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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: December 18, 1997
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 December 9, 1997, Registrant consummated an acquisition transaction
contemplated by an Agreement and Plan of Merger and Reorganization dated as of
October 30, 1997 (the "Merger Agreement"), with Vanguard Automation, Inc.
("Vanguard"), a privately owned company located in Tucson, Arizona, whereby
Vanguard became a wholly-owned subsidiary of Registrant (the "Merger").
Vanguard is the leading supplier of ball grid array and chip scale packaging
equipment for the semiconductor and connector industries.
The Merger Agreement provided that upon consummation of the Merger,
the then outstanding shares of Vanguard capital stock would be converted into
the right to receive, and become exchangeable for an aggregate of 3,390,780
shares of Registrant's common stock. Up to an additional 364,736 shares of
Registrant's common stock are issuable upon exercise of certain Vanguard options
and warrants assumed by Registrant upon consummation of the Merger.
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 Vanguard.*
(i) Reports of Arthur Andersen LLP, Independent Auditors;
(ii) Balance Sheets of Vanguard as of December 31, 1997 and
September 30, 1997;
(iii) Statements of Operations and Retained Earnings (Loss)
of Vanguard for the year ended December 31, 1996 and
for the year ended September 30, 1997;
(iv) Statements of Cash Flows of Vanguard for the year ended
December 31, 1996 and for the year ended September 30,
1997; and
(v) Notes to Financial Statements of Vanguard.
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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, 1997, 1996
and 1995;
(ii) Unaudited Pro Forma Combined Balance Sheet as of
September 30, 1997;
(iii) Unaudited Pro Forma Combined Statements of Operations
for the Years Ended September 30, 1997, 1996 and 1995;
and
(iv) Notes to Unaudited Pro Forma Financial Information.
(c) Exhibits.
(i) Agreement and Plan of Merger and Reorga-nization dated
as of October 30, 1997 by and among Robotic Vision
Systems, Inc., RVSI Southwest Acquisition Corp. and
Vanguard Automation, Inc.
* Registrant's provision within 15 days after the Merger of historical
financial statements of Vanguard and pro forma financial information
relating to 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.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: December 18, 1997 ROBOTIC VISION SYSTEMS, INC.
(Registrant)
By: /s/Robert H. Walker
Robert H. Walker
Executive Vice President
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AGREEMENT AND PLAN OF MERGER
AND
REORGANIZATION
BY AND AMONG
ROBOTIC VISION SYSTEMS, INC.
RVSI SOUTHWEST ACQUISITION CORP.
AND
VANGUARD AUTOMATION, INC.
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TABLE OF CONTENTS
ARTICLE I THE MERGER............................................. 1
SECTION 1.1 The Merger 1
SECTION 1.2 Effective Time of the Merger 1
SECTION 1.3 Disclosure Schedules 2
ARTICLE II SURVIVING AND PARENT CORPORATIONS...................... 2
SECTION 2.1 Certificate of Incorporation 2
SECTION 2.2 By-Laws 2
SECTION 2.3 Directors 2
SECTION 2.4 Officers 2
SECTION 2.5 Further Action 3
ARTICLE III CONVERSION OF SHARES................................... 3
SECTION 3.1 Shares of the Company. 3
SECTION 3.2 Subsidiary Shares 4
SECTION 3.3 Exchange of Certificates 5
SECTION 3.4 Shares of Dissenting Shareholders 6
SECTION 3.5 Closing 7
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......... 7
SECTION 4.1 Organization and Qualification 7
SECTION 4.2 Capitalization 7
SECTION 4.3 Subsidiaries 8
SECTION 4.4 Authority 9
SECTION 4.5 Contracts; No Default 9
SECTION 4.6 Litigation 10
SECTION 4.7 Taxes 10
SECTION 4.8 Employee Benefit Plans; ERISA 12
SECTION 4.9 No Violation of Law 15
SECTION 4.10 Environmental Matters 16
SECTION 4.11 Insurance 19
SECTION 4.12 Properties 19
SECTION 4.13 Condition of Assets 19
SECTION 4.14 No Contravention 20
SECTION 4.15 Labor Matters 20
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SECTION 4.16 Employees 20
SECTION 4.17 Financial Statements 21
SECTION 4.18 Absence of Certain Changes or Events 21
