required of it pursuant to the terms
thereof.
4.2 Corporate Approval; Binding Effect. Each of Parent
and Acquirer has obtained all necessary authorizations and
approvals from its Board of Directors and stockholder(s)
required for the execution and delivery of this Agreement, and
the Merger Agreements and the consummation of the transactions
contemplated hereby and thereby. This Agreement has been duly
executed and delivered by each of Parent and Acquirer and
constitutes the legal, valid and binding obligation of such
<PAGE>
person, enforceable against such person in accordance with its
terms, except as enforceability thereof may be limited by any
applicable bankruptcy, reorganization, insolvency or other laws
affecting creditors' rights generally or by general principles
of equity.
4.3 Non-Contravention. The execution and delivery by each
of Parent and Acquirer of this Agreement and the consummation by
each such person of the transactions contemplated hereby will
not (a) violate or conflict with any provisions of the
Certificate of Incorporation or By-Laws of such person, each as
amended to date; or (b) constitute a violation of, or be in
conflict with, constitute or create a default under, or result
in the creation or imposition of any lien upon any property of
such person pursuant to (i) any agreement or instrument to which
such person is a party or by which such person or any of its
properties is bound or to which such person or any of its
properties is subject, or (ii) any statute, judgment, decree,
order, regulation or rule of any court or governmental authority
to which such person is subject.
4.4 Governmental Consents. Except as set forth in
Schedule 4.4 hereto, no consent, approval or authorization of,
or registration, qualification or filing with, any governmental
agency or authority is required in connection with the Merger or
the consummation by Parent or Acquirer of any other transaction
contemplated hereby.
4.5 Broker. Neither Parent nor Acquirer has retained,
utilized or been represented by any broker, agent, finder or
other intermediary in connection with the negotiation or
consummation of the transactions contemplated by this Agreement.
4.6 SEC Material. The Parent has delivered true and
correct copies of the SEC Material to the Stockholders.
4.7 Patents, Trademarks, etc. Neither Parent, nor any of
its affiliate employees engaged in the transactions contemplated
hereby has any actual knowledge of any matter which would cause
Target to be in breach any of the representations and warranties
set forth in Section 3.20 hereof.
5. CONDUCT OF BUSINESS BY TARGET PENDING CLOSING. Each
of Target and the Principal Stockholders, jointly and severally,
covenants and agrees that, from and after the date of this
Agreement and until the Closing, except as otherwise
specifically consented to or approved by Parent in writing:
5.1 Full Access. Target will afford to Parent and its
authorized representatives full access during normal business
hours to all properties, books, records, contracts and documents
of Target and a full opportunity to make such reasonable
investigations as they shall desire to make of Target, and
<PAGE>
Target shall furnish or cause to be furnished to Parent and its
authorized representatives all such information with respect to
the affairs and businesses of Target as Parent may reasonably
request.
5.2 Carry on in Regular Course. Target shall maintain its
owned and leased properties in good operating condition and
repair, and to make all necessary renewals, additions and
replacements thereto, and to carry on its business diligently
and substantially in the same manner as heretofore and not make
or institute any unusual or novel methods of manufacture,
purchase, sale, lease, management, accounting or operation.
5.3 No General Increases. Target shall not grant any
general or uniform increase in the rates of pay of employees of
Target, nor grant any general or uniform increase in the
benefits under any bonus or pension plan or other contract or
commitment to, for or with any such employees; and Target shall
not increase the compensation payable or to become payable to
officers, key salaried employees or agents, or increase any
bonus, insurance, pension or other benefit plan, payment or
arrangement made to, for or with any such officers, key salaried
employees or agents.
5.4 No Dividends, Issuances, Repurchases, etc. Target
shall not declare or pay any dividends (whether in cash, shares
of stock or otherwise) on, or make any other distribution in
respect of, any shares of its capital stock, or issue, purchase,
redeem or acquire for value any shares of its capital stock.
5.5 Contracts and Commitments. Target shall not enter
into any contract or commitment or engage in any transaction not
in the usual and ordinary course of business and consistent with
the business practices of Target, nor any contract or commitment
with any affiliate on other than arms-length terms.
5.6 Purchase and Sale of Capital Assets. Target shall not
purchase or sell or otherwise dispose of any capital asset with
a market value in excess of $1,000, or of capital assets of
market value aggregating in excess of $5,000, without the prior
written consent of Parent, and in no event shall purchase, sell
or otherwise dispose of any capital asset other than in the
ordinary course of business.
5.7 Insurance. Target shall maintain with financially
sound and reputable insurance companies, funds or underwriters,
adequate insurance (including without limitation the insurance
described on Schedule 3.14) of the kinds, covering such risks
and in such amounts and with such deductibles and exclusions as
are consistent with prudent business practice.
5.8 Preservation of Organization. Target shall use its
best efforts to preserve its business organization intact, to
keep available to Parent the present key officers and employees
<PAGE>
of Target and to preserve for Parent the present relationships
of Target's suppliers and customers and others having business
relations with Target.
5.9 No Default. Target shall not do any act or omit to do
any act, or permit any act or omission to act, which will cause
a material breach of any contract, commitment or obligation of
Target.
