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: October 9, 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 2. Acquisition or Disposition of Assets.
On October 1, 1996, Registrant consummated an
acquisition transaction contemplated by an Agreement and
Plan of Merger and Reorganization of even date (the "Merger
Agreement"), with Systemation Engineered Products, Inc.
("SEP"), a privately owned company located in New Berlin,
Wisconsin, whereby SEP became a wholly-owned subsidiary of
Registrant (the "Merger"). SEP is a world leader in tape-and-
reel, as well as tube and tray based component
processing systems for the semiconductor and electronics
industries.
The Merger Agreement provided that upon
consummation of the Merger, the then outstanding shares of
SEP common stock would be converted into the right to
receive, and become exchangeable for an aggregate of
1,740,000 shares of Registrant's common stock.
The Merger was structured as a tax-free
reorganization and will be accounted for by Registrant as
a pooling of interests.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of SEP.*
(i) Report of Deloitte & Touche LLP,
Independent Auditors;
(ii) Balance Sheets of SEP as of March
31, 1996 and 1995 and (unaudited)
as of September 30, 1996;
(iii) Statements of Operations and
Retained Earnings of SEP for the
years ended March 31, 1996 and
1995 and (unaudited) for the six
months ended September 30, 1996;
(iv) Statements of Cash Flows of SEP
for the years ended March 31,
1996 and 1995 and (unaudited) for
the six months ended September
30, 1996; and
(v) Notes to Financial Statements of
SEP.
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(b) Pro Forma Financial Information.*
(i) Unaudited Combined Summary of Pro
Forma Statements of Operations
for the years ended September 30,
1996, 1995 and 1994;
(ii) Unaudited Pro Forma Combined
Balance Sheet as of September 30,
1996;
(iii) Unaudited Pro Forma Combined
Statements of Operations for the
Years Ended September 30, 1996,
1995 and 1994; and
(iv) Notes to Unaudited Pro Forma
Financial Information.
(c) Exhibits.
(i) Agreement and Plan of Merger and
Reorga-nization dated as of
October 1, 1996 by and among
Robotic Vision Systems, Inc.,
RVSI Fourth Acquisition Corp.,
Systema-tion Engineered Products,
Inc., Phillip Koerper, Merlin
Behnke, Alvira Nemetz and Michael
Neleson.
* Registrant's provision of historical financial
statements of SEP and pro forma financial information
relating to the Merger within 15 days after the
Merger, as prescribed by Regulation S-X, promulgated
by the Securities and Exchange Commission, is
impracticable. Registrant will file such historical
financial statements and pro forma financial
information no later than 75 days after the Merger.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned
thereunto duly authorized.
Dated: October 9, 1996 ROBOTIC VISION SYSTEMS, INC.
(Registrant)
By: /s/Robert H.Walker
Robert H. Walker
Executive Vice President
EXHIBIT 7(c)(i)
AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION, dated as of
October 1, 1996 (this
"Agreement"), by and among
ROBOTIC VISION SYSTEMS, INC., a
Delaware corporation
("Parent"), RVSI FOURTH
ACQUISITION CORP., a Delaware
corporation and a wholly owned
subsidiary of Parent (the
"Subsidiary"), SYSTEMATION
ENGINEERED PRODUCTS, INC., a
Wisconsin corporation (the
"Company") and the SELLING
STOCKHOLDERS named below.
The Boards of Directors of Parent, the Subsidiary and the
Company, and the stockholders of the Company have approved the
merger of the Subsidiary with and into the Company pursuant to
this Agreement (the "Merger") and the transactions
contemplated hereby upon the terms and subject to the
conditions set forth herein.
It is intended that the Merger shall qualify for federal
income tax purposes as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as
amended, and that the Merger shall be recorded for accounting
purposes as a pooling of interests.
Parent, the Company and Phillip Koerper, Merlin Behnke,
Alvira Nemetz and Michael Nelesen, being all of the
stockholders of the Company (collectively, the "Selling
Stockholders"), desire to make certain representations,
warranties, covenants and agreements in connection with the
Merger.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements
contained herein, the parties hereto, intending to be legally
bound hereby, agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. Upon the terms and subject to
the conditions of this Agreement, at the Effective Time (as
defined in Section 1.2 below), the Subsidiary shall be merged
with and into the Company in accordance with the provisions of
Section 252 of the Delaware General Corporation Law (the
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"DGCL") and of Section 180.1107 of the Wisconsin Business
Corporation Law (the "WBCL"), with the effect provided in
Sections 259 - 261 of the DGCL and Section 180.1106 of the
WBCL, and the separate existence of the Subsidiary shall
thereupon cease. The Company shall be the surviving
corporation in the Merger (hereinafter sometimes referred to
as the "Surviving Corporation") and shall continue to be
governed by the laws of the State of Wisconsin. Without
limiting the generality of the foregoing, and subject thereto,
at the Effective Time of the Merger, (a) the Surviving
Corporation shall possess all assets and property of every
description, and every interest therein, wherever located, and
the rights, privileges, immunities, powers, franchises and
authority, of a public as well as of a private nature, of each
of the Subsidiary and the Company, (b) all obligations
belonging to or due each of the Subsidiary and the Company
shall be vested in, and become the obligations of, the
Surviving Corporation without further act or deed, (c) title
to any real estate or any interest therein vested in either of
the Subsidiary and the Company shall not revert or in any way
be impaired by reason of the Merger, (d) all rights of
creditors and all liens upon any property of any of the
Subsidiary and the Company shall be preserved unimpaired, and
(e) the Surviving Corporation shall be liable for all of the
obligations of each of the Subsidiary and the Company and any
claim existing, or action or proceeding pending, by or against
either of the Subsidiary and the Company may be prosecuted to
judgment with right of appeal, as if the Merger had not taken
place.
SECTION 1.2 Effective Time of the Merger. The Merger
shall become effective at such time (the "Effective Time") as
(i) a Certificate of Merger, in the form set forth as Exhibit
I hereto, is filed with the Secretary of State of the State of
Delaware and the Secretary of State of the State of Wisconsin
and (ii) a plan of merger, in accordance with Section 180.1101
of the WBCL, is filed with the Secretary of State of the State
of Wisconsin (the "Merger Filings"), such filings shall be
made concurrently with or as soon as practicable after the
execution and delivery of this Agreement.
SECTION 1.3 Disclosure Schedules. Simultaneously with
the execution and delivery of this Agreement, (a) the Company
is delivering to Parent a schedule relating to the Company
(the "Company Disclosure Schedule"), and (b) Parent is
delivering to the Company a schedule relating to Parent and
the Subsidiary (the "Parent Disclosure Schedule" and
collectively with the Company Disclosure Schedule, the
"Disclosure Schedules") setting forth the matters required to
be set forth in the Disclosure Schedules as described
elsewhere in this Agreement. The Disclosure Schedules shall
be deemed to be part of this Agreement.
<PAGE>
ARTICLE II
SURVIVING AND PARENT CORPORATIONS
SECTION 2.1 Articles of Incorporation. The Articles of
Incorporation of the Company as in effect immediately prior to
the Effective Time shall be the Articles of Incorporation of
the Surviving Corporation, until duly amended in accordance
with the terms thereof and of the WBCL.
SECTION 2.2 By-Laws. The By-laws of the Company as in
effect immediately prior to the Effective Time shall be the
By-laws of the Surviving Corporation until duly amended in
accordance with their terms and as provided by the WBCL.
SECTION 2.3 Directors. The sole director of the
Subsidiary at the Effective Time shall, from and after the
Effective Time, be the sole director of the Surviving
Corporation until his successor has been duly elected or
appointed and qualified or until his earlier death,
resignation or removal in accordance with the Surviving
Corporation's Articles of Incorporation and By-laws.
SECTION 2.4 Officers. The officers of the Company at
the Effective Time shall, from and after the Effective Time,
be the officers of the Surviving Corporation until their
successors have been duly elected or appointed and qualified
or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's By-Laws.
SECTION 2.5 Further Action. If at any time after the
Effective Time, Parent shall consider that any further deeds,
assignments, conveyances, agreements, documents, instruments
or assurances in law or any other things are necessary or
desirable to vest, perfect, confirm or record in the Surviving
Corporation the title to any property, rights, privileges,
powers and franchises of the Subsidiary by reason of, or as a
result of, the Merger, or otherwise to carry out the
provisions of this Agreement, the officers of the Subsidiary
shall execute and deliver, upon Parent's reasonable request,
any instruments or assurances, and do all other things
necessary or proper to vest, perfect, confirm or record title
to such property, rights, privileges, powers and franchises in
the Surviving Corporation, and otherwise to carry out the
provisions of this Agreement.
<PAGE>
ARTICLE III
CONVERSION OF SHARES
SECTION 3.1 Shares of the Constituent and the
Surviving Corporations. The manner and basis of converting
the shares of common stock of the Company into shares of
common stock of Parent shall be as follows:
(a) Conversion Ratio. (1) Each share of common stock,
$1.00 par value, issued and outstanding of the Company
(collectively, the "Company Stock") shall, by virtue of the
Merger and without any action on the part of the holder
thereof, or any other action whatsoever, be converted into
shares of validly issued, fully paid and non-assessable common
stock, $.01 par value, of Parent (collectively, the "Parent
Merger Stock") as follows: the number of shares of Parent
Merger Stock into which each outstanding share of Company
Stock shall be converted shall equal the product of one (1)
multiplied by a fraction (such fraction is herein called the
"Conversion Ratio") whose numerator shall be 1,740,000 and
whose denominator shall be 4,842.
(2) Each share of common stock, $.01 par
value, of the Subsidiary, issued and outstanding, shall, by
virtue of the Merger and without any action on the part of the
holder thereof, or any other action whatsoever, be converted
into one share of validly issued, fully paid and non-assessable
common stock, $1.00 par value, of the Company.