SECTION 4.19 Customers and Suppliers 22
SECTION 4.20 Intellectual Property; Software 22
SECTION 4.21 Business Locations 23
SECTION 4.22 Directors, Officers and Compensation
of Employees 24
SECTION 4.23 Books, Records and Accounts 24
SECTION 4.24 Brokers and Finders 24
SECTION 4.25 Tax Matters 24
SECTION 4.26 No Omissions or Untrue Statements 25
SECTION 4.27 Securities Laws and Restrictive Legends 25
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT.............. 25
SECTION 5.1 Organization and Qualification of
Parent 26
SECTION 5.2 Capitalization 26
SECTION 5.3 The Subsidiaries 26
SECTION 5.4 Parent's Authority 27
SECTION 5.5 The Subsidiary's Authority 28
SECTION 5.6 Contracts; No Default 28
SECTION 5.7 Litigation 28
SECTION 5.8 Taxes 29
SECTION 5.9 ERISA 29
SECTION 5.10 No Violation of Law 29
SECTION 5.11 No Contravention 30
SECTION 5.12 Labor Matters 30
SECTION 5.13 Environmental Matters 30
SECTION 5.14 Financial Statements 31
SECTION 5.15 Absence of Certain Changes or Events 31
SECTION 5.16 Parent's SEC Reports 32
SECTION 5.17 No Omissions or Untrue Statements 32
SECTION 5.18 Brokers and Finders 32
SECTION 5.19 Tax Matters 32
SECTION 5.20 Properties 32
SECTION 5.21 Books, Records and Accounts 33
SECTION 5.22 Intellectual Property 33
SECTION 5.23 Absence of Intention 33
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ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER................ 33
SECTION 6.1 Conduct of Business Prior to Effective
Time 33
SECTION 6.2 Additional Covenants of the Company 34
SECTION 6.3 No Solicitation 35
SECTION 6.4 Management Agreement 36
ARTICLE VII ADDITIONAL AGREEMENTS................................. 36
SECTION 7.1 Furnishing of Information 36
SECTION 7.2 Stockholder Approval 36
SECTION 7.3 NASDAQ National Market 37
SECTION 7.4 Undertaking of Parent Prior to Effective
Time 37
SECTION 7.5 Agreement to Cooperate 37
SECTION 7.6 Public Statements 38
SECTION 7.7 Agreements of Affiliates 38
SECTION 7.8 Assurances Relating to Tax Matters
Certificate 38
SECTION 7.9 Disclosure Supplements 38
SECTION 7.10 Satisfaction of Conditions Precedent 39
SECTION 7.11 Filing of Form S-3 Registration
Statement 39
SECTION 7.12 Filing of Form S-8 Registration
Statement 39
SECTION 7.13 Continuing Director and Officer
Indemnification 39
ARTICLE VIII CONDITIONS............................................ 40
SECTION 8.1 Conditions to Each Party's Obligations
to Effect the Merger 40
SECTION 8.2 Conditions to Obligations of the
Company to Effect the Merger 40
SECTION 8.3 Conditions to Obligations of Parent and
Subsidiary to Effect the Merger 42
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ARTICLE IX TERMINATION AND ABANDONMENT........................... 43
SECTION 9.1 Termination 43
SECTION 9.2 Effect of Termination 44
SECTION 9.3 Amendment 44
SECTION 9.4 Waiver 44
SECTION 9.5 Expenses 44
ARTICLE X MISCELLANEOUS......................................... 45
SECTION 10.1 Non-Survival of Representations and
Warranties 45
SECTION 10.2 Succession and Assignments; Third
Party Beneficiaries 45
SECTION 10.3 Notices 45
SECTION 10.4 Construction 46
SECTION 10.5 Counterparts 46
SECTION 10.6 No Implied Waiver; Remedies 46
SECTION 10.7 Entire Agreement 46
SECTION 10.8 Headings 47
SECTION 10.9 Severability 47
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LIST OF EXHIBITS
EXHIBIT I Certificate of Merger
EXHIBIT II Form of Tax Matters Certificate of the Company
EXHIBIT III Form of Tax Matters Certificate of Parent
EXHIBIT IV-1 & Form of Affiliate's Agreement of the Company
EXHIBIT IV-2 Form of Affiliate's Agreement of Parent
EXHIBIT V An opinion from Cooperman Levitt Winikoff Lester
& Newman, P.C., counsel to Parent and the Subsidiary,
dated the Closing Date
EXHIBIT VI An opinion from Snell & Wilmer L.L.P., counsel to the
Company, dated the Closing Date
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION,
dated as of October 30, 1997 (the "Agreement"), by
and among ROBOTIC VISION SYSTEMS, INC., a Delaware
corporation ("Parent"), RVSI SOUTHWEST ACQUISITION
CORP., a Delaware corporation and a wholly owned
subsidiary of Parent (the "Subsidiary"), and
VANGUARD AUTOMATION, INC., a Delaware corporation
(the "Company").