5.10 Compliance with Laws. Target shall comply with all
laws, regulations and orders applicable with respect to its
business.
5.11 Advice of Change. Target will promptly advise Parent
in writing of any material adverse change in the business,
condition, operations, prospects or assets of Target.
5.12 No Shopping. The Stockholders shall not, and shall
not permit Target to negotiate for, solicit or enter into any
agreement with respect to the sale of the Target Common Stock or
any substantial portion of the assets of Target or any merger or
other business combination of Target, to or with any Person
other than Parent and Acquirer.
5.13 Consents of Third Parties. Target will employ its
best efforts to secure, before the Closing Date, the consent, in
form and substance satisfactory to Parent and Parent's counsel,
to the consummation of the transactions contemplated by this
Agreement by each party to any contract, commitment or
obligation of Target, under which such transactions would
constitute a default, would accelerate obligations of Target or
would permit cancellation of any such contract.
5.14 Satisfaction of Conditions Precedent. Target and the
Stockholders will use their best efforts to cause the
satisfaction of the conditions precedent contained herein.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND
ACQUIRER. The obligation of Parent and Acquirer to consummate
the Closing shall be subject to the satisfaction at or prior to
the Closing of each of the following conditions (to the extent
noncompliance is not waived in writing by Parent and Acquirer):
6.1 Representations and Warranties True at Closing. The
representations and warranties made by Target and the
Stockholders in or pursuant to this Agreement shall be true and
correct at and as of the Closing Date with the same effect as
though such representations and warranties had been made or
given at and as of the Closing Date.
6.2 Compliance with Agreement. Target and the
Stockholders shall have performed and complied with all of their
obligations under this Agreement to be performed or complied
with by them on or prior to the Closing Date.
<PAGE>
6.3 No Material Change. There shall not have been or
threatened to be any material damage to or loss or destruction
of any properties or assets owned or leased by Target (whether
or not covered by insurance) or any material adverse change in
the condition (financial or otherwise), operations, business,
prospects or assets of Target or imposition of any laws, rules
or regulations which would materially adversely affect the
condition (financial or otherwise), operations, business,
prospects or assets of Target.
6.4 Closing Certificate. Target shall have delivered to
Parent in writing, at and as of the Closing, a certificate duly
executed by Target's President, in form and substance
satisfactory to Parent and Parent's counsel, certifying that the
conditions in each of Section 6.1 and 6.2 have been satisfied.
6.5 Opinion of Counsel. Foley, Hoag & Eliot, counsel to
the Stockholders and Target shall have delivered to Parent and
Acquirer a written opinion, addressed to Parent and Acquirer and
dated the Closing Date, substantially in the form of Exhibit C
hereto.
6.6 Approvals. All corporate and other approvals in
connection with the transactions contemplated by this Agreement
and the form and substance of all certificates and other
documents delivered hereunder shall be reasonably satisfactory
in form and substance to Parent, Acquirer and their counsel.
6.7 No Litigation. No restraining order or injunction
shall prevent the transactions contemplated by this Agreement
and no action, suit or proceeding shall be pending or threatened
before any court or administrative body (a) in which it will be
or is sought to restrain or prohibit or obtain damages or other
relief in connection with this Agreement or the consummation of
the transactions contemplated hereby, or (b) in connection with
any claim for damages in excess of $5,000 against Target (except
for the matters disclosed on Schedule 3.10 hereto).
6.8 Consulting and Non-Competition Agreement. Timothy P.
White shall have executed and delivered to Parent and Acquirer
a consulting and non-competition agreement in the form of
Exhibit D hereto (the "Consulting Agreement"), and the
Consulting Agreement shall be in full force and effect.
6.9 Royalty Agreement. The royalty agreement in the form
of Exhibit E hereto (the "Royalty Agreement") shall be in full
force and effect between the Target and Timothy P. White.
6.10 Employment Agreements. Each of the persons listed on
Schedule 6.10 hereto shall have executed and delivered to Parent
and Acquirer an employment agreement, substantially in the form
of Exhibit F hereto (collectively, the "Employment Agreements"),
and the Employment Agreements shall be in full force and effect.
<PAGE>
6.11 Resignations of Directors and Officers. Except as set
forth on Schedule 6.11 hereto, all of the directors and officers
of Target shall have resigned their positions with Target, on or
prior to the Closing Date and prior thereto shall have executed
such appropriate documents with respect to the transfer or
establishment of bank accounts, signing authority, etc., as
Parent shall have reasonably requested.
6.12 Environmental Report. Parent shall have obtained, at
its own expense, a report, in form and substance satisfactory to
it, of an environmental engineering firm satisfactory to Parent,
as to compliance of the Real Property located in New Boston and
in Weare, New Hampshire with all applicable environmental
statutes, rules and regulations, including without limitation
the absence of any oil or hazardous waste on such Real Property.
6.13 Indebtedness. Target shall have delivered to Parent
a certificate certifying as to the amount of Indebtedness of
Target outstanding on the Closing Date, and specifying the
amount owed to each creditor.