(b) No Fractional Shares. No rights to receive
fractional shares of or interests in fractional Parent Merger
Stock shall arise under this Agreement, and no certificates or
scrip representing fractional Parent Merger Stock shall be
issued hereunder. Upon surrender of a certificate or
certificates previously evidencing the Company Stock, any
fractional share interest or interests in Parent Merger Stock
which the holder of such certificate or certificates would
otherwise be entitled to receive shall be paid by Parent to
such holder by check based upon $13.50 for a full share of
Parent Merger Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND OF THE SELLING STOCKHOLDERS
The Company and the Selling Stockholders severally but
not jointly represent and warrant to Parent as follows, with
the knowledge and understanding that Parent is relying
materially upon such representations and warranties:
SECTION 4.1 Organization and Standing. The Company is
a corporation duly organized, validly existing and in good
standing under the laws of the State of Wisconsin. The
Company has all requisite corporate power to carry on its
business as it is now being conducted and is duly qualified to
do business as a foreign corporation and is in good standing
in all jurisdictions set forth in (as used in this and the
following Sections of Article IV, the phrase "knowledge of the
Company" or similar phrases means knowledge of any one or more
of Phillip Koerper, Michael Nelesen, Merlin Behnke and Alvira
Nemetz) the Company Disclosure Schedule, and to the knowledge
of the Company and the Selling Stockholders, such
jurisdictions are the only ones in which the properties owned,
leased or operated by the Company or the nature of the
business conducted by the Company makes such qualification
necessary, except where the failure to qualify (individually
or in the aggregate) will not have any material adverse effect
on the business or prospects of the Company. The copies of
the Articles of Incorporation and By-laws of the Company, as
amended to date and delivered to Parent, are true and complete
copies of these documents as now in effect. The minute books
of the Company are accurate in all material respects.
SECTION 4.2 Capitalization. The authorized capital
stock of the Company, the number of shares of capital stock
which are issued and outstanding, the par value thereof and
the record and beneficial holders thereof are as set forth in
the Company Disclosure Schedule. All of such shares of
capital stock that are issued and outstanding are duly
authorized, validly issued and outstanding, fully paid and,
except as provided in WBCL Section 180.0622(2)(b) as
interpreted, non-assessable, and were not issued in violation
of the preemptive rights of any person. Except as
contemplated by this Agreement, there are no subscriptions,
options, warrants, rights or calls or other commitments or
agreements to which the Company or any Selling Stockholder is
a party or by which it is bound, calling for any issuance,
transfer, sale or other disposition of any class of securities
of the Company. Other than as set forth in the Company
Disclosure Schedule, there are no outstanding securities
convertible or exchangeable, actually or contingently, into
common stock or any other securities of the Company.
SECTION 4.3 Subsidiaries. The only currently existing
subsidiary of the Company is set forth in the Company
Disclosure Schedule (the "Company Subsidiary"). As used
herein, the term "Company Subsidiary" shall mean any
corporation or other entity of which the Company, directly or
indirectly, controls or which the Company owns, directly or
indirectly, 50% or more of the stock or other voting
interests, the holders of which are, ordinarily or generally,
in the absence of contingencies (which contingencies have not
occurred) or understandings (which understandings have not yet
been required to be performed) entitled to vote for the
election of a majority of the board of directors or any
similar governing body. Except as set forth in the Company
Disclosure Schedule, the Company does not own any capital
stock in any other corporation or similar business entity nor
is the Company a partner in any partnership or joint venture.
The Company Disclosure Schedule describes the state or other
jurisdiction of incorporation or organization of the Company
Subsidiary. The Company owns the percentage of capital stock
of the Company Subsidiary set forth in the Company Disclosure
Schedule. The Company Subsidiary is a corporation duly
organized, validly existing and, if applicable, in good
standing under the laws of its state or other jurisdiction of
incorporation or organization. The Company Subsidiary has the
requisite corporate power to carry on its business as it is
now being conducted. The copies of the Certificate of
Incorporation and By-laws of the Company Subsidiary, as
amended to date and delivered to Parent, are true and complete
copies of these documents as now in effect. All of the
outstanding shares of capital stock of the Company Subsidiary
have been duly authorized, validly issued and are fully paid
and non-assessable, and were not issued in violation of the
preemptive rights of any person. There are no subscriptions,
options, warrants, rights or calls or other commitments or
agreements to which the Company or the Company Subsidiary is
a party or by which either is bound, calling for any issuance,
transfer, sale or other disposition of any class of securities
of the Company Subsidiary. There are no outstanding
securities convertible or exchangeable, actually or
contingently, into common stock or any other securities of the
Company Subsidiary. The Company Subsidiary qualifies as a
foreign sales corporation ("FSC") under Section 922 of the
Internal Revenue Code of 1986, as amended (the "Code") and its
only activities to date have been in furtherance of its status
as a FSC.
SECTION 4.4 Authority. The Company has the corporate
power and authority to enter into and perform this Agreement.
The Company's Board of Directors has approved and adopted this
Agreement and the Merger and has adopted a resolution
recommending approval and adoption of this Agreement and the
Merger by the Company's stockholders, and the Company's
stockholders have approved and adopted this Agreement and the
Merger. This Agreement constitutes the valid and binding
obligation of the Company, enforceable in accordance with its
terms, except that such enforcement may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to enforcement of
creditors' rights generally and (ii) general equitable
principles.
SECTION 4.5 Properties. Except as set forth in the
Company Disclosure Schedule, the Company has good and
marketable title to all of the assets and properties which it
purports to own as reflected on the most recent balance sheet
comprising a portion of the Financial Statements (as
hereinafter defined), or thereafter acquired. The Company has
a valid leasehold interest in all material properties of which
it is the lessee and each such lease is valid, binding and
enforceable against the Company, and, to the knowledge of the
Company and the Selling Stockholders, the other parties
thereto in accordance with its terms. Neither the Company nor
to the knowledge of the Company and the Selling Stockholders,
the other parties thereto are in default in the performance of
any material provision thereunder. Neither the whole nor any
material portion of the assets of the Company is subject to
any governmental decree or order to be sold or is being
condemned, expropriated or otherwise taken by any public
authority with or without payment of compensation therefor,
nor, to the knowledge of the Company and the Selling
Stockholders, has any such condemnation, expropriation or
taking been proposed. Except as set forth in the Company
Disclosure Schedule, none of the material assets of the
Company is subject to any restriction which would prevent
continuation of the use currently made thereof or materially
adversely affect the value thereof.
SECTION 4.6 Contracts; No Default.
(a) The Company Disclosure Schedule sets forth a true
and complete list of all contracts, agreements, commitments
and other instruments (whether oral or written) to which the
Company is a party that (i) involve a receipt or an
expenditure by the Company or require the performance of
services or delivery of goods to, by, through, on behalf of or
for the benefit of the Company, which in each case, relates to
a contract, agreement, commitment or instrument that either
(A) requires payments or receipts in excess of $25,000 per
year or (B) is not terminable by the Company on notice of
thirty (30) days or less without penalty or the Company being
liable for damages, or (ii) involve an obligation for the
performance of services or delivery of goods by the Company
that cannot, or in reasonable probability will not, be
performed within thirty (30) days from the dates as of which
these representations are made.
(b) All of the contracts, agreements, commitments and
other instruments described in the Company Disclosure Schedule
(individually, "Contract" and collectively, the "Contracts")
are valid and binding upon the Company, and to the knowledge
of the Company and the Selling Stockholders, the other parties
thereto and are in full force and effect and enforceable in
accordance with their terms, except that such enforcement may
be subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally and (ii) general
equitable principles, and neither the Company, nor to the
knowledge of the Company and the Selling Stockholders, any
other party to any Contract has breached any provision of, and
no event has occurred which, with the lapse of time or action
by a third party, could result in a material default under,
the terms thereof. To the knowledge of the Company and the
Selling Stockholders, no stockholder of the Company has
received any payment from any contracting party in connection
with or as an inducement for causing the Company to enter into
any Contract.
SECTION 4.7 Litigation. Except as set forth in the
Company Disclosure Schedule, there is no claim, action,
proceeding, or investigation pending or, to the knowledge of
the Company and the Selling Stockholders, threatened against
or affecting the Company or the Company Subsidiary before or
by any court, arbitrator or governmental agency or authority
which, in the reasonable judgment of the Company and the
Selling Stockholders, would have a material adverse effect on
the financial condition, operations or prospects ("Material
Adverse Effect") of the Company. There is no strike or
unresolved labor dispute relating to the Company's employees
which, in the reasonable judgment of the Company and the
Selling Stockholders, would have a Material Adverse Effect of
the Company. There are no decrees, injunctions or orders of
any court, governmental department, agency or arbitration
outstanding against the Company or the Company Subsidiary.
SECTION 4.8 Taxes. For purposes of this Agreement,
(A) "Tax" (and, with correlative meaning, "Taxes") shall mean
any federal, state, local or foreign income, alternative or
add-on minimum, business, employment, franchise, occupancy,
payroll, property, sales, transfer, use, value added,
withholding or other tax, levy, impost, fee, imposition,
assessment or similar charge together with any related
addition to tax, interest, penalty or fine thereon; and (B)
"Returns" shall mean all returns (including, without
limitation, information returns and other material
information), reports and forms relating to Taxes.
The Company and each Company Subsidiary has duly and
timely filed with the appropriate governmental authorities all
Tax Returns required to be filed by it other than Tax Returns
where the failure to file (individually and in the aggregate)
would not have a Material Adverse Effect. All such Tax
Returns, to the knowledge of the Company and the Selling
Stockholders, were, when filed and are, accurate and complete
in all material respects and were prepared in conformity with
applicable laws and regulations, and the Company has duly paid
in full or made adequate provision for the payment of all
Taxes shown to be due on such Tax Returns. Except as set
forth in the Company Disclosure Schedule, its Tax Returns have
been examined by the United States Internal Revenue Service
(the "IRS") or other relevant governmental authority or the
period of assessment of the Taxes in respect of which such Tax
Returns were required to be filed has expired, all
deficiencies asserted or assessments made as a result of such
examinations have been paid in full and no proceeding or
examination by or in front of the relevant governmental
authority in connection with the examination of any of the Tax
Returns is currently pending. No claim has been made in
writing to the Company or the Company Subsidiary by any
governmental authority in a jurisdiction where it does not
file a Tax Return that it is or may be subject to Tax in such
jurisdiction. No waiver of statues of limitation have been
given by or requested in writing to the Company with respect
to any Taxes. The Company has not agreed to any extension of
time with respect to any Tax deficiency. The liabilities and
reserves for Taxes reflected in the Company's balance sheet as
of August 24, 1996 contained in the Company Financial
Statements (as hereinafter defined) are adequate to cover all
Taxes for all periods ending on or prior to such date, except
for the payment of such Taxes which, alone or in the
aggregate, would not have a Material Adverse Effect, and there
are no liens for Taxes upon any property or asset of the
Company or the Company Subsidiary, except for liens for Taxes
not yet due. To the knowledge of the Company, there are no
unresolved issues of law or fact arising out of a notice of
deficiency, proposed deficiency or assessment from the IRS or
any other governmental taxing authority with respect to its
Taxes which, if decided adversely, singly or in the aggregate,
would have a Material Adverse Effect. The Company is not a
party to any agreement providing for the allocation or sharing
of Taxes with any entity. The Company has not, with regard to
any assets or property held, acquired or to be acquired by it,
filed a consent to the application of Section 341(f) of the
Code. To the knowledge of the Company, the Company has
withheld and paid all Taxes required to have been withheld and
paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or third party,
except for the payment of such Taxes which, alone or in the
aggregate, would not have a Material Adverse Effect. No Tax
is required to be withheld by the Company pursuant to Section
1445 of the Code as a result of the transfer contemplated by
this Agreement. As a result of the Merger, the Company will
not be obligated to make a payment to an individual that would
be a "parachute payment" to a "disqualified individual" as
those terms are defined in Section 280G of the Code without
regard to whether such payment is reasonable compensation for
personal services performed or to be performed in the future.