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The Boards of Directors of Parent, the Subsidiary and 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. The Company and the Subsidiary
are hereinafter sometimes collectively referred to as the "Constituent
Corporations".
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 (the "Code"), and that the Merger
shall be recorded for accounting purposes as a pooling of interests.
Parent and the Company 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 251 of the Delaware General Corporation Law (the "DGCL"),
with the effect provided in Sections 259 - 261 of the DGCL, 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 Delaware.
SECTION 1.2 EFFECTIVE TIME OF THE MERGER. The Merger shall become
effective at such time, as soon as practicable on or after the Closing Date, as
defined in Section 3.5 (the "Effective Time"), as a Certificate of Merger, in
the form set forth as
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Exhibit I hereto, is filed with the Secretary of State of the State of Delaware
(the "Merger Filing").
SECTION 1.3 DISCLOSURE SCHEDULES. (a) Within five business days
following the date of execution of this Agreement, the Company shall deliver a
schedule relating to the Company and the Company Subsidiaries, as defined in
Section 4.3 (the "Company Disclosure Schedule"), and (b) simultaneously with the
execution of this Agreement, Parent shall deliver a schedule relating to Parent
and the Parent Subsidiaries, as defined in Section 5.3 (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. Should the
Company Disclosure Schedule reveal or disclose events, circumstances or
qualifications of the representations and warranties of the Company set forth in
this Agreement that was not previously known by or disclosed to Parent and that
Parent, in its good faith determination, concludes constitutes a Material
Adverse Effect (as defined in Section 4.1) with respect to the Company, then
Parent shall have the right to terminate this Agreement, as set forth in Section
9.1(b), within three business days of the delivery to Parent of the Company
Disclosure Schedule to it.
ARTICLE II
SURVIVING AND PARENT CORPORATIONS
SECTION 2.1 CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of the Subsidiary as in effect immediately prior to the Effective
Time shall be the Certificate of Incorporation of the Surviving Corporation,
until duly amended in accordance with the terms thereof and of the DGCL.
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
Certificate of Incorporation of the Surviving Corporation and the DGCL.
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 Certificate of Incorporation and By-laws.
SECTION 2.4 OFFICERS. The officers of the Subsidiary 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 Certificate
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of Incorporation and By-Laws.
SECTION 2.5 FURTHER ACTION. If at any time after the Effective Time, the
Surviving Corporation shall consider or be advised 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 of
record or otherwise in the Surviving Corporation the title to any property,
rights, privileges, powers and franchises of either of the Constituent
Corporations by reason of, or as a result of, the Merger, or otherwise to carry
out the provisions of this Agreement, the officers and directors of the
Surviving Corporation shall be authorized to execute and deliver, in the name of
and on behalf of each of the Constituent Corporations or otherwise, all such
instruments or assurances, and do all other things necessary or proper to vest,
perfect, confirm or record title to all such property, rights, privileges,
powers and franchises in the Surviving Corporation, and otherwise to carry out
the provisions of this Agreement.
ARTICLE III
CONVERSION OF SHARES
SECTION 3.1 SHARES OF THE COMPANY. At the Effective Time, by virtue of
the Merger and without any action on the part of any holder of any capital stock
of the Company:
(a) Each share of (i) common stock, par value $.001 per share, of the
Company ("Company Common Stock"), (ii) Series A Preferred Stock, par value $.001
per share of the Company, (iii) Series AA Convertible Preferred Stock, par value
$.001 per share of the Company, and (iv) Series AA-2 Convertible Preferred
Stock, par value $.001 per share of the Company (collectively, together with
Company Common Stock, "Company Stock"), other than shares of Company Common
Stock held of record or beneficially by Parent, Subsidiary, Parent Subsidiaries
and/or their affiliates, issued and outstanding at the Effective Time excluding
shares as to which appraisal rights have been perfected in accordance with
Section 262 of the DGCL), subject to the terms and conditions of this Agreement,
shall be converted into the right to receive and become exchangeable for (the
"Exchange Ratio") .090770 of a share of common stock, $.01 par value, of Parent
("Parent Common Stock"); provided, however that if, prior to the Closing Date,
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Parent should split, recapitalize, reclassify or combine Parent Common Stock, or
pay or grant to all stockholders of Parent a stock dividend or other stock
distribution in Parent Common Stock or rights to acquire Parent Common Stock or
otherwise change Parent Common Stock into any other securities, then the
Exchange Ratio will be appropriately adjusted to fully reflect the effect of
such split, recapitalization, reclassification, combination, stock dividend or
other distribution or change.