6.14 Forgiveness of Indebtedness. Target shall have
delivered evidence, in form and substance satisfactory to Parent
that all outstanding Indebtedness of Target to Timothy P. White
has been forgiven and discharged in full.
6.15 Delivery of Agreements of Merger. Target shall have
duly and definitively executed and delivered the Agreements of
Merger.
6.16 Consents of Third Parties. Target will have obtained
the consent, in form and substance satisfactory to Parent and
Parent's counsel, to the consummation of the transactions
contemplated by this Agreement by each party to any contract,
commitment or other obligation of Target under which such
transactions would constitute a default, would accelerate
obligations of Target or Parent or would permit cancellation of
any such contract.
6.17 Tax Matters Certificate. The Target shall have
executed and delivered a Tax Matters Certificate.
6.18 Minute Books and Stock Records. The Parent shall have
received the original minute books and stock records of the
Target.
6.19 Proceedings and Documents Satisfactory. All
proceedings in connection with the transactions contemplated by
this Agreement and all certificates and documents delivered to
Parent in connection with the transactions contemplated by this
Agreement shall be satisfactory in all reasonable respects to
Parent and Parent's counsel, and Parent shall have received the
originals or certified or other copies of all such records and
documents as Parent may reasonably request.
<PAGE>
7. CONDITIONS PRECEDENT TO TARGET'S AND THE STOCKHOLDERS'
OBLIGATIONS. The obligation of Target and the Stockholders to
consummate the Closing shall be subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (to
the extent noncompliance is not waived in writing by Target and
the Stockholders):
7.1 Representations and Warranties True at Closing. The
representations and warranties made by Parent and Acquirer in
this Agreement shall be true and correct at and as of the
Closing Date with the same effect as though such representations
and warranties had been made or given at and as of the Closing
Date.
7.2 Compliance with Agreement. Parent and Acquirer shall
have performed and complied with all of their obligations under
this Agreement that are to be performed or complied with by them
at or prior to the Closing.
7.3 Closing Certificate. Parent and Acquirer shall have
delivered to Target in writing, at and as of the Closing, a
certificate duly executed by the President of each of Parent and
Acquirer, in form and substance satisfactory to Target and
Target's counsel, to the effect that the conditions in each of
Sections 7.1 and 7.2 have been satisfied.
7.4 No Litigation. No restraining order or injunction
shall prevent the transactions contemplated by this Agreement
and no action, suit or proceeding shall be pending or threatened
before any court or administrative body in which it will be or
is sought to restrain or prohibit or obtain damages or other
relief in connection with this Agreement or the consummation of
the transactions contemplated hereby.
7.5 Authorization of Issuance of Parent Common Stock.
Parent shall have duly and validly authorized for issuance upon
the Merger shares of Parent Common Stock sufficient to meet its
obligations under Sections 1 and 2, and such shares, when
issued, will be validly issued, fully paid and non-assessable.
7.6 Employment Agreements. Each of the persons listed on
Schedule 6.10 hereto shall have executed and delivered to Parent
and Acquirer an Employment Agreement, and the Employment
Agreements shall be in full force and effect.
7.7 Consulting Agreement. Acquirer shall have executed
and delivered to Timothy P. White the Consulting Agreement and
the Consulting Agreement shall be in full force and effect.
7.8 Stock Option Agreements. The Parent and Timothy P.
White shall have executed and delivered stock option agreements
in the forms of Exhibits G-1 and G-2.
<PAGE>
7.9 RVSI Guaranty. RVSI shall have executed and delivered
to Timothy P. White a guaranty in the form of Exhibit H hereto
(the "Guaranty") and the Guaranty shall be in full force and
effect.
7.10 Delivery of Agreements of Merger. Parent and Acquirer
shall have duly and definitively executed and delivered the
Agreements of Merger.
7.11 Tax Matters Certificate. The Parent shall have
executed and delivered a Tax Matters Certificate.
7.12 Proceedings and Documents Satisfactory. All
proceedings in connection with the transactions contemplated by
this Agreement and all certificates and documents delivered to
Target and the Stockholders in connection with the transactions
contemplated by this Agreement shall be satisfactory in all
reasonable respects to Target and the Stockholders and their
counsel, and Target and the Stockholders shall have received the
originals or certified or other copies of all such records and
documents as Target and the Stockholders may reasonably request.
8. COVENANTS OF THE PARTIES.
8.1 Confidential Information. Any and all information
disclosed by Parent or Acquirer to any of the Stockholders or
Target or by any of the Stockholders or Target to Parent or
Acquirer as a result of the negotiations leading to the
execution of this Agreement, or in furtherance thereof, which
information was not already known to Target or the Stockholders
or to Parent or Acquirer, as the case may be, or otherwise
already public, shall remain confidential to each of such person
and their respective employees and agents until the Closing
Date. If the Closing does not take place for any reason, each
of the parties hereto agrees not to further divulge or disclose
any such information at any time in the future unless it has
otherwise become public. The information intended to be
protected hereby shall include, but not be limited to, financial
information, customers, sales representatives, and anything else
having an economic or pecuniary benefit to Parent or Acquirer or
any of the Stockholders or Target, respectively.