SECTION 4.9 No Violation of Law. The Company and the
Company Subsidiary are not in violation of and has not been
given notice or been charged with any violation of, any law,
statute, order, rule, regulation, ordinance or judgment
(including, without limitation, any Environmental Laws, as
hereinafter defined) of any governmental or regulatory body or
authority, except for violations which, in the aggregate, do
not have, and would not reasonably be expected to have, a
Material Adverse Effect on the Company. The Company has not
received any written notice that any investigation or review
with respect to it by any governmental or regulatory body or
authority is pending or threatened, other than, in each case,
those the outcome of which, as far as reasonably can be
foreseen, would not reasonably be expected to have, a Material
Adverse Effect on the Company. The Company has all permits,
licenses, franchises, variances, exemptions, orders and other
governmental authorizations, consents and approvals necessary
to conduct its business as presently conducted (collectively
its "Permits"), except for permits, licenses, franchises,
variances, exemptions, orders, authorizations, consents and
approvals the absence of which, alone or in the aggregate,
would not have a Material Adverse Effect on the Company. The
Company (a) has duly and timely filled all reports and other
information required to be filed with any governmental or
regulatory authority in connection with its Permits, and (b)
to the knowledge of the Company, is not in violation of the
terms of any of its Permits, except for omissions or delays in
filings, reports or violations which, alone or in the
aggregate, would not have a Material Adverse Effect on the
Company. The Company Disclosure Schedule contains a list of
Permits.
SECTION 4.10 Environmental Matters. Except as set
forth in the Company Disclosure Schedule, to its knowledge,
the Company and each Company Subsidiary are and at all times
have been in compliance in all material respects with all
applicable requirements of Environmental Laws (as defined
below) in connection with the ownership, operation and
conditions of the business of the Company. To its knowledge,
there are no PCBs, underground storage tanks (as defined by
Environmental Laws), asbestos materials or asbestos containing
materials in any property leased, owned or operated by the
Company. Except as set forth on the Company Disclosure
Schedule, to the Company's knowledge, neither the Company nor
any Company Subsidiary has released, transported or arranged
for the disposal of any hazardous substance at any facility,
location or site except in material compliance with all
applicable laws. To the knowledge of the Company and the
Selling Stockholders, no conditions exist or have occurred as
a result of which or in connection with which it is reasonably
likely that the Company could be held liable for damages,
response or remedial costs, fines, penalties, sanctions or
equitable relief under any Environmental Laws, except for such
damages, costs, fines, penalties, sanctions or relief which,
alone or in the aggregate, would not have a Material Adverse
Effect on the Company. As used in this Section,
"Environmental Laws" means any federal, state or local
statute, regulation, ordinance, permit, order, judgment,
decree or decision relating to health, safety or the
environment. "Release" means any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, active disposal or passive disposal
(including the abandonment or discarding of barrels,
containers or other closed receptacles containing any
hazardous substances). "Hazardous substance" means (a) any
"hazardous substance" as defined in the Comprehensive
Environmental Response, Compensation and Liability Act of
1980, as amended, ("CERCLA") and any implementing regulations,
(b) any hazardous or toxic substance, waste or material within
the meaning of any other federal, state or local statute,
regulation, ordinance or decision, (c) any pollutant,
contaminant or special waste regulated by any Environmental
Laws, or (d) petroleum, crude oil or any fraction thereof.
SECTION 4.11 List of Stockholders. The Company
Disclosure Schedule includes a complete and accurate list of
all stockholders of the Company setting forth the name,
address and number of shares of Company Stock owned by each
Selling Stockholder. Each Selling Stockholder is an
"accredited investor," as said term is defined in Rule 501 of
Regulation D of the General Rules and Regulations under the
Securities Act of 1933, as amended (the "Securities Act"),
promulgated by the Securities and Exchange Commission (the
"SEC"). Each Selling Stockholder agrees that the certificates
representing Parent Merger Stock shall bear the restrictive
legends referred to in Schedule 7.1.
SECTION 4.12 Insurance. The Company is covered by
insurance policies, or renewals thereof, as identified and
described in the Company Disclosure Schedule. The Company has
not received notice from any insurer or agent of such insurer
that material improvements or expenditures will have to be
made in order to continue such insurance and, so far as known
to the Company and the Selling Stockholders, no such
improvements or expenditures are required (other than premium
payments). To the knowledge of the Company, there is no
material liability under any insurance policy in the nature of
a retroactive rate adjustment or loss sharing or similar
arrangement except as set forth on the Company Disclosure
Schedule.
SECTION 4.13 Condition of Assets. The material
equipment, fixtures and other personal property of the Company
is in an operating condition reasonably adequate for the
conduct of its business as presently being conducted.
SECTION 4.14 No Breaches. The making and performance
of this Agreement and the other agreements contemplated hereby
by the Company will not (i) conflict with or violate the
Articles of Incorporation or the by-laws of the Company, (ii)
violate any laws, ordinances, rules, or regulations, or any
order, writ, injunction or decree to which the Company is a
party or by which the Company or any of its material assets,
businesses, or operations is bound or affected or (iii) result
in any breach or termination of, or constitute a default
under, or constitute an event which, with notice or lapse of
time, or both, would become a default under, or result in the
creation of any encumbrance upon any material asset of the
Company under, or create any rights of termination,
cancellation or acceleration in any person under, any
Contract.
SECTION 4.15 Employees. Except as set forth on the
Company Disclosure Schedule, none of the employees of the
Company is represented by any labor union or collective
bargaining unit and the neither Company nor any Selling
Stockholder is aware of any organizational efforts taking
place with respect to such representation.
SECTION 4.16 Financial Statements. The Company
Disclosure Schedule contains (i) an unaudited interim
consolidated balance sheet as of August 24, 1996 and related
unaudited interim consolidated statement of income of the
Company and the Company Subsidiary for the period from April
1, 1996 through August 24, 1996 and (ii) audited consolidated
balance sheets as of March 31, 1996, March 31, 1995, March 31,
1994 and March 31, 1993 and related audited consolidated
statements of income, retained earnings and cash flows of the
Company and the Company Subsidiaries for the twelve month
periods ended March 31, 1996, March 31, 1995, March 31, 1994
and March 31, 1993 (collectively, the "Company Financial
Statements"). The Company Financial Statements presently
fairly, in all material respects, the consolidated financial
position and results of operations of the Company and the
Company Subsidiaries as of the dates and periods indicated,
and, except as set forth on the Company Disclosure Schedule,
prepared in accordance with generally accepted accounting
principles ("GAAP") consistently applied, subject, in the case
of the unaudited financial statements for the period from
April 1, 1996 through August 24, 1996, to normal and recurring
year-end adjustments, which, individually or collectively, are
not material to the Company. Without limiting the generality
of the foregoing, except as set forth in the Company
Disclosure Schedule, to the knowledge of the Company and the
Selling Stockholders, there is no basis for any assertion
against the Company or any Company Subsidiary as of the date
of said balance sheets of any material debt, liability or
obligation of any nature not fully reflected or reserved
against in the Company Financial Statements or in the notes
thereto and there are no assets of the Company, the value of
which (in the reasonable judgment of the Company and the
Selling Stockholders) is materially overstated in said balance
sheets. Except as disclosed therein or in the Company
Disclosure Schedule or as incurred in the ordinary course of
business since August 24, 1996 the Company has not incurred
any known material contingent liabilities (including
liabilities for Taxes). The Company is not a party to any
contract or agreement for the forward purchase or sale of any
foreign currency.
SECTION 4.17 Absence of Certain Changes or Events.
Except as set forth in the Company Disclosure Schedule, since
August 24, 1996 there has not been:
(a) any material adverse change in the financial
condition, operations, properties, assets, liabilities or
business of the Company;
(b) any material damage, destruction or loss of any
material properties of the Company, whether or not
covered by insurance;
(c) any material change in the manner in which the
business of the Company has been conducted;
(d) any material change in the treatment and
protection of trade secrets or other confidential
information of the Company; and
(e) any occurrence not included in paragraphs (a)
through (d) of this Section 4.17 which has resulted, or
which the Company has reason to believe, would be
expected to result, in a Material Adverse Effect on the
Company.
SECTION 4.18 Employee Benefit Plans; ERISA.
(a) Except as set forth in the Company Disclosure
Schedule, at the date hereof the Company does not maintain or
contribute to any employee benefit plans, programs,
arrangements and practices (such plans, programs, arrangement
and practices of the Company being hereinafter collectively
referred to as the "Company Plans"), including employee
benefit plans within the meaning set forth in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as
amended, and all regulations promulgated thereunder, as in
effect from time to time ("ERISA"), or any written employment
contracts providing for an annual base salary in excess of
$100,000 and having a term in excess of one year, which
contracts are not immediately terminable without penalty or
further liability, or other similar arrangements for the
provision of benefits (excluding any "Multiemployer Plan"
within the meaning of Section 3(37) of ERISA or a "Multiple
Employer Plan" within the meaning of Section 413(c) of the
Code, and all regulations promulgated thereunder, as in effect
from time to time. The Company Disclosure Schedule lists all
Multiemployer Plans and Multiple Employer Plans which the
Company maintains or to which it makes contributions. The
Company has no obligation to create any additional such plan
or to amend any such plan so as to increase benefits
thereunder, except as required under the terms of the Company
Plans, under existing collective bargaining agreements or to
comply with applicable law.