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(b) In addition, each of the options to acquire up to an aggregate of
1,731,501 shares of Company Common Stock granted either under the Company's 1993
Incentive Stock Option Plan (the "Company Plan") or other than pursuant to the
Company Plan that were issued and outstanding on October 29, 1997, as well as
each of the warrants to acquire up to an aggregate of 2,000,000 shares of
Company Common Stock that were issued and outstanding on October 29, 1997
(collectively, "Company Purchase Rights"), all of which are referred to in
Section 4.2 of the Company Disclosure Schedule (to the extent not exercised
prior to the Effective Time), shall be assumed by Parent and converted into like
rights to purchase shares of Parent Common Stock with the respective number of
shares issuable upon exercises of Company Purchase Rights and the respective
exercise prices thereof being appropriately adjusted in accordance with the
Exchange Ratio; provided, however, that in the case of options intended to
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qualify as "incentive stock options" pursuant to Section 422 of the Code, any
such adjustment shall be made in such a manner as not to disqualify such options
as "incentive stock options". From and after the Effective Time, this Agreement
shall be the sole required evidence of such assumption, regardless of whether a
new instrument is issued by Parent in exchange for the instrument representing
any Company Purchase Right. Promptly after the Effective Time, Parent shall
provide notice to all holders of Company Purchase Rights who have not previously
been notified of the amended terms of such Company Purchase Rights pursuant to
this Section 3.1(b).
(c) Prior to the Effective Time, the Company shall (i) obtain any required
consents from holders of outstanding options to purchase Company Common Stock
granted under the Company Plan and (ii) make any amendments to the terms of the
Company Plan or any award granted thereunder that, in the case of either (i) or
(ii), are necessary to give effect to the transactions contemplated by this
Section 3.1; provided, however, that any such consents and amendments shall not
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change the vesting of such options in accordance with their current terms.
(d) No rights to receive fractional shares of or interests in fractional
Parent Common Stock shall arise under this Agreement, and no certificates or
scrip representing fractional Parent Common Stock shall be issued hereunder.
Upon surrender of a certificate or certificates previously evidencing Company
Common Stock, any fractional share interest or interests in Parent Common 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 in an amount equal to
such fractional share interest or interests pro rata value based upon $14.706
for each full share of Parent Common Stock.
SECTION 3.2 SUBSIDIARY SHARES. At the Effective Time, by virtue of the
Merger and without any action on the part of any holder of any capital stock of
Subsidiary, each issued and outstanding share of Common Stock, $.01 par value,
of the Subsidiary ("Subsidiary Common Stock") shall be converted into one share
of common stock, $.001 par value, of the Surviving Corporation ("Surviving
Corporation Common Stock").
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SECTION 3.3 EXCHANGE OF CERTIFICATES. (a) From and after the Effective
Time, each holder of an outstanding certificate, which immediately prior to the
Effective Time represented shares of Company Stock (the "Company Certificates"),
shall cease to have any right as a stockholder of the Company and such holder's
sole rights shall be to receive in exchange for such holder's Company
Certificates, upon surrender thereof to an exchange agent selected by Parent
(the "Exchange Agent"), a certificate or certificates (with the legend referred
to in Section 4.29 endorsed thereon) representing the number of whole shares of
Parent Common Stock which such holder is entitled to receive pursuant to Section
3.1(a) plus cash in lieu of fractional shares, as provided in Section 3.1(d)
hereof (collectively, the "Merger Consideration"). Notwithstanding any other
provision of this Agreement, (i) until the holders of Company Certificates
theretofore representing shares of Company Stock have surrendered such
certificates for exchange as provided herein, (A) no dividends shall be paid by
the Parent with respect to any shares of Parent Common Stock represented by such
Company Certificates and (B) no payment for fractional shares shall be made,
provided, in each case, that upon surrender of each such Company Certificate,
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the surrendering holder shall receive all such dividends and payments for
fractional shares and (ii) without regard to when such Company Certificate is
surrendered for exchange as provided herein, no interest shall be paid on any
such dividend or payment for fractional shares. If any certificate for shares of
Parent Common Stock is to be issued in a name other than that in which the
Company Certificate surrendered in exchange therefor is registered, it shall be
a condition of such exchange that the person requesting such exchange shall pay
any transfer or other taxes required by reason of the issuance of certificates
for such shares of Parent Common Stock in a name other than that of the
registered holder of the Company Certificate surrendered, or shall establish to
the satisfaction of Parent that such tax has been paid or is not applicable. No
transfers of Company Common Stock shall be made on the stock transfer books of
the Company after the close of business on the day prior to the date of the
Effective Time.