8.2 Tax-Free Reorganization Treatment. Neither Parent nor
Target shall intentionally take or cause to be taken any action,
whether before or after the Effective Time, which would
disqualify the Merger as a "reorganization" within the meaning
of Section 368 of the Code.
8.3 Servicing Target Business. From and after the
Effective Time, Parent agrees to cause the Surviving Corporation
to continue to service Target's existing customer base for
imaging and illumination products by servicing and maintaining
<PAGE>
existing equipment, to the extent consistent with Parent's
historical practice of doing business and other demands on the
resources of the Parent and the Surviving Corporation.
8.4 IPRD Facility. Parent shall establish an Imaging
Product Research and Development Facility ("IPRD Facility") at
a location in or near New Boston, New Hampshire to be reasonably
selected by Parent. The purpose of the IPRD Facility will be to
design, prototype, test and manufacture 1-D and 2-D imaging
products in response to machine vision, automated imaging and
symbology market requirements and specific customer requests and
for other valid business purposes. Operation and management of
the IPRD Facility (including without limitation goals,
direction, staffing and operation) shall be conducted by Parent
at its sole discretion. Parent agrees to maintain the IPRD
Facility for no longer than the earlier of (i) two years from
the date of this Agreement and (ii) termination of Timothy P.
White's consulting arrangements with Parent under the Consulting
Agreement on account of his voluntary resignation or his
termination from such position for "cause".
8.5 Indebtedness. The Parent hereby agrees that
immediately after the Closing it will cause all Indebtedness of
the Target outstanding at Closing, other than Indebtedness owing
to Timothy P. White, to be paid and discharged in full by the
Surviving Corporation.
8.6 Tax Matters Certificate. Each of Target and Parent
shall use all reasonable efforts to obtain, as promptly as is
practicable following the date hereof and in any event prior to
the Effective Time, such oral or written assurances as it
reasonably deems sufficient to enable it to execute and deliver
to the other a certificate substantially in the form of Exhibit
I hereto (a "Tax Matters Certificate").
9. DEFINITIONS. As used herein the following terms not
otherwise defined have the following respective meanings:
"Indebtedness": As applied to any Person (as defined in
this Section 10), (a) all indebtedness of such Person for
borrowed money, whether current or funded, or secured or
unsecured, (b) all indebtedness of such Person for the deferred
purchase price of property or services represented by a note or
other security, (c) all indebtedness of such Person created or
arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under
such agreement in the event of default are limited to
repossession or sale of such property), (d) all indebtedness of
such Person secured by a purchase money mortgage or other lien
to secure all or part of the purchase price of property subject
to such mortgage or lien, (e) all obligations under leases which
shall have been or must be, in accordance with generally
<PAGE>
accepted accounting principles, recorded as capital leases in
respect of which such Person is liable as lessee, (f) any
liability of such Person in respect of banker's acceptances or
letters of credit, and (g) all indebtedness referred to in
clause (a), (b), (c), (d), (e) or (f) above which is directly or
indirectly guaranteed by such Person or which such Person has
agreed (contingently or otherwise) to purchase or otherwise
acquire or in respect of which it has otherwise assured a
creditor against loss.
"IRS": The United States Internal Revenue Service.
"Person": A corporation, an association, a partnership, an
organization, a business, an individual, a government or
political subdivision thereof or a governmental agency.
"state": Any state or commonwealth of the United States of
America; the District of Columbia; the Commonwealth of Puerto
Rico; and any other dependency, possession or territory of the
United States of America.
"Subsidiary": With respect to any Person, any corporation
a majority (by number of votes) of the outstanding shares of any
class or classes of which shall at the time be owned by such
Person or by a Subsidiary of such Person, if the holders of the
shares of such class or classes (a) are ordinarily, in the
absence of contingencies, entitled to vote for the election of
a majority of the directors (or persons performing similar
functions) of the issuer thereof, even though the right so to
vote has been suspended by the happening of such a contingency,
or (b) are at the time entitled, as such holders, to vote for
the election of a majority of the directors (or persons
performing similar functions) of the issuer thereof, whether or
not the right so to vote exists by reason of the happening of a
contingency.
10. INDEMNIFICATION.
10.1 Indemnity by Target and the Principal Stockholders.
Subject to the overall limitations, minimum amounts and time
limitations set forth in Section 10.5, each of Target and each
Principal Stockholder agrees jointly and severally to indemnify
and hold Parent and Acquirer (and their respective directors,
officers, employees and affiliates) harmless from and with
respect to any and all claims, liabilities, losses, damages,
costs and expenses, including without limitation the fees and
disbursements of counsel, (collectively, the "Losses") related
to or arising, directly or indirectly, out of:
(i) any failure or any breach by Target or the
Stockholders of any representation or warranty (without regard
to any "materiality" limitation or similar limitation contained
therein), covenant, obligation or undertaking made by Target or
<PAGE>
any of the Stockholders in this Agreement, any Schedule or
Exhibit hereto, or any other statement, certificate or other
instrument delivered pursuant hereto;
(ii) any actual or alleged tax liability of Target in
respect of any period through the Closing Date;
(iii) any actual or alleged liability for death or
injury to person or property, to the extent not covered by
insurance, as a result of any actual or alleged defect in any
product sold or manufactured by Target on or prior to the
Closing Date;
(iv) any contractual product warranty claims arising out of
defects in any product shipped by Target on or prior to the
Closing Date; or
(v) any liability of Target with respect to any of the
items disclosed on Schedules 3.10, 3.11, 3.13, 3.17 (d) or 3.18
hereto.