(b) Except as set forth in the Company Disclosure
Schedule, (i) there have been no prohibited transactions
within the meaning of Section 406 and 407 of ERISA or Section
4975 of the Internal Revenue Code of 1986, as amended (the
"Code"), with respect to any of the Company Plans that could
result in penalties, taxes or liabilities which, singly or in
the aggregate, could have a material adverse effect on the
business, operations, properties, assets, condition (financial
or other) results of operations or prospects of the Company,
(ii) except for premiums due, there is no outstanding
liability in excess of $10,000, whether measured alone or in
the aggregate, under Title IV or ERISA with respect to any of
the Company Plans, (iii) neither the Pension Benefit Guaranty
Corporation nor any plan administrator has instituted
proceedings to terminate any of the Company Plans subject to
Title IV of ERISA other than in a "standard termination"
described in Section 4041(b) of ERISA, (iv) none of the
Company Plans has incurred any "accumulated funding
deficiency" (as defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived, as of the last day of
the most recent fiscal year of each of the Company Plans ended
prior to the date of this Agreement, (v) the current present
value of all projected benefit obligations under each of the
Company Plans which is subject to Title IV of ERISA did not,
as of its latest valuation date, exceed the then current value
of the assets of such plan allocable to such benefit
liabilities by more than the amount, if any, disclosed in the
Financial Statements as of November 30, 1994 (based upon
reasonable actuarial assumptions currently utilized for such
Company Plan), (vi) each of the Company Plans has been
operated and administered in all material respects in
accordance with applicable laws during the period of time
covered by the applicable statute of limitations, (vii) each
of the Company Plans which is intended to be "qualified"
within the meaning of Section 401(a) of the Code has been
determined by the IRS to be so qualified and such
determination has not been modified, revoked or limited by
failure to satisfy any condition thereof or by a subsequent
amendment thereto or a failure to amend, except that it may be
necessary to make additional amendments retroactively to
maintain the "qualified" status of such Company Plans, and the
period for making any such necessary retroactive amendments
has not expired, (viii) with respect to Multiemployer Plans,
the Company has not made or suffered a "complete withdrawal"
or a "partial withdrawal," as such terms are respectively
defined in Sections 4203, 4204 and 4205 of ERISA and, to the
knowledge of the Company and the Selling Stockholders, no
event has occurred or is expected to occur which presents a
material risk of a complete or partial withdrawal under said
Sections 4203, 4204 and 4205, (ix) there are no pending or, to
the knowledge of the Company and the Selling Stockholders,
threatened or anticipated claims involving any of the Company
Plans other than claims for benefits in the ordinary course,
and (x) the Company has no current liability in excess of
$10,000, whether measured alone or in the aggregate, for plan
termination or withdrawal (complete or partial) under Title IV
of ERISA based on any plan to which any entity that would be
deemed one employer with the Company under Section 4001 of
ERISA or Section 414 of the Code contributed during the period
of time covered by the applicable statute of limitations (the
"Company Controlled Group Plans"), and the Company does not
anticipate that any such liability will be asserted against
the Company, none of the Company Controlled Group Plans has an
"accumulated funding deficiency" (as defined in Section 302 of
ERISA and 412 of the Code), and no Company Controlled Group
Plan has an outstanding funding waiver which could result in
the imposition of liens, excise taxes or liability against the
Company in excess of $10,000 whether measure alone or in the
aggregate.
SECTION 4.19 Business Locations. The Company does not
own or lease any real or material personal property in any
state or country except as set forth on the Company Disclosure
Schedule. The Company has no executive offices or places of
business except as otherwise set forth on the Company
Disclosure Schedule.
SECTION 4.20 Customers and Suppliers. Except as set
forth in the Company Disclosure Schedule, neither the Company
nor any Selling Stockholder has any knowledge that, either as
a result of the transactions contemplated hereby or for any
other reason (exclusive of expiration of a contract upon the
passage of time), any customer (which accounted for an
aggregate amount of 5% or more of the Company's consolidated
gross revenues within the preceding 12 months) or material
supplier of the Company will not continue to conduct business
with the Company after the date hereof in substantially the
same manner as it has conducted business with the Company in
the past.
SECTION 4.21 Intellectual Property; Computer Software.
(a) The Company Disclosure Schedule sets forth a complete
and correct list and summary description of all patents,
material unpatented inventions set forth in or described in
writing, trademarks, tradenames, service marks, service names,
brand names and copyrights, registrations thereof and
applications therefore, applicable to or used in the business
of the Company, together with a complete list of all licenses
granted by or to the Company with respect to any of the above.
To the knowledge of the Company, all such patents, material
unpatented inventions, trademarks, tradenames, service marks,
service names, brand names and copyrights are owned by the
Company, free and clear of all liens, claims, security
interests and encumbrances of any nature whatsoever. The
Company is not currently in receipt of any notice of any
violation or infringement of, and the Company is not knowingly
violating or infringing, the rights of others in any patent,
unpatented invention, trademark, tradename, service mark,
copyright, trade secret, know-how, design, process or other
intangible asset.
(b) (i) The Company Disclosure Schedule contains a
complete and accurate list of all computer software owned by
the Company (other than "off-the-shelf" software that has not
been customized for its use) (the "Owned Software"). Except
as set forth on the Company Disclosure Schedule, the Company
has exclusive title to the Owned Software, free and clear of
all claims, including claims or rights of employees, agents,
consultants, customers, licensees or other parties involved in
the development, creation, documentation, marketing,
maintenance, enhancement or licensing of such computer
software. The Owned Software is not dependent on any Licensed
Software (as defined in subsection (ii) below) in order to
operate fully in the manner in which it is intended. No Owned
Software has been published or knowingly disclosed to any
other parties, except as set forth on the Company Disclosure
Schedule, and except pursuant to contracts requiring such
other parties to keep the Owned Software confidential. To the
knowledge of the Company and the Selling Stockholders, no such
other party has breached any obligation of confidentiality.
(ii) The Company Disclosure Schedule contains
a complete and accurate list of all software (other than "off-the-
shelf" software that has not been customized for its use)
under which the Company is a licensee, lessee or otherwise has
obtained the right to use software and the Company pays a
royalty for the use of such software (the "Licensed
Software"). The Company Disclosure Schedule also sets forth
a list of all license fees, rents, royalties or other charges
that the Company is required or obligated to pay with respect
to Licensed Software. The Company has the right and license
to use, sublicense, modify and copy Licensed Software, free
and clear of any limitations or encumbrances, except as may be
set forth in the Company Disclosure Schedule. The Company is
in material compliance with all provisions of each license,
lease or other similar agreement pursuant to which it has
rights to use the Licensed Software. Except as disclosed in
the Company Disclosure Schedule, none of the Licensed Software
has been incorporated into or made a part of any Owned
Software or any other Licensed Software. The Company has not
published or knowingly disclosed any Licensed Software to any
other party except, in the case of Licensed Software which the
Company leases or markets to others, in accordance with and as
permitted by any license, lease or similar agreement relating
to the Licensed Software and except pursuant to contracts
requiring such other parties to keep the Licensed Software
confidential. To the knowledge of the Company and the Selling
Stockholders, no party to whom the Company has disclosed
Licensed Software has breached such obligation of
confidentiality.
(iii) The Owned Software and Licensed Software
constitute all material software used in the business of the
Company (collectively, the "Company Software"). To the
knowledge of the Company, the Company Disclosure Schedule sets
forth a list of all contract programmers, independent
contractors, non-employee agents and persons or other entities
(other than employees) who have performed material computer
programming services for the Company at any time since April
1, 1993 and identifies all contracts and agreements pursuant
to which such services were performed. The transactions
contemplated herein will not cause a breach or default under
any licensee, leases or similar agreements relating to the
Company Software or impair the ability of Parent and the
Company to use the Company Software subsequent to the date
hereof in the same manner as the Company Software is currently
used by the Company. The Company is not knowingly infringing
any intellectual property rights of any other person or entity
with respect to the Company Software, and, to the knowledge of
the Company and the Selling Stockholders, no other person or
entity is infringing any intellectual property rights of the
Company with respect to the Company Software.
SECTION 4.22 Approvals. Except as set forth in Section
1.2 as to the Merger Filings and assuming the correctness of
Parent's representation and warranty set forth in Section
5.18, no declaration, filing or registration with, or notice
to, or authorization, consent or approval of, any governmental
or regulatory body or authority or other person is necessary
for execution and delivery of this Agreement by the Company or
consummation by the Company of the transactions contemplated
hereby, other than such declarations, filings, registrations,
notices, authorizations, consents or approvals which, if not
made or obtained, as the case may be, would not, in the
aggregate, have a material adverse effect on the Company.
SECTION 4.23 Transactions with Affiliates. Except as
set forth in the Company Disclosure Schedule, the Company is
not indebted for money borrowed, either directly or
indirectly, from any of its officers, directors, or any
Affiliate (as defined below), in any amount whatsoever; nor
are any of its officers, directors, or Affiliates indebted for
money borrowed from the Company; nor are there any
transactions of a continuing nature between the Company; and
any of its officers, directors, or Affiliates (other than (i)
by or through the regular employment thereof by the Company
and (ii) the leasing arrangements referred to in the Company
Disclosure Schedule) not subject to cancellation which will
continue beyond the Effective Time, including, without
limitation, use of the assets of the Company for personal
benefit with or without adequate compensation. For purposes
of this Section, the term "Affiliate" shall mean any person
that, directly or indirectly, through one or more
intermediaries, controls or is controlled by, or is under
common control with, the person specified. As used in the
foregoing definition, the term (i) "control" shall mean the
power through the ownership of voting securities, contract or
otherwise to direct the affairs of another person and (ii)
"person" shall mean an individual, firm, trust, association,
corporation, partnership, government (whether federal, state,
local or other political subdivision, or any agency or bureau
of any of them) or other entity.
SECTION 4.24 Books, Records and Accounts. The
Company's books, records and accounts fairly and accurately
reflect transactions and dispositions of assets by the
Company, and the system of internal accounting controls of the
Company is sufficient to assure that: (a) transactions are
executed in accordance with management's general or specific
authorization; (b) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
GAAP, and to maintain accountability for assets; (c) access to
assets is permitted only in accordance with management's
general or specific authorization; and (d) the recorded
accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with
respect to any differences.
SECTION 4.25 No Omissions or Untrue Statements. No
representation or warranty made by the Company or by any
Selling Stockholder to Parent in this Agreement, the Company
Disclosure Schedule or in any certificate of a Company officer
delivered to Parent pursuant to the terms of this Agreement
contains any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements
contained herein or therein not misleading as of the date
hereof.
SECTION 4.26 Brokers and Finders. Except for the fees
and expenses payable to Mertz Associates Inc., which fees and
expenses will be paid by the Company, neither the Company nor
any Selling Stockholder has employed any investment banker,
broker, finder, consultant or intermediary in connection with
the transactions contemplated by this Agreement which would be
entitled to any investment banking, brokerage, finder's or
similar fee or commission in connection with this Agreement or
the transactions contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company and the
Selling Stockholders as follows, with the knowledge and
understanding that the Company and the Selling Stockholders
are relying materially on such representations and warranties:
SECTION 5.1 Organization and Standing of Parent.
Parent is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
Parent has all requisite corporate power to carry on its
business as now conducted and is duly qualified to do business
as a foreign corporation and is in good standing as a foreign
corporation in all jurisdictions in which the properties
owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except
where the failure to be so qualified and in good standing will
not have a Material Adverse Effect on it.