(b) At or before the Effective Time, Parent shall make available to the
Exchange Agent (i) a sufficient number of certificates representing shares of
Parent Common Stock required to effect the exchange referred to in Section
3.3(a) and (ii) sufficient funds to permit payment in lieu of fractional shares.
(c) Promptly after the Effective Time, Parent shall cause the Exchange
Agent to mail to each holder of record of the Company Certificates (i) a form
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Company Certificates shall pass, only upon actual
delivery of the Company Certificates to the Exchange Agent) and (ii)
instructions for use in effecting the surrender of the Company Certificates in
exchange for certificates representing shares of Parent Common Stock (and cash
in lieu of fractional shares). Upon surrender of the Company Certificates for
cancellation to the Exchange Agent, together with a duly executed letter of
transmittal and such other documents as the Exchange Agent shall reasonably
require, the holder of such Company Certificates shall be entitled to receive in
exchange therefor one or more certificates representing that number of whole
shares of Parent Common Stock into
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which the shares of Company Stock theretofore represented by the Company
Certificates so surrendered shall have been converted pursuant to the provisions
of Section 3.1(a), in addition to payment for any fractional share or dividend
of Parent Common Stock, and the Company Certificates so surrendered shall
forthwith be cancelled. Until so surrendered, the Company Certificates from and
after the Effective Time, for all purposes other than the payment of dividends
and distributions shall represent solely the right to receive the number of
whole shares of Parent Common Stock that shall be issued in exchange for such
shares of Company Stock and any cash in lieu of fractional Parent Common Stock
as contemplated by Section 3.1(d). Notwithstanding the foregoing, neither the
Exchange Agent nor any party hereto shall be liable to a holder of shares of
Company Stock for any shares of Parent Common Stock delivered to a public
official as required by applicable abandoned property, escheat or similar laws.
The Exchange Agent shall not be entitled to vote or exercise any rights of
ownership with respect to Parent Common Stock held by it from time to time
hereunder.
(d) From and after the Effective Time, Parent shall be entitled to treat
outstanding certificates which immediately prior to the Effective Time
represented shares of Subsidiary Common Stock as evidencing the ownership of the
number of full shares of Surviving Corporation Common Stock, which the holder of
the shares of Subsidiary Common Stock represented by such certificates is
entitled to receive pursuant to Section 3.2, and the holder of such certificates
shall not be required to surrender such certificates for exchange. Shares of
Surviving Corporation Common Stock which the holder of shares of Subsidiary
Common Stock is entitled to receive in the Merger shall be deemed to have been
issued at the Effective Time.
(e) If any Company Certificate shall have been lost, stolen or destroyed,
upon delivery to the Exchange Agent of (i) an affidavit of that fact by the
person claiming such Company Certificate to be lost, stolen or destroyed and
(ii) an indemnification undertaking in favor of Parent and the transfer agent
for Parent's Common Stock against any claim that may be made against them with
respect to such Company Certificate, the Exchange Agent will deliver in exchange
for such lost, stolen or destroyed Company Certificate the applicable Merger
Consideration with respect to the shares of Company Stock formerly represented
thereby to which such holder is entitled pursuant to Section 3.1.
SECTION 3.4 SHARES OF DISSENTING SHAREHOLDERS. Notwithstanding anything
in this Agreement to the contrary, any shares of Company Stock that are
outstanding immediately prior to the Effective Time and that are held by
shareholders who shall not have voted in favor of the Merger and who shall have
properly demanded in writing and otherwise perfected appraisal for such shares
in accordance with Section 262 of the DGCL (collectively, the "Dissenting
Shares") shall not be converted into or represent the right to receive Merger
Consideration. Such stockholders shall be entitled to receive payment of the
appraised value of such share of Company Stock held by them in accordance with
the provisions of Section 262 of the DGCL, except that all Dissenting Shares
held by shareholders who shall have withdrawn or lost their rights to appraisal
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of such shares of Company Stock under Section 262 shall thereupon be deemed to
have been converted into and to have become exchangeable, as of the Effective
Time, for the right to receive, without any interest thereon, the applicable
Merger Consideration.