10.2 Indemnity by Parent and Acquirer. Parent and Acquirer
agree, jointly and severally, to indemnify and hold Target and
the Stockholders (and their respective directors, officers,
employees and affiliates) harmless from and with respect to any
and all Losses) related to or arising from, directly or
indirectly, any failure or any breach by Parent or Acquirer of
any representation or warranty, covenant, obligation or
undertaking made by Parent or Acquirer in this Agreement, any
Schedule or Exhibit hereto, or any other statement, certificate
or other instrument delivered pursuant hereto.
10.3 Claims.
(a) Notice. Any party seeking indemnification hereunder
(the "Indemnified Party") shall promptly notify the other party
hereto (the "Indemnifying Party") of any action, suit,
proceeding, demand or breach (a "Claim") with respect to which
the Indemnified Party claims indemnification hereunder, provided
that failure of the Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations under this
Section 10 except to the extent, if at all, that such
Indemnifying Party shall have been prejudiced thereby.
(b) Third Party Claims. If such Claim relates to any
action, suit, proceeding or demand instituted against the
Indemnified Party by a third party (a "Third Party Claim"), the
Indemnifying Party shall be entitled to participate in the
defense of such Third Party Claim after receipt of notice of
such claim from the Indemnified Party. Within thirty (30) days
after receipt of notice of a particular matter from the
Indemnified Party, the Indemnifying Party may assume the defense
of such Third Party Claim, in which case the Indemnifying Party
shall have the authority to negotiate, compromise and settle
such Third Party Claim, if and only if the following conditions
are satisfied:
<PAGE>
(i) the Indemnifying Party shall have confirmed in
writing that it is obligated hereunder to indemnify the
Indemnified Party with respect to such Third Party Claim; and
(ii) the Indemnified Party shall not have given the
Indemnifying Party written notice that it has determined, in the
exercise of its reasonable discretion, that matters of corporate
or management policy or a conflict of interest make separate
representation by the Indemnified Party's own counsel advisable.
The Indemnified Party shall retain the right to employ its own
counsel and to participate in the defense of any Third Party
Claim, the defense of which has been assumed by the Indemnifying
Party pursuant hereto, but the Indemnified Party shall bear and
shall be solely responsible for its own costs and expenses in
connection with such participation.
10.4 Method and Manner of Paying Claims. In the event of
any claims under this Section 10, the claimant shall advise the
party or parties who are required to provide indemnification
therefor in writing of the amount and circumstances surrounding
such claim. With respect to liquidated claims, if within thirty
days the other party has not contested such claim in writing,
the other party will pay the full amount thereof within ten days
after the expiration of such period. Any amount owed by an
Indemnifying Party hereunder with respect to any Claim may be
set-off by the Indemnified Party against any amounts owed by the
Indemnified Party to any Indemnifying Party. The unpaid balance
of a Claim shall bear interest at a rate per annum equal to the
rate announced by The First National Bank of Boston as its "Base
Rate" plus two percent (2%) from the date notice thereof is
given by the Indemnified Party to the Indemnifying Party.
10.5 Limitations on Indemnification.
(a) No Indemnifying Party shall be required to indemnify
an Indemnified Party hereunder except to the extent that the
aggregate amount of Losses for which the Indemnified Party is
otherwise entitled to indemnification pursuant to this Section
10 exceeds $50,000, whereupon the Indemnified Party shall be
entitled to be paid the excess of (i) the aggregate amount of
all such Losses over (ii) $50,000, subject to the limitations on
maximum amount of recovery set forth in Section 10.5(b);
provided, that Losses related to or arising directly or
indirectly out of any inaccuracies in any representation or
warranty made by Target or any of the Stockholders in Sections
3.2, 3.3, 3.5, 3.7, 3.13, 3.17, 3.25, 3.30 or 3.34 (only in so
far as the breach of Section 3.34 relates to any of the
foregoing Sections) or payable with respect to claims for
indemnification made with respect to Sections 10.1(ii) through
<PAGE>
(iv) hereof (collectively, "Unlimited Claims") shall be
indemnified in their entirety by Target and the Stockholders and
shall not be subject to the limitations set forth in this
Section 10.5(a).
(b) The aggregate Losses payable by Indemnifying Parties
on each side pursuant to this Section 10 with respect to all
claims for indemnification which are not Unlimited Claims shall
not exceed the Purchase Price. All Losses payable by any
Indemnifying Party pursuant to this Section 10 with respect to
all Unlimited Claims shall not be subject to the limitations set
forth in this Section 10.5(b).