SECTION 5.2 Capitalization. The authorized capital
stock of Parent consists of 30,000,000 shares of Parent Common
Stock. As of September 20, 1996, there were 18,956,002
shares of Parent Common Stock issued and outstanding. As of
September 20, 1996, there were 228,815 shares of Parent Common
Stock reserved for issuance upon the exercise of outstanding
common stock purchase warrants (with an exercise price range
of $1.00 to $25.00) of the Parent ("Warrants"), and 2,634,022
shares of Parent Common Stock reserved for issuance upon the
exercise of outstanding options and options or restricted
stock (with an exercise price range of $0.53 to $38.72) which
may be granted under the stock incentive plans of Parent
("Parent Plans"). Except for the Warrants and the options and
other rights granted under the Parent Plans, there are not as
of the date of this Agreement any existing options, warrants,
calls, subscriptions or other rights or agreements or
commitments obligating Parent to issue or transfer shares of
its capital stock or any other securities convertible into or
evidencing the right to subscribe for any such shares. All
issued and outstanding shares of Parent Common Stock are, and
all shares of Parent Common Stock to be issued at the
Effective Time shall be, when issued, duly authorized and
validly issued, fully paid, non-assessable and free of pre-emptive
rights with respect thereto.
SECTION 5.3 The Subsidiaries. Each subsidiary of
Parent is set forth in the Parent Disclosure Schedule
(collectively, the "Parent Subsidiaries"). As used herein,
the term "Parent Subsidiary" shall mean any corporation or
other entity of which Parent, directly or indirectly, controls
or which Parent owns, directly or indirectly, 50% or more of
the stock or other voting interests, the holders of which are,
ordinarily or generally, in the absence of contingencies
(which contingencies have not occurred) or understandings
(which understandings have not yet been required to be
performed) entitled to vote for the election of a majority of
the board of directors or any similar governing body. Except
as set forth in the Parent Disclosure Schedule, Parent does
not own any capital stock in any other corporation or similar
business entity nor is Parent a partner in any partnership or
joint venture. The Parent Disclosure Schedule describes the
state or other jurisdiction of incorporation or organization
and the authorized capitalization of each Parent Subsidiary.
Parent owns the percentage of capital stock of each Subsidiary
as set forth in the Parent Disclosure Schedule. Each Parent
Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of its state or other
jurisdiction of incorporation or organization. Each Parent
Subsidiary has all requisite corporate power to carry on its
business as it is now being conducted and is duly qualified to
do business as a foreign corporation and is in good standing
in each jurisdiction where such qualification is necessary
under applicable law except where the failure to qualify
(individually or in the aggregate) will not have any Material
Adverse Effect on the Parent. As of the date hereof, except
for obligations or liabilities incurred in connection with its
incorporation or organization and the transactions
contemplated thereby and hereby, Subsidiary has not and will
not have incurred, directly or indirectly through any
subsidiary or affiliate, any obligations or liabilities or
engaged in any business or activities of any type or kind
whatsoever.
SECTION 5.4 Parent's Authority. (a) Parent has the
corporate power and authority to enter into and perform this
Agreement. Parent's Board of Directors has approved and
adopted this Agreement and the Merger. No approval of this
Agreement or the Merger is required of Parent's stockholders.
This Agreement constitutes the valid and binding obligation of
Parent, enforceable in accordance with its terms, except that
such enforcement may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally and
(ii) general equitable principles.
(b) Except for (i) the Merger Filings and (ii) reports on
Form 8-K, pursuant to Section 13 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), to reflect
consummation of the Merger including the requisite (x)
financial statements for businesses acquired and (y) pro forma
financial information (collectively, the "Required Statutory
Approvals"), no declaration, filing or registration with, or
notice to, or authorization, consent or approval of, any
governmental or regulatory body or authority is necessary for
the execution and delivery of this Agreement by the Parent or
the consummation by the Parent of the transactions
contemplated hereby, other than such declarations, filings,
registrations, notices, authorizations, consents or approval
which, if not made or obtained, as the case may be, would not,
in the aggregate, have a Material Adverse Effect.
SECTION 5.5 The Subsidiary's Authority. (a) The
Subsidiary has the corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated
hereby. The Subsidiary's Board of Directors and sole
stockholder has approved and adopted this Agreement and the
Merger. This Agreement constitutes the valid and binding
obligation of the Subsidiary, enforceable in accordance with
its terms, except that such enforcement may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to enforcement of
creditors' rights generally and (ii) general equitable
principles.
(b) Except for the Required Statutory Approvals, no
declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any governmental or
regulatory body or authority is necessary for the execution
and delivery of this Agreement by the Subsidiary or the
consummation by the Subsidiary of the transactions
contemplated hereby, other than such declarations, filings,
registrations, notices, authorizations, consents or approval
which, if not made or obtained, as the case may be, would not,
in the aggregate, have a Material Adverse Effect.
SECTION 5.6 Contracts; No Default. All material
contracts, agreements, licenses, leases, easements, permits,
rights of way, commitments, and understandings, written or
oral, connected with or relating in any respect to the present
operations of Parent and the Parent Subsidiaries considered as
one enterprise (except employment or other agreements
terminable at will) are, with the exception of this Agreement,
described in Parent's SEC Reports (as hereinafter defined) and
listed as exhibits thereto (collectively, the "Parent
Contracts"). The Parent Contracts are in full force and effect
and are valid, binding and enforceable upon Parent or a Parent
Subsidiary, as applicable, and to the knowledge of Parent,
against the other parties thereto in accordance with their
terms, except as such enforcement may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to enforcement of
creditors' rights generally and (ii) general equitable
principles. Neither Parent nor any of the Parent Subsidiaries,
as applicable, nor, to the knowledge of Parent, any other
party to any Parent Contract has breached any provision of,
and no event has occurred which, with the lapse of time or
action by a third party, would result in a material default or
breach of any provision of any Parent Contract. To the
knowledge of Parent, no stockholder, officer or director of
the Parent has received any payment from any contracting party
in connection with or as an inducement for causing Parent to
enter into any Parent Contract.
SECTION 5.7 Litigation. Except as set forth in
Parent's SEC Reports and in Schedule 5.7 of the Parent
Disclosure Schedule, there is no claim, action, proceeding, or
investigation pending or, to the knowledge of Parent,
threatened against or affecting Parent or any Parent
Subsidiary before or by any court, arbitrator or governmental
agency or authority which, in the reasonable judgment of
Parent, would have a Material Adverse Effect. There is no
strike or unresolved labor dispute relating to the employees
of Parent or any Parent Subsidiary which, in the reasonable
judgment of Parent, would have a Material Adverse Effect.
There are no decrees, injunctions or orders of any court,
governmental department, agency or arbitration outstanding
against Parent or any Parent Subsidiary.
SECTION 5.8 Taxes. Parent and each Parent Subsidiary
has duly and timely filed all Returns required to be filed by
it other than Returns where the failure to file (individually
and in the aggregate) would have no Material Adverse Effect.
All such Returns to Parent's knowledge were, when filed and
are, accurate and complete in all material respects and were
prepared in conformity with applicable laws and regulations.
Parent has paid or will pay in full or has adequately reserved
against all Taxes otherwise assessed against it through the
date hereof or shown to be due on such tax returns. Parent is
not a party to any pending action or proceeding by any
governmental authority for the assessment of any Tax, and, to
the knowledge of Parent, no claim for assessment or collection
of any Tax has been asserted against Parent that has not been
paid. There are no Tax liens upon the assets of Parent (other
than the lien of property taxes not yet due and payable).
There is no valid basis, to Parent's knowledge, for any
assessment, deficiency, notice, 30-day letter or similar
intention to assess any Tax to be issued to Parent by any
governmental authority. The liabilities and reserves for
Taxes reflected in the Parent's consolidated balance sheet as
of June 30, 1996 contained in the Parent Financial Statements
(as hereinafter defined); after taking into consideration the
reserves for taxes set forth in the latest balance sheet of
Computer Identics Corporation included in the Parent's SEC
Reports (as hereinafter defined), are adequate to cover all
Taxes for all periods ending on or prior to such date, except
for the payment of such Taxes which, alone or in the
aggregate, would not have a Material Adverse Effect, and there
are no liens for Taxes upon any property or asset of Parent or
a Parent Subsidiary, except for liens for Taxes not yet due.
To the knowledge of Parent, there are no unresolved issues of
law or fact arising out of a notice of deficiency, proposed
deficiency or assessment from the IRS or any other
governmental taxing authority with respect to its Taxes which,
if decided adversely, singly or in the aggregate, would have
Material Adverse Effect. Neither Parent nor any Parent
Subsidiary is a party to any agreement providing for the
allocation or sharing of Taxes with any entity. Neither
Parent nor a Parent Subsidiary has, with regard to any assets
or property held, acquired or to be acquired by it, filed a
consent to the application of Section 341(f) of the Code. To
the knowledge of Parent, Parent and each Parent Subsidiary has
withheld and paid all Taxes required to have been withheld and
paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third
party, except for the payment of such Taxes which, alone or in
the aggregate, would not have a Material Adverse Effect. No
Tax is required to be withheld by Parent pursuant to Section
1445 of the Code as a result of the transfer contemplated by
this Agreement.
SECTION 5.9 No Violation of Law. Parent and each
Parent Subsidiary are not in violation of and has not been
given notice or been charged with any violation of, any law,
statute, order, rule, regulation, ordinance or judgment
(including, without limitation, any Environmental Laws) of any
governmental or regulatory body or authority, except for
violations which, in the aggregate, do not have, and would not
reasonably be expected to have, a Material Adverse Effect.
Neither the Parent nor any Parent Subsidiary has received any
written notice that any investigation or review with respect
to Parent or any Parent Subsidiary by any governmental or
regulatory body or authority is pending or threatened, other
than, in each case, those the outcome of which, as far as
reasonably can be foreseen, would not reasonably be expected
to have, a Material Adverse Effect on Parent. Neither Parent
nor any Parent Subsidiary has received any written notice that
any investigation or review with respect to Parent or any
Parent Subsidiary by any governmental or regulatory body or
authority is pending or threatened, other than, in each case,
those the outcome of which, as far as reasonably can be
foreseen, would not reasonably be expected to have, a Material
Adverse Effect. Parent and each Parent Subsidiary have all
Permits necessary to conduct its business as presently
conducted, except for such permits, licenses, franchises,
variances, exemptions, orders, authorizations, consents and
approvals the absence of which, alone or in the aggregate,
would not have a Material Adverse Effect. Parent and each
Parent Subsidiary (a) has duly and timely filed all reports
and other information required to filed with any governmental
or regulatory authority in connection with its Permits, and
(b) to the knowledge of Parent is not in violation of the
terms of any of its Permits, except for such omissions or
delays in filings, reports or violations which, alone or in
the aggregate, would not have a Material Adverse Effect.