SECTION 3.5 CLOSING. The closing (the "Closing") of the transactions
contemplated by this Agreement shall take place at the offices of Cooperman
Levitt Winikoff Lester & Newman, P.C., 800 Third Avenue, New York, New York
10022, on the second business day following the date on which the last of the
conditions set forth in Article VIII hereof is fulfilled or waived, or at such
other time and place as Parent and the Company shall agree (the date on which
the closing occurs being the "Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the Subsidiary as
follows, with the knowledge and understanding that Parent and the Subsidiary
each is relying upon such representations and warranties:
SECTION 4.1 ORGANIZATION AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. 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 Section 4.1 of the Company Disclosure Schedule, and to the
knowledge of the Company, 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 Company. "Material Adverse Effect" means,
with respect to the Company or Parent (as applicable), a material adverse effect
on the business, operations, properties, assets, condition (financial or
otherwise) or results of operations of it and (in the case of Parent) its
subsidiaries, on a consolidated basis, or on its ability to consummate the
transactions contemplated hereby. The copies of the Certificate 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 and the Company Subsidiaries (as hereinafter
defined) are accurate in all material respects.
SECTION 4.2 CAPITALIZATION. The authorized capital stock of the
Company, the classes of capital stock, the number of shares of capital stock of
each class or series which are issued and outstanding as of the date hereof, the
par value thereof, and the record holders thereof are as set forth in Section
4.2 of the Company Disclosure Schedule. All of such shares of capital stock
that are issued and outstanding are duly
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authorized, validly issued and outstanding, fully paid and nonassessable, and
were not issued in violation of the preemptive rights of any person. Except as
set forth in the Company Disclosure Schedule or as otherwise disclosed therein
and herein or, in the case of the preferred stock of the Company, the conversion
features set forth in the Company's Certificate of Incorporation, there are no
subscriptions, options, warrants, rights or calls or other commitments or
agreements to which the Company 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, currently or
contingently, into Common Stock or any other securities of the Company.
SECTION 4.3 SUBSIDIARIES. 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 and the authorized
capitalization of each Company Subsidiary. The Company owns the percentage of
capital stock of each Company Subsidiary as set forth in Section 4.3 of the
Company Disclosure Schedule. Each Company 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 Company 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. The copies of the
Certificate of Incorporation and By-laws (or comparable governing documents in
the case of Company Subsidiaries organized under the laws of countries other
than the United States) of each 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 each of the Company
Subsidiaries have been duly authorized and validly issued and are fully paid and
non-assessable, and were not issued in violation of the preemptive rights of any
person. Except as set forth in the Company Disclosure Schedule or as otherwise
disclosed therein and herein, there are no subscriptions, options, warrants,
rights or calls or other commitments or agreements to which any Company
Subsidiary is a party or by which it is bound, calling for any issuance,
transfer, sale or other disposition of any class of securities of such Company
Subsidiary. Other than as set forth in the Company Disclosure Schedule, there
are no outstanding securities convertible or exchangeable, currently or
contingently, into common stock or any other securities of any Company
Subsidiary.
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SECTION 4.4 AUTHORITY. (a) The Company has full corporate power and
authority to enter into this Agreement and, subject to the Company Stockholders'
Approval (as defined in Section 7.2 below) and the Required Approvals (as
defined in Section 4.4(b) below), to consummate the transactions contemplated
hereby. Its execution and delivery of this Agreement, and its consummation of
the transactions contemplated hereby, have been duly authorized by its Board of
Directors and no other corporate proceedings on its part are necessary to
authorize its execution and delivery of this Agreement and its consummation of
the transactions contemplated hereby, except for the Company Stockholders'
Approval, and the obtaining of the Required Approvals. This Agreement has been
duly and validly executed and delivered by the Company, and constitutes its
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except that such enforcement may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to enforcement of creditors' rights generally
and (ii) general equitable principles, whether asserted at law or in equity
(collectively, the "Bankruptcy Exception").
(b) Except for (i) filings in connection with the applicable requirements
of the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976, as amended (the
"HSR Act"), (ii) the making of the Merger Filing in connection with the Merger
and (iii) the consents set forth in Section 4.4(b) of the Company Disclosure
Schedule (the filings and approvals referred to in clauses (i), (ii) and (iii)
are collectively referred to as the "Required Approvals"), 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 the execution and delivery of this Agreement by the Company or
the 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 4.5 CONTRACTS; NO DEFAULT.
(a) Section 4.5(a) of the Company Disclosure Schedule consists of a true
and complete list of all contracts, agreements, commitments and other
instruments (whether oral or written) to which the Company or any Company
Subsidiary is a party that (i) involve a receipt or an expenditure by the
Company or a Company Subsidiary or require the performance of services or
delivery of goods to, by, through, on behalf of or for the benefit of the
Company or a Company Subsidiary, which in each case, relates to a contract,
agreement, commitment or instrument that either (A) requires payments in excess
of $200,000 per year and receipts in excess of $250,000 per year or (B) is not
terminable by the Company or a Company Subsidiary on notice of thirty (30) days
or less without penalty or the Company or a Company Subsidiary being liable for
damages of $50,000 or more, or (ii) involve an obligation for the performance of
services or delivery of goods by the Company or a Company Subsidiary that
cannot, or in reasonable probability will not, be performed within one year from
the date hereof from the dates as of which these representations are made.