(c) No Indemnifying Party shall be liable for any Losses
pursuant to this Section 10 unless a written claim for
indemnification in accordance with Section 10.4 is given by the
Indemnified Party to the Indemnifying Party with respect thereto
within (i) one (1) year after the Closing with respect to all
Claims which are not Unlimited Claims or Claims arising from a
breach of the representations and warranties set forth in
Section 3.20 hereof ("IP Claims") and (ii) two (2) years after
Closing with respect to all IP Claims. No such time limitation
shall apply to any Losses related to or arising directly or
indirectly out of any Unlimited Claims, except that with respect
to Unlimited Claims arising from a breach of the representations
and warranties set forth in Section 3.17 or 3.25 hereof or a
Claim made pursuant to Section 10.1(ii) hereof, a time
limitation equal to the applicable statute of limitations shall
apply (without regard to any tolling or extension of such
statute of limitations by Parent or Acquirer).
(d) Parent and Acquirer on the one hand and Target and the
Stockholders on the other hand, hereby acknowledge and agree
that from and after the Closing, in the absence of fraud by the
other party hereto, the sole and exclusive remedy with respect
to any breach by any party of any of the representations and
warranties set forth in this Agreement shall be pursuant to the
indemnification provisions set forth in this Section 10.
11. REGISTRATION RIGHTS.
11.1 Definitions. As used in this Section 11:
"Commission" means the Securities and Exchange Commission.
"Registrable Securities" means (i) any Parent Common Stock
issued to the Stockholders under this Agreement and (ii) any
securities issued with respect to the securities referred to in
clause (i) by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization. As to any
particular Registrable Securities, such securities will cease to
be Registrable Securities when they have been distributed to the
public through a broker, dealer or market purchaser in
<PAGE>
compliance with Rule 144 under the Securities Act (or any
similar rule then in force) or sold pursuant to an effective
registration statement under the Securities Act.
"Registration Expenses" has the meaning specified in
Section 11.4.
"Registration Statement" has the meaning specified in
Section 11.2.
"Securities Act" means the Securities Act of 1933, as
amended, or any successor federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall
be in effect at the time.
"Securities Exchange Act" means the Securities Exchange Act
of 1934, as amended, or any successor federal statute, and the
rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
11.2 Registration on Form S-3. No later than such time as
results covering at least 30 days of combined operations of
Target and Parent have been published by Parent, in the form of
a quarterly earnings report, an effective registration statement
filed with the Commission, a report to the Commission on Form
10-K, 10-Q or 8-K, or any other public filing or announcement
which includes the combined results of operations, the Parent
will prepare and file with the Commission a registration
statement on Form S-3 covering all of the Registrable Securities
(the "Registration Statement") issued to the Stockholders on the
Closing Date. The Registration Statement will permit delayed or
continuous offerings pursuant to Rule 415 under the Securities
Act.
11.3 Registration Procedures. The Parent agrees to use
reasonable efforts to effect the registration of the Registrable
Securities in accordance with the intended method of disposition
thereof, and pursuant thereto the Parent will as expeditiously
as possible:
(i) prepare and file with the Commission such amendments
and supplements to the Registration Statement and the prospectus
used in connection therewith as may be necessary to keep such
Registration Statement effective until the second anniversary of
the Closing, or if earlier such time as all of the Registrable
Securities covered by such registration statement have been sold
and to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by the
Registration Statement during such effective period in
accordance with the intended methods of disposition by the
Stockholders set forth in the Registration Statement;
<PAGE>
(ii) furnish to the Stockholders such number of copies of
the Registration Statement, each amendment and supplement
thereto, the prospectus included in the Registration Statement
(including each preliminary prospectus) and such other documents
as the Stockholders may reasonably request in order to
facilitate the disposition of the Registrable Securities owned
by each such seller;
(iii) use reasonable efforts to register or qualify the
Registrable Securities under such other securities or blue sky
laws of such states of the United States as the Stockholders
reasonably request and do any and all other acts and things
which may be reasonably necessary or advisable to enable the
Stockholders to consummate the disposition in such jurisdictions
of the Registrable Securities owned by the Stockholders;
provided that the Parent will not be required (A) to qualify
generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph
(iii), (B) to subject itself to taxation in any such
jurisdiction or (C) to consent to general service of process in
any such jurisdiction;
(iv) notify the Stockholders, at any time when a prospectus
relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of
which the prospectus included in the Registration Statement
contains an untrue statement of a material fact or omits any
fact necessary to make the statements therein not misleading,
and, at the request of the Stockholders, the Parent will
promptly prepare (and, when completed, give notice to each
seller of Registrable Securities) a supplement or amendment to
such prospectus so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus will
not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not
misleading; provided that upon such notification by the Parent,
the Stockholders will not offer or sell Registrable Securities
until the Parent has notified the Stockholders that it has
prepared a supplement or amendment to such prospectus and
delivered copies of such supplement or amendment to such seller;
(v)use its best efforts to cause all the Registrable
Securities to be listed on the NASDAQ National Market System;
and
(vi)in the event of the issuance of any stop order
suspending the effectiveness of the Registration Statement, or
of any order suspending or preventing the use of any related
prospectus or suspending the qualification of any Registrable
Securities included in the Registration Statement for sale in
any jurisdiction, the Parent will use reasonable efforts
promptly to obtain the withdrawal of such order.