SECTION 5.10 No Breaches. The making and performance
of this Agreement will not (i) conflict with the Certificate
of Incorporation or the By-laws of Parent, (ii) violate any
laws, ordinances, rules, or regulations, or any order, writ,
injunction or decree to which Parent or any Parent Subsidiary
is a party or by which the respective material assets,
business, or operations of Parent or any Parent Subsidiary may
be bound or affected or (iii) result in any breach or
termination of, or constitute a default under, or constitute
an event which, with notice or lapse of time, or both, would
become a default under, or result in the creation of any
encumbrance upon any material asset of Parent or any Parent
Subsidiary under, or create any rights of termination,
cancellation, or acceleration in any person under, any Parent
Contract.
SECTION 5.11 Financial Statements. The consolidated
financial statements of Parent (the "Parent Financial
Statements") included in Parent's SEC Reports present fairly,
in all material respects, the consolidated financial position
of Parent as of the respective dates and the results of its
operations for the fiscal years and periods covered in
accordance with GAAP consistently applied and in accordance
with Regulation S-X of the SEC (subject, in the case of
unaudited interim period financial statements, to normal and
recurring year-end adjustments which, individually or
collectively, are not material). Without limiting the
generality of the foregoing, (i) except as set forth in the
Parent Disclosure Schedule or in the Parent's SEC Reports,
there is no basis for any assertion against Parent or any
Parent Subsidiary as of the date of the most recent balance
sheet comprising a portion of the Parent Financial Statements
of any material debt, liability or obligation of any nature
not fully reflected or reserved against in the Parent
Financial Statements or in the notes thereto; and (ii) there
are no assets of Parent or any Parent Subsidiary, the value of
which (in the reasonable judgment of Parent) is materially
overstated in the Parent Financial Statements. Except as
disclosed therein or in the Parent Disclosure Schedule or as
incurred in the ordinary course of business since June 30,
1996, Parent has no known material contingent liabilities
(including liabilities for Taxes). Parent is not a party to
any contract or agreement for the forward purchase or sale of
any foreign currency.
SECTION 5.12 Environmental Matters. To its knowledge,
Parent and each Parent Subsidiary are and at all times have
been in compliance in all material respects with all
applicable requirements of Environmental Laws in connection
with the ownership, operation and conditions of the business
of Parent and the Parent Subsidiaries. To its knowledge,
there are no PCBs, underground storage tanks (as defined by
Environmental Laws), asbestos materials or asbestos containing
materials (in the case of asbestos or asbestos containing
materials or underground heating oil tanks in a condition
which is in violation of Environmental Laws) in any leased
premises or property owned or operated by Parent or a Parent
Subsidiary. To their knowledge, neither Parent nor any Parent
Subsidiary has released, transported or arranged for the
disposal of any hazardous substance at any facility, location
or site except in material compliance with all applicable
laws. To the knowledge of Parent, no conditions exist or have
occurred as a result of which or in connection with which
Parent or a Parent Subsidiary could be held liable for
damages, response or remedial costs, fines, penalties,
sanctions or equitable relief under any Environmental Laws,
except for such damages, costs, fines, penalties, sanctions or
relief which, alone or in the aggregate, would not have a
Material Adverse Effect.
SECTION 5.13 Condition of Assets. The material
equipment, fixtures and other personal property of Parent and
each Parent Subsidiary are in an operating condition
reasonably adequate for the conduct of its respective business
as presently being conducted.
SECTION 5.14 Employee Benefit Plans, ERISA. To the
knowledge of Parent there (i) have been no prohibited
transactions within the meaning of Section 406 and 407 of
ERISA or Section 4975 of the Code, with respect to any of the
Parent Benefit Plans (as hereinafter defined) that could
result in penalties, taxes or liabilities which, singly or in
the aggregate, could have a Material Adverse Effect on Parent,
(ii) except for premiums due, there is no outstanding
liability in excess of $10,000, whether measured alone or in
the aggregate, under Title IV of ERISA with respect to any of
the Parent Benefit Plans, (iii) neither the Pension Benefit
Guaranty Corporation nor any plan administrator has instituted
proceedings to terminate any of the Parent Benefit Plans
subject to Title IV of ERISA other than in a "standard
termination" described in Section 4041(b) of ERISA, (iv) none
of the Parent Benefit Plans has incurred any "accumulated
funding deficiency" (as defined in Section 302 of ERISA and
Section 412 of the Code), whether or not waived, as of the
last day of the most recent fiscal year of each of the Parent
Benefit Plans ended prior to the date of this Agreement, (v)
the current present value of all projected benefit obligations
under each of the Parent Benefit Plans which is subject to
Title IV of ERISA did not, as of its latest valuation date,
exceed the then current value of the assets of such plan
allocable to such benefit liabilities by more than the amount,
if any, disclosed in the Parent Financial Statements as of
June 30, 1996 (based upon reasonable actuarial assumptions
currently utilized for such Parent Benefit Plan), (vi) to the
knowledge of Parent, each of the Parent Benefit Plans has been
operated and administered in all material respects in
accordance with applicable laws during the period of time
covered by the applicable statute of limitations, (vii) each
of the Parent Benefit Plans which is intended to be
"qualified" within the meaning of Section 401(a) of the Code
has been determined by the IRS to be so qualified and, to the
knowledge of Parent, such determination has not been modified,
revoked or limited by failure to satisfy any condition thereof
or by a subsequent amendment thereto or a failure to amend,
except that it may be necessary to make additional amendments
retroactively to maintain the "qualified" status of such
Parent Benefit Plans, and the period for making any such
necessary retroactive amendments has not expired, (viii) with
respect to Multiemployer Plans, neither Parent nor any Parent
Subsidiary has made or suffered a "complete withdrawal" or a
"partial withdrawal," as such terms are respectively defined
in Sections 4203, 4204 and 4205 of ERISA and, to the knowledge
of Parent, no event has occurred or is expected to occur which
presents a material risk of a complete or partial withdrawal
under said Sections 4203, 4204 and 4205, (ix) there are no
pending or, to the knowledge of Parent, threatened or
anticipated claims involving any of the Parent Benefit Plans
other than claims for benefits in the ordinary course, and (x)
neither Parent nor any Parent Subsidiary has a current
liability in excess of $10,000, whether measured alone or in
the aggregate, for plan termination or withdrawal (complete or
partial) under Title IV of ERISA based on any plan to which
any entity that would be deemed one employer with Parent under
Section 4001 of ERISA or Section 414 of the Code contributed
during the period of time covered by the applicable statute of
limitations (the "Parent Controlled Group Plans"), and Parent
does not anticipate that any such liability will be asserted
against Parent or any Parent Subsidiary. None of the Parent
Controlled Group Plans has an "accumulated funding deficiency"
(as defined in Section 302 of ERISA and 412 of the Code), and
no Parent Controlled Group Plan has an outstanding funding
waiver which could result in the imposition of liens, excise
taxes or liability against Parent in excess of $10,000 whether
measured alone or in the aggregate. Parent Benefit Plans
means and includes any employee benefit plans, programs,
arrangements and practices of Parent and the Parent
Subsidiaries, including employee benefit plans within the
meaning set forth in Section 3(3) of the ERISA.
SECTION 5.15 Customers and Suppliers. Except as set
forth in the Parent Disclosure Schedule, Parent has no
knowledge that, either as a result of the transactions
contemplated hereby or for any other reason (exclusive of
expiration of a contract upon the passage of time), any
customer (which accounted for an aggregate amount of 5% or
more of Parent's consolidated gross revenues within the
preceding 12 months) or material supplier of Parent or any of
the Parent Subsidiaries (considered collectively as one
enterprise) will not continue to conduct business with Parent
or a Parent Subsidiary after the Effective Time in
substantially the same manner as it has conducted business
with Parent and the Parent Subsidiaries in the past.
SECTION 5.16 Intellectual Property. Parent and each
Parent Subsidiary owns or has the right to use the patents,
unpatented inventions, trademarks, tradenames, servicemarks,
servicenames, copyrights, trade secrets, know-how, design,
process and other intangible assets used in the business of
Parent and the Parent Subsidiaries free and clear of liens,
claims and encumbrances created outside of the ordinary course
of business, or as identified in agreements referred to in
Parent's SEC Reports. Neither Parent nor any Parent
Subsidiary is knowingly violating or infringing the rights of
others in any patent, unpatented invention, trademark,
tradename, servicemark, copyright, trade secret, know-how,
design, process or other intangible asset.
SECTION 5.17 Books, Records and Accounts. Parent's
books, records and accounts fairly and accurately reflect
transactions and dispositions of assets by Parent and the
Parent Subsidiaries, and the system of internal accounting
controls of Parent and the Parent Subsidiaries is sufficient
to assure that: (a) transactions are executed in accordance
with management's general or specific authorization; (b)
transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP, and to
maintain accountability for assets; (c) access to assets is
permitted only in accordance with management's general or
specific authorization; and (d) the recorded accountability
for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
SECTION 5.18 Hart-Scott-Rodino. To the knowledge of
Parent, no person or entity (i) holds fifty per cent (50%) or
more of the outstanding voting securities of Parent or (ii)
has the contractual power presently to designate fifty per
cent (50%) or more of the directors of Parent. Parent does
not have either annual net sales or total assets of
$100,000,000 or more, as such net sales and total assets are
measured in accordance with Rule 801.11 of the rules
promulgated by the Federal Trade Commission pursuant to the
Hart-Scott-Rodino Anti-Trust Improvements Act of 1976.
SECTION 5.19 S-3 Registration Statement. Parent
currently satisfies the registrant requirement for the use of
a registration statement on Form S-3 pursuant to the
Securities Act.
SECTION 5.20 Absence of Certain Changes or Events.
Except as set forth in Parent's SEC Reports or in Parent
Disclosure Schedule, since June 30, 1996 there has not been:
(a) any material adverse change in the financial
condition, operations, properties, assets, liabilities or
business of Parent and the Parent Subsidiaries considered as
one enterprise;
(b) any material damage, destruction or loss of any
material properties of Parent or any Parent Subsidiary,
whether or not covered by insurance;
(c) any material change in the manner in which the
business of Parent and the Parent Subsidiaries considered as
one enterprise has been conducted;
(d) any material change in the treatment and protection
of trade secrets or other confidential information of Parent
or any Parent Subsidiary;
(e) any occurrence not included in paragraphs (a)
through (d) of this Section 5.20 which has resulted, or which
Parent has reason to believe, would be expected to result, in
a Material Adverse Effect on Parent.