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(b) All of the contracts, agreements, commitments and other instruments
described in Section 4.5(a) of the Company Disclosure Schedule (individually, a
"Contract" and collectively, the "Contracts") are valid and binding upon the
Company or a Company Subsidiary, as applicable, and to the knowledge of the
Company, the other parties thereto, and are in full force and effect and
enforceable in accordance with their terms, subject to the Bankruptcy Exception
and neither the Company nor any Company Subsidiary, nor to the knowledge of the
Company, any other party to any Contract, has materially breached any provision
of, nor has any event 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, no stockholder of the Company has received any
payment in violation of law from any contracting party in connection with or as
an inducement for causing the Company or a Company Subsidiary to enter into any
Contract.
SECTION 4.6 LITIGATION. Except as set forth in Schedule 4.6 of the
Company Disclosure Schedule there is no (i) claim, action, suit or proceeding
pending or, to the knowledge of the Company, threatened against or directly
relating to the Company or any Company Subsidiary before any court or
governmental or regulatory authority or body or arbitration tribunal, or (ii)
outstanding judgment, order, writ, injunction or decree, or application, request
or motion therefor, of any court, governmental agency or arbitration tribunal in
a proceeding to which the Company, any Company Subsidiary or any of their
respective assets was or is a party except, in the case of clauses (i) and (ii)
above, such as would not, individually or in the aggregate, either materially
impair or preclude the Company's ability to consummate the Merger or the other
transactions contemplated hereby or have a Material Adverse Effect on the
Company.
SECTION 4.7 TAXES. Except as disclosed in Section 4.7 of the Company
Disclosure Schedule: (i) the Company and the Company Subsidiaries have prepared
and timely filed or will timely file with the appropriate governmental agencies
all material franchise, income and all other material Tax (as hereinafter
defined) returns and reports (Tax returns and reports are hereinafter
collectively referred to as "Tax Returns") required to be filed for any period
on or before the Effective Time, taking into account any extension of time to
file granted to or obtained on behalf of the Company and/or the Company
Subsidiaries (copies of which for the three preceding fiscal years have been
delivered to Parent); (ii) all material Taxes of the Company and the Company
Subsidiaries (whether or not reported) in respect of the pre-Merger period have
been paid in full to the proper authorities or fully accrued for with respect to
fiscal periods for which there are available financial statements in such
statements and otherwise on the books of the Company, other than such Taxes as
are being contested in good faith by appropriate proceedings and are adequately
reserved for in accordance with generally accepted accounting principles
("GAAP"); (iii) all deficiencies resulting from Tax examinations of federal,
state and foreign income sales and franchise and all other material Tax Returns
filed by the Company and the Company Subsidiaries have either been paid or
adequately reserved for in accordance with GAAP; (iv) to the Company's
knowledge, (a) no material deficiency has been asserted or assessed against the
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Company or any of the Company Subsidiaries and is pending, and (b) no
examination of the Company or any of the Company Subsidiaries is pending or
threatened for any material amount of Tax by any taxing authority (with respect
to any such action, Section 4.7 of the Company Disclosure Schedule sets forth
the periods at issue and the category of Tax, and the examining authority's and
any corresponding revenue agents' reports relating to the issue provided to the
Company have been delivered to Parent); (v) no extension of the period for
assessment or collection of any material Tax is currently in effect and no
extension of time within which to file any material Tax Return has been
requested, which Tax Return has not since been filed; (vi) to the Company's
knowledge, no material Tax liens have been filed with respect to any Taxes;
(vii) the Company and each of the Company Subsidiaries have not agreed to make
any adjustment by reason of a change in their accounting methods that would
affect the taxable income or deductions of the Company or any of the Company
Subsidiaries for any period ending after the Effective Time; (viii) the Company
and the Company Subsidiaries have made timely payments of the Taxes required to
be deducted and withheld from the wages paid to their employees; (ix) there are
no Tax sharing agreements or arrangements with any party other than the Company
or a Company Subsidiary under which the Company or any Company Subsidiary will
have any obligation or liability on or after the Effective Time; (x) to the
knowledge of the Company, the Company and the Company Subsidiaries have the net
operating loss carryforwards set forth in Section 4.7 of the Company Disclosure
Schedule, provided, however, that the Company makes no representation or
-------- -------