11.4 Registration Expenses. All expenses incident to the
Parent's performance of or compliance with this Section 11,
<PAGE>
including without limitation all registration and filing fees,
fees and expenses of compliance with securities or blue sky
laws, printing expenses, messenger and delivery expenses, and
fees and disbursements of counsel for the Parent and all
independent certified public accountants and other Persons
retained by the Parent, the Parent's internal expenses
(including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties),
the expense of any annual audit or quarterly review, the expense
of any liability insurance for the Parent and its board of
directors and the expenses and fees for listing the securities
to be registered on the NASDAQ National Market System (all such
expenses being herein called "Registration Expenses"), will be
borne by the Parent. The Parent shall not bear any expenses for
broker or investment banking commissions or discounts or any
expenses of counsel to the Stockholders.
11.5 Indemnification.
(a) The Parent agrees to indemnify, to the extent
permitted by law, each of the Stockholders against all losses,
claims, damages and liabilities caused by any untrue or alleged
untrue statement of material fact contained in the Registration
Statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged
omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, except
insofar as the same are (i) caused by or contained in any
information furnished to the Parent by the Stockholders for use
therein, (ii) caused by such Stockholder's failure to deliver a
copy of the Registration Statement or prospectus or any
amendments or supplements thereto after the Parent has furnished
such Stockholder with a sufficient number of copies of the same,
or (iii) caused by such Stockholder's sale of Registrable
Securities in violation of the proviso to Section 11.3(iv)
hereof.
(b) In connection with the Registration Statement, each of
the Stockholders will furnish to the Parent in writing such
information and affidavits as the Parent reasonably requests for
use in connection with any such registration statement or
prospectus and, to the extent permitted by law, will indemnify
the Parent, its directors and officers and each Person who
controls the Parent (within the meaning of the Securities Act)
against any losses, claims, damages and liabilities resulting
from any untrue or alleged untrue statement of material fact
contained in the Registration Statement, prospectus or
preliminary prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the
statements therein not misleading, but only to the extent that
such untrue or alleged untrue statement or omission or alleged
omission is attributable to the information furnished by the
Stockholders to the Parent in writing expressly for use in such
registration statement or prospectus or supplement thereto.
<PAGE>
(c) Any Person entitled to indemnification hereunder will
(i) give prompt written notice to the indemnifying party of any
claim with respect to which it seeks indemnification and (ii)
unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party. If
such defense is assumed, the indemnifying party will not be
subject to any liability for any settlement made by the
indemnified party without its consent (but such consent will not
be unreasonably withheld). An indemnifying party who is not
entitled to, or elects not to, assume the defense of a claim
will not be obligated to pay the fees and expenses of more than
one counsel for all parties indemnified by such indemnifying
party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may
exist between such indemnified party and any other of such
indemnified parties with respect to such claim. Subject to the
foregoing terms and provisions of this Section 11.5(c), each
indemnifying party hereunder will reimburse the person entitled
to indemnification hereunder for all legal and other expenses
reasonably incurred in connection with investigating and
defending the action or claim for which such indemnified party
seeks indemnification, as such expenses are incurred.
(d) The indemnification provided for under this Agreement
will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or
any officer, director or controlling Person of such indemnified
party and will survive the transfer of securities.
11.6 Assignment. In the event of any assignment by a
Stockholder of its rights under this Section 11 not consented to
by the Parent, the assignee will not be considered a holder of
Registrable Securities for purposes of this Agreement.
12. TERMINATION. This Agreement may be terminated by
either Parent and Acquirer or Target and the Stockholders in
writing, without liability to the terminating party on account
of such termination (provided the terminating party is not
otherwise in default or in breach of this Agreement), if the
Closing shall not have occurred on or before June 30, 1996,
other than as a consequence of the intentional breach or the
intentional default by the terminating party.
13. GENERAL.
13.1 Survival of Representations and Warranties. The
representations and warranties of the parties hereto contained
in this Agreement or otherwise made in writing in connection
<PAGE>
with the transactions contemplated hereby (in each case except
as affected by the transactions contemplated by this Agreement)
shall be deemed material and, notwithstanding any investigation
by Parent or Acquirer, shall be deemed to have been relied on by
Parent and Acquirer and shall survive the Closing, and the
consummation of the transactions contemplated hereby. Each
representation and warranty made by any of Target, the
Stockholders, Acquirer or Parent in this Agreement shall expire
on the last day, if any, that Claims for breaches of such
representation or warranty may be made pursuant to Section 10.5
hereof, except that any such representation or warranty that has
been made the subject of a Claim prior to such expiration date
shall survive with respect to such Claim until the final
resolution of such Claim pursuant to Section 10.
13.2 Consent to Jurisdiction. Each of the parties hereto
hereby irrevocably submits to the exclusive jurisdiction of any
state or federal court sitting in the State of New York over any
action or proceeding arising out of or relating to this
Agreement and hereby irrevocably agrees that all claims in
respect to such action or proceeding may be heard and determined
in such state or federal court. Each of the parties hereto
agrees that a final judgment in any action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit
on the judgment or in any other manner provided by law. Each of
the parties hereto hereby waives any objection that it may now
or hereafter have to the venue of any such action or proceeding
or any such court or that such action or proceeding is brought
in an inconvenient court.