SECTION 5.21 Parent's SEC Reports. Since October 1,
1993, Parent has filed with the SEC all reports, registrations
and other documents, together with any amendments thereto,
required to be filed under the Securities Act and the Exchange
Act (all such reports, registrations and documents filed with
the SEC are collectively referred to as "Parent's SEC
Reports"). As of their respective dates, Parent's SEC Reports
complied in all material respects with all rules and
regulations promulgated by the SEC and did not contain any
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Parent has provided to the Company a true and complete copy of
all of Parent's SEC Reports filed on or prior to the date
hereof.
SECTION 5.22 Employees. Except as set forth on the
Parent Disclosure Schedule, none of the employees of the
Parent is represented by any labor union or collective
bargaining unit and Parent is not aware of any organizational
efforts taking place with respect to such representation.
SECTION 5.23 Opinion of Financial Advisor. Parent has
received the opinion of Alex. Brown & Sons Incorporated to the
effect that, as of the date hereof, the Conversion Ratio is
fair, from a financial point of view, to the Parent's public
stockholders.
SECTION 5.24 No Omissions or Untrue Statements. No
representation or warranty made by Parent to the Company in
this Agreement, in Parent Disclosure Schedule or in any
certificate of a Parent officer required to be delivered to
the Company pursuant to the terms of this Agreement contains
or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make
the statements contained herein or therein not misleading as
of the date hereof.
SECTION 5.25 Brokers and Finders. Except for the fees
and expenses payable to Alex. Brown, which fees and expenses
will be paid by Parent, Parent has not employed any investment
banker, broker, finder, consultant or intermediary in
connection with the transactions contemplated by this
Agreement which would be entitled to any investment banking,
brokerage, finder's or similar fee or commission in connection
with this Agreement or the transactions contemplated hereby.
ARTICLE VI
DELIVERIES
SECTION 6.1 The Company's Deliveries. Concurrently
with its execution and delivery of this Agreement, the Company
shall deliver, or cause to be delivered, to Parent:
(a) a certificate, duly executed by the Secretary
of the Company, certifying as to the Articles of Incorporation
and By-laws of the Company, the incumbency and signatures of
the Company's officers and copies of directors' and
stockholders' resolutions approving and authorizing the
execution and delivery of this Agreement, and the consummation
of the transactions contemplated hereby;
(b) an opinion of the Company's counsel, Reinhart,
Boerner, Van Deuren, Norris & Rieselbach, s.c. in form and
substance reasonably satisfactory to Parent;
(c) letter agreements addressed to Parent and
signed by the Selling Stockholders, which letters shall
include an undertaking of such persons not to sell or
otherwise dispose of any Parent Merger Stock until Parent has
set forth in a filing with the SEC financial statements
reflecting at least 30 days of post-Merger combined operations
of Parent and the Company;
(d) a certificate from the chief executive officer
of the Company as to certain tax matters;
(e) a certificate from each Selling Stockholder as
to certain tax matters;
(f) evidence of termination of the existing
separate employment agreements dated as of July 21, 1987
between the Company and the Selling Stockholders (other than
Phillip Koerper);
(g) evidence of termination of the Buy-Sell
Agreement dated as of July 21, 1987 among the Company and the
Selling Stockholders; and
(h) employment agreements between the Company and
each of the Selling Stockholders in form and substance
satisfactory to Parent (the "Employment Agreements").
SECTION 6.2 Other Deliveries to Parent. Concurrently
with its execution and delivery of this Agreement, Parent
shall receive:
(a) an opinion of Deloitte & Touche, LLP, Parent's
independent public accountants, stating that the Merger will
qualify as a "pooling of interests" transaction under GAAP;
(b) an opinion of Roller, Ksicinski and Syring,
S.C., the Company's independent public accountants, stating
that the Merger will qualify as a "pooling of interests"
transaction under GAAP;
(c) letter agreements addressed to Parent and
signed by each person who is an "affiliate" (as defined for
purposes of paragraphs (c) and (d) of Rule 145 under the
Securities Act or used for purposes of Accounting Series,
Releases 130 and 135, as amended, of the SEC) of Parent, which
letters shall include an undertaking of such persons not to
sell or otherwise dispose of any shares of Parent Common Stock
until Parent has set forth in a filing with the SEC financial
statements reflecting at least 30 days of post-Merger combined
operations of Parent and the Company;
(d) an opinion of Parker Duryee Rosoff & Haft to
the effect that the Merger will be treated for Federal income
tax purposes as a reorganization within the meaning of Section
368(a) of the Code and that no gain or loss will be recognized
by the Parent or the Subsidiary as a result of the Merger;
(e) non-competition agreements from each of the
Selling Stockholders in form and substance satisfactory to
Parent;
(f) a guaranty by Parent of the Company's
obligations under the Company's lease of the premises located
at 2880 South 171st Street, New Berlin, Wisconsin 53151; and
(g) a side letter between Parent, the Company and
Phillip Koerper pursuant to which the parties will agree to
certain matters related to the Company's lease of its
facilities, in form acceptable to the parties thereto.
SECTION 6.3 Deliveries to the Company and Selling
Stockholders. Concurrently with its execution and delivery of
this Agreement, Parent shall deliver, or cause to be
delivered, to the Company and the Selling Stockholders:
(a) a certificate, duly executed by the Secretary
of Parent, certifying as the Certificate of Incorporation and
By-laws of Parent, incumbency and signatures of officers of
Parent and copies of directors' resolutions approving and
authorizing the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby; and
(b) an opinion of Parent's counsel, Parker Duryee
Rosoff & Haft, in form and substance reasonably satisfactory
to the Company and the Selling Stockholders.
SECTION 6.4 Deliveries to the Selling Stockholders.
Concurrently with the execution and delivery of this
Agreement, each of the Selling Stockholders shall receive (i)
the respective Employment Agreement to which he or she is a
party and (ii) either (x) a release by Park Bank and M&I
Marshall and Ilsley Bank ("M&I") of such Selling Stockholder
from liability under such Selling Stockholder's guaranty of
liabilities of the Company to Park Bank and M&I (the
"Guaranty") or (y) an indemnification agreement, in form
reasonably satisfactory to such Selling Stockholder, from
Parent indemnifying such Selling Stockholder for any payments
he or she may make under the Guaranty to Park Bank subsequent
to the Effective Time. At the Effective Time, in exchange for
the certificates representing Company Stock, the Selling
Stockholders shall receive certificates representing Parent
Merger Stock.
ARTICLE VII
REGISTRATION OF PARENT MERGER STOCK
SECTION 7.1 Filing of Registration Statement. Parent
covenants that, within fifteen business days following the
filing with the SEC of Parent's Annual Report on Form 10-K for
the year ended September 30, 1996, it shall prepare and file
with the SEC a registration statement under the Securities Act
covering resales of the Parent Merger Stock by the Selling
Stockholders and thereafter use is best efforts to cause such
registration statement to be declared effective and remain
effective for a period equal to the longer of (i) three years
(or, if Rule 144(k), as amended from time to time, promulgated
under the Securities Act or a successor Rule thereto, is
amended to provide for less than a three year holding period
for sales of restricted securities without registration under
the Securities Act, for a period equal to such amended and
reduced holding period, provided that each of the Selling
Stockholders is eligible to sell their Parent Merger Stock in
accordance with Rule 144(k)) or (ii) the time period during
which any of the Selling Stockholders would be deemed an
"affiliate" of the Parent under Rule 144 of the Securities
Act, all in accordance with the procedures set forth in
Schedule 7.1 attached hereto and forming a part hereof.
Parent agrees to be bound by the provisions of Schedule 7.1
hereto. Parent is currently eligible to use a registration
statement on Form S-3 for the purposes set forth in Schedule
7.1.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 By the Selling Stockholders. Subject to
Sections 8.5 and 9.10 hereof, each Selling Stockholder,
severally but not jointly, shall indemnify, defend, and hold
Parent harmless from and against any and all losses, costs,
liabilities, damages, and expenses (including reasonable legal
and other expenses incident thereto) of every kind, nature,
and description (collectively, "Losses") that result from or
arise out of (i) the breach of any representation or warranty
of the Company and of the Selling Stockholders set forth in
this Agreement or in any certificate or other document
delivered on behalf of the Company or the Selling Stockholders
to Parent pursuant hereto; or (ii) the breach of any of the
covenants of the Company or the Selling Stockholders contained
in or arising out of this Agreement or the transactions
contemplated hereby.
SECTION 8.2 By Parent. Subject to Sections 8.5 and
9.10 hereof, Parent shall indemnify, defend, and hold the
Selling Stockholders harmless from and against any and all
Losses that arise out of (i) the breach of any representation
or warranty of Parent set forth in this Agreement or in any
certificate or other document delivered on behalf of the
Parent to the Company or the Selling Stockholders pursuant
hereto; or (ii) the breach of any of the covenants of Parent
contained in or arising out of this Agreement or the
transactions contemplated hereby.
SECTION 8.3 Claims Procedure. Should any claim
covered by Sections 8.1 or 8.2 be asserted against a party
entitled to indemnification under this Article (the
"Indemnitee"), the Indemnitee shall promptly notify the party
obligated to make indemnification (the "Indemnitor"),
provided, however, that any delay or failure in notifying the
Indemnitor shall not affect the Indemnitor's liability under
this Article except to the extent that such delay or failure
was prejudicial to the Indemnitor. If such claim is a third
party claim, the Indemnitor upon receipt of such notice shall
assume the defense thereof with counsel reasonably
satisfactory to the Indemnitee and the Indemnitee shall extend
reasonable cooperation to the Indemnitor in connection with
such defense. No settlement of any such claim shall be made
without the consent of the Indemnitor and Indemnitee, such
consent not to be unreasonably withheld or delayed, nor shall
any such settlement be made by the Indemnitor which does not
provide for the absolute, complete and unconditional release
of the Indemnitee from such claim. In the event that the
Indemnitor shall fail, within a reasonable time, to defend a
claim, the Indemnitee shall have the right to assume the
defense thereof without prejudice to its rights to
indemnification hereunder. If the claim is not a third party
claim, the general provisions of Section 9.11 shall apply.
SECTION 8.4 Losses Net of Tax Effect, Etc. The
determination of the amount of any Losses for which
indemnification may be sought pursuant to Sections 8.1 or 8.2
shall take into account and such amount shall be reduced by,
(i) any reduction in federal or state income taxes of the
Indemnitee attributable thereto, (ii) the amount of any
insurance proceeds received by such Indemnitee in connection
therewith, and (iii) any third party payments by virtue of
indemnification or subrogation. In addition, in the event
that the Selling Stockholders and the Parent, respectively,
have claims for Losses against each other, a "netting out" or
"set-off" of such Losses shall be allowed to the extent that
(i) the parties agree to the respective amount of "set-off" or
(ii) the amount of "set-off" is determined by arbitration as
provided in Section 9.11.
SECTION 8.5 Limitations on Liability. No party
hereunder shall be liable to another party pursuant to the
indemnification provisions for any special, consequential or
punitive damages. In addition, the Selling Stockholders shall
not be liable hereunder as a result of any misrepresentation
or breach of any such Selling Stockholder's representations,
warranties or covenants contained in this Agreement unless and
until the Losses incurred by Parent as a result of such
misrepresentations or breaches under this Agreement shall
exceed, in the aggregate, $250,000 (in which case the Selling
Stockholders shall be liable for the entire amount of such
claims, including the first $250,000). The Selling
Stockholders shall also not be liable hereunder for Losses in
excess of $10,000,000; and such limitation on liability, as to
each Selling Stockholder, shall be in proportion to the amount
of Parent Merger Stock received.
SECTION 8.6 Option to Deliver Parent Stock as Payment.
In the event a Selling Stockholder becomes obligated to make
an indemnification payment to Parent pursuant to the above
provisions of this Article VIII, the Selling Stockholder, if
he or she still retains shares of Parent Merger Stock received
upon consummation of the Merger, in lieu of making payment to
Parent in cash, may elect to deliver to Parent shares of
Parent Merger Stock (valued, for this purpose, at $13.50 per
share; subject to adjustment to reflect the effect of any
stock splits or stock dividends effected subsequent to the
Effective Time).
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Expenses. The Company and Parent shall
each pay their own expenses (with the Company paying any
expenses attributable to the Selling Stockholders) incident to
the negotiation, preparation, and carrying out of this
Agreement, including all fees and expenses of its counsel and
accountants for all activities of such counsel and accountants
undertaken pursuant to or in connection with this Agreement.
SECTION 9.2 Survival of Representations, Warranties
and Covenants. All statements contained in this Agreement or
in any certificate delivered by or on behalf of the Company,
the Selling Stockholders or Parent pursuant hereto or in
connection with the transactions contemplated hereby shall be
deemed representations and warranties by the Company, the
Selling Stockholders or Parent, as the case may be, hereunder.
All representations and warranties made by the Company and the
Selling Stockholders and by Parent in this Agreement, or
pursuant hereto, shall survive the Effective Time only until
the earlier of (i) the filing with the SEC of the registration
statement contemplated by Section 7.01 hereof or (ii) if such
registration statement is not filed within the time period
specified in Section 7.01, the last day of the fifteen
business day period referred to in Section 7.01 and no action
based thereon may be commenced after such date; provided,
however, that all representations and warranties related to
any claim asserted in writing prior to the expiration of the
above period shall survive until such claim shall be resolved
and payment in respect thereof, if any is owing, shall be
made. The covenants of the parties set forth in this
Agreement shall survive the execution and delivery of this
Agreement.
SECTION 9.3 Succession and Assignments; Third Party
Beneficiaries. This Agreement may not be assigned (either
voluntarily or involuntarily) by any party hereto without the
express written consent of the other party. Any attempted
assignment in violation of this Section shall be void and
ineffective for all purposes. In the event of an assignment
permitted by this Section, this Agreement shall be binding
upon the heirs, successors and assigns of the parties hereto.
There shall be no third party beneficiaries of this Agreement.
SECTION 9.4 Notices. All notices, requests, demands,
or other communications with respect to this Agreement shall
be in writing and shall be (i) sent by facsimile transmission
with transmission confirmation, (ii) sent by the United States
Postal Service, registered or certified mail, return receipt
requested, or (iii) personally delivered by a nationally
recognized express overnight courier service, charges prepaid,
to the following addresses (or such other addresses as the
parties may specify from time to time in accordance with this
Section):
(a) To Parent:
Robotic Vision Systems, Inc.
425 Rabro Drive East
Hauppauge, New York 11788
Attn: President
Fax No.: (516) 273-1167
With a copy to:
Parker Duryee Rosoff & Haft
529 Fifth Avenue
New York, New York 10017
Attn: Ira I. Roxland, Esq.
Fax No.: (212) 972-9488
(b) To the Company:
Systemation Engineered Products, Inc.
16805 Victor Road
New Berlin, Wisconsin 53151
Attn: President
Fax No.: (414) 797-4456
With a copy to:
Reinhart, Boerner, Van Deuren,
Norris & Rieselbach, S.C.
1000 N. Water Street, 21st Floor
Milwaukee, Wisconsin 53202-0900
Attn: Lawrence J. Burnett, Esq.
Fax No.: (414) 298-8097
(c) To the respective Selling Stockholders:
c/o Systemation Engineered Products, Inc.
16805 Victor Road
New Berlin, Wisconsin 53151
Attn: The names of the respective Selling Stockholders
Fax No.: (414) 797-4456
With a copy to:
Reinhart, Boerner, Van Deuren,
Norris & Rieselbach, S.C.
1000 N. Water Street, 21st Floor
Milwaukee, Wisconsin 53202-0900
Attn: Lawrence J. Burnett, Esq.
Fax No.: (414) 298-8097
Any such notice shall, when sent in accordance with the
preceding sentence, be deemed to have been given and received
on the earliest of (i) the day delivered to such address or
sent by facsimile transmission, (ii) the fifth business day
following the date deposited with the United States Postal
Service, or (iii) 24 hours after shipment by such courier
service.
SECTION 9.5 Construction. This Agreement shall be
construed and enforced in accordance with the internal laws of
the State of New York without giving effect to the principles
of conflicts of law thereof.
SECTION 9.6 Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be
deemed an original, but all of which shall together constitute
one and the same Agreement.
SECTION 9.7 No Implied Waiver; Remedies. No failure
or delay on the part of the parties hereto to exercise any
right, power, or privilege hereunder or under any instrument
executed pursuant hereto shall operate as a waiver nor shall
any single or partial exercise of any right, power, or
privilege preclude any other or further exercise thereof or
the exercise of any other right, power, or privilege. All
rights, powers and privileges granted herein shall be in
addition to other rights and remedies to which the parties may
be entitled at law or in equity.
SECTION 9.8 Entire Agreement. This Agreement,
including Schedule 7.1 hereto and the Disclosure Schedules
attached hereto, the Non-Competition Agreements and the
Employment Agreements sets forth the entire understandings of
the parties with respect to the subject matter hereof, and it
incorporates and merges any and all previous communications,
understandings, oral or written, as to the subject matter
hereof, including, without limitation, a letter agreement
dated September 16, 1996 among the parties, and cannot be
amended or changed except in writing, signed by the parties.
SECTION 9.9 Release of Selling Stockholders From
Guaranties in Favor of Park Bank and M&I. In the event that
the Guaranty of each Selling Stockholder to Park Bank is not
released by Park Bank and M&I at the delivery of this
Agreement, Parent covenants with the Selling Stockholders
that, within thirty days following the delivery of this
Agreement, Parent shall either (x) cause Park Bank and M&I to
release the Selling Stockholders (and, if liable thereon, his
or her spouse, as applicable) from all liability on account of
the Guaranties or (y) cause the unpaid principal amount of the
indebtedness of the Company covered by the Guaranties and
accrued interest thereon to be paid in full.
SECTION 9.10 Headings. The headings of the Sections of
this Agreement, where employed, are for the convenience of
reference only and do not form a part hereof and in no way
modify, interpret or construe the meanings of the parties.
SECTION 9.11 Dispute Resolution. (a) In the event that
a party hereto has a claim arising under this Agreement, such
party shall provide written notice of such claim to the other
parties hereto. Each of the parties hereto agrees that any
dispute relating to a claim arising under this Agreement
(other than any claim relating to or arising in connection
with any action or proceeding commenced by a third party
against any of the Parent, the Selling Stockholders, or the
Company (collectively, the "Transaction Parties") in which
such Transaction Party impleads one or more of the other
Transaction Parties) shall be resolved by submitting said
dispute to an arbitrator mutually agreed upon by the parties
hereto. It is the parties' intention to select an arbitrator
who has experience, as a former judge or otherwise, in dispute
resolution. In the event that the parties hereto cannot agree
upon the selection of an arbitrator within ten (10) days after
a party hereto provides notice to the other parties hereto of
its intent to submit such dispute to arbitration, any party
hereto may submit such dispute to Endispute Inc., which
organization shall select a sole arbitrator to arbitrate such
dispute. The arbitrator shall use reasonable efforts to
conduct the arbitration proceedings on consecutive business
days as expeditiously as possible. The place of arbitration
shall be Pittsburgh, Pennsylvania. The parties hereto agree
that the arbitrator's decision shall be final, conclusive and
binding. The costs and expenses of the arbitration shall be
paid as the arbitrator determines to be appropriate.
(b) Each party hereto agrees that any legal action
arising out of or relating to such arbitration (other than
with respect to confirmation or enforcement of an arbitration
award) shall only be instituted in the Federal or State courts
situated within the Commonwealth of Pennsylvania, Allegheny
County and any legal action seeking confirmation or
enforcement of any such arbitration award may be instituted in
any Federal or State court in the Commonwealth of Pennsylvania
or any other appropriate jurisdiction.
(c) Each party hereto further irrevocably consents to
service of process upon it out of such court situated within
the Commonwealth of Pennsylvania, Allegheny County in any
action or proceeding by mailing copies thereof by United
States registered mail, postage prepaid, to its address
specified in Section 9.4.
SECTION 9.12 Submission to Jurisdiction. Each of the
Selling Stockholders and Parent hereby irrevocably submit in
any suit, action or proceeding arising out of or related to
this Agreement or any of the transactions contemplated hereby
to the exclusive jurisdiction of the United States District
Court for the Western District of Pennsylvania and the
jurisdiction of any court of the Commonwealth of Pennsylvania
located in Allegheny County and waive any and all objections
to jurisdiction that they may have under the laws of the
Commonwealth of Pennsylvania or the United States.
SECTION 9.13 Severability. To the extent that any
provision of this Agreement shall be invalid or unenforceable,
it shall be considered deleted hereof and the remainder of
such provision and of this Agreement shall be unaffected and
shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
ROBOTIC VISION SYSTEMS, INC.
By:/s/Steven J. Bilodeau
Name: Steven J. Bilodeau
Title: Executive Vice President
SYSTEMATION ENGINEERED PRODUCTS, INC.
By:/s/Phillip Koerper
Name: Phillip Koerper
Title: President
The undersigned agree to be bound by the
provisions of Article IV, VIII and IX hereof:
/s/Phillip Koerper
PHILLIP KOERPER
/s/Merlin Behnke
MERLIN BEHNKE
/s/Alvira Nemetz
ALVIRA NEMETZ
/s/Michael Nelesen
MICHAEL NELESEN