13.3 Expenses. All expenses of the preparation, execution
and consummation of this Agreement and of the transactions
contemplated hereby, including without limitation attorneys',
accountants' and outside advisers' fees and disbursements, shall
be borne by the party incurring such expenses. None of the
expenses of the Stockholders shall be borne by the Target.
13.4 Notices. All notices, demands and other
communications hereunder shall be in writing or by written
telecommunication, and shall be deemed to have been duly given
if delivered personally or if mailed by certified mail, return
receipt requested, postage prepaid, or if sent by overnight
courier, or sent by written telecommunication, as follows:
If to Target or the Stockholders, to:
c/o Timothy P. White
Northeast Robotics, Inc.
3 River Road
New Boston, New Hampshire 03070
<PAGE>
with a copy sent contemporaneously to:
Foley, Hoag & Eliot
One Post Office Square
Boston, Massachusetts 02109
Attention: David W. Walker, Esq.
If to Parent or Acquirer, to:
Robotic Vision Systems, Inc.
425 Rabro Drive East
Hauppauge, New York 11788
Attention: Pat V. Costa
with a copy sent contemporaneously to:
David L. Engel, Esq.
Bingham, Dana & Gould
150 Federal Street
Boston, Massachusetts 02110
Any such notice shall be effective (a) if delivered
personally, when received, (b) if sent by overnight courier,
when receipted for, (c) if mailed, three (3) days after being
mailed as described above, and (d) if sent by written
telecommunication, when dispatched.
13.5 Entire Agreement. This Agreement contains the entire
understanding of the parties, supersedes all prior agreements
and understandings relating to the subject matter hereof and
shall not be amended except by a written instrument hereafter
signed by all of the parties hereto.
13.6 Governing Law. The validity and construction of this
Agreement shall be governed and construed and enforced in
accordance with the internal laws (and not the choice-of-law
rules) of the State of Delaware.
13.7 Sections and Section Headings. The headings of
sections and subsections are for reference only and shall not
limit or control the meaning thereof.
13.8 Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
heirs, successors and permitted assigns. Neither this Agreement
nor the obligations of any party hereunder shall be assignable
or transferable by such party without the prior written consent
of the other party hereto; provided, however, that nothing
contained in this Section 13.8 shall prevent Parent or Acquirer,
without the consent of the Stockholders, (a) from transferring
or assigning this Agreement or its rights or obligations
<PAGE>
hereunder to another entity controlling, under the control of,
or under common control with Parent or Acquirer or (b) from
assigning all or part of its rights or obligations hereunder to
any Person which acquires (whether by stock sale, asset sale,
merger or otherwise) the Parent or the Acquirer.
13.9 Severability. In the event that any covenant,
condition, or other provision herein contained is held to be
invalid, void, or illegal by any court of competent
jurisdiction, the same shall be deemed to be severable from the
remainder of this Agreement and shall in no way affect, impair,
or invalidate any other covenant, condition, or other provision
contained herein.
13.10 Further Assurances. The parties agree to take such
reasonable steps and execute such other and further documents as
may be necessary or appropriate to cause the terms and
conditions contained herein to be carried into effect.
13.11 No Implied Rights or Remedies. Except as otherwise
expressly provided herein, nothing herein expressed or implied
is intended or shall be construed to confer upon or to give any
person, firm or corporation, other than Target and the
Stockholders and Parent and Acquirer and their respective
shareholders, if any, any rights or remedies under or by reason
of this Agreement.
13.12 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
13.13 Satisfaction of Conditions Precedent. Each of Target
and the Stockholders and Parent and Acquirer will use its best
efforts to cause the satisfaction of the conditions precedent
contained in this Agreement; provided, however, that nothing
contained in this Section 13.13 shall obligate either party
hereto to waive any right or condition under this Agreement.
13.14 Public Statements or Releases. Each of the parties
hereto agrees that prior to the consummation of the Closing no
party to this Agreement will make, issue or release any public
announcement, statement or acknowledgment of the existence of,
or reveal the status of, this Agreement or the transactions
provided for herein, without first obtaining the consent of the
other party hereto. Nothing contained in this Section 13.14
shall prevent either party from making such disclosures as such
party may consider necessary to satisfy such party's legal or
contractual obligations.
<PAGE>
IN WITNESS WHEREOF, and intending to be legally bound
hereby, the parties hereto have caused this Agreement to be duly
executed and delivered as a sealed instrument as of the date and
year first above written.
PARENT:
ROBOTIC VISION SYSTEMS, INC.
By:/s/Pat V. Costa
Title: President
ACQUIRER:
NER ACQUISITION CORP.
By:/s/John J. Merva
Title: Treasurer
TARGET:
NORTHEAST ROBOTICS, INC.
By:/s/Timothy P. White
Title: President
STOCKHOLDERS:
/s/Timothy P. White
Timothy P. White
/s/Marcel LaFlamme
Marcel LaFlamme
/s/Peter White, Jr.
Peter White, Jr.