warranty as to the ability of the Surviving Corporation or Parent to use such
loss carryforwards after the Effective Time; (xi) the Company and the Company
Subsidiaries have no overall foreign losses as defined in Section 904(f)(2) of
the Code; (xii) except as set forth in Section 4.7 of the Company Disclosure
Schedule, neither the Company nor any of the Company Subsidiaries has unused
foreign tax credits; (xiii) to the Company's knowledge, all payments, other than
payments of dividends (including any payments deemed to be the equivalent of a
dividend) or Taxes, made or incurred by the Company or any of the Company
Subsidiaries since December 31, 1996 will be deductible or capitalizable for Tax
purposes including any payments made by the Company or any of the Company
Subsidiaries pursuant to any transaction contemplated by this Agreement, except
for any payments the failure of which to be deductible or capitalizable would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company; (xiv) to the Company's knowledge, no income under any arrangement or
understanding to which the Company or any of the Company Subsidiaries is a party
will be attributed to the Company or any of the Company Subsidiaries which is
not represented by income to which the Company or the Company Subsidiary is
legally entitled; (xv) to the Company's knowledge, there are no transfer pricing
agreements made by the Company with any taxation authority; (xvi) no assets of
the Company or any of the Company Subsidiaries is held in an arrangement for
which partnership Tax Returns are being filed and neither the Company nor any of
the Company Subsidiaries is a partner in any partnership; (xvii) neither the
Company nor any of the Company Subsidiaries owns any interest in any "controlled
foreign corporation" (within the meaning of Section 957 of the Code), "passive
foreign investment company" (within the meaning of Section 1296 of the Code) or
other entity the income of which is required to be
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included in the income of the Company or such Company Subsidiary, whether or not
distributed; (xviii) neither the Company nor any of the Company Subsidiaries has
made an election under Section 341(f) of the Code; and (xix) the Company is not
obligated to make any payments that would constitute excess parachute payments
within the meaning of Section 280G of the Code.
"Tax" or "Taxes" shall mean all federal, state, local and foreign taxes,
duties, levies, charges and assessments of any nature, including social security
payments and deductibles relating to wages, salaries and benefits and payments
to subcontractors (to the extent required under applicable Tax law), and also
including all interest, penalties and additions imposed with respect to such
amounts.
SECTION 4.8 EMPLOYEE BENEFIT PLANS; ERISA. Except as set forth in
Section 4.8 of the Company Disclosure Schedule:
(a) there are no "employee pension benefit plans" as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), covering employees (or former employees) employed in the United
States, maintained or contributed by the Company or any of the Company
Subsidiaries or any of their ERISA Affiliates (as hereinafter defined), or to
which the Company or any of the Company Subsidiaries or any of their ERISA
Affiliates contributes or is obligated to make payments thereunder or otherwise
may have any liability ("Pension Benefit Plans"). For purposes of this
Agreement, "ERISA Affiliate" shall mean any person (as defined in Section 3(9)
of ERISA) that is a member of any group of persons described in Section 414(b),
(c), (m) or (o) of the Code of which the Company or a Company Subsidiary is a
member.
(b) The Company has delivered to Parent true and complete copies of
all "welfare benefit plans" (as defined in Section 3(1) of ERISA) covering
employees (or former employees) employed in the United States, maintained or
contributed to by the Company or any of the Company Subsidiaries ("Welfare
Plans"), all multi-employer plans (as defined in Section 3(37) of ERISA)
covering employees (or former employees) employed in the United States to which
the Company or any of the Company Subsidiaries or any of their ERISA Affiliates
is required to make contributions or otherwise may have any liability, and, to
the extent covering employees (or former employees) employed in the United
States, all stock bonus, stock option, restricted stock, stock appreciation
right, stock purchase, bonus, incentive, deferred compensation, severance and
vacation plans maintained or contributed to by the Company or a Company
Subsidiary.
(c) The Company and each of the Company Subsidiaries, and each of the
Pension Benefit Plans and Welfare Plans, are in compliance with the applicable
provisions of ERISA and other applicable laws except where the failure to comply
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company.
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(d) All contributions to, and payments from, the Pension Benefit Plans
which are required to have been made in accordance with the Pension Benefit
Plans and, when applicable, Section 302 of ERISA or Section 412 of the Code have
been timely made except where the failure to make such contributions or payments
on a timely basis would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.
(e) The Pension Benefit Plans intended to qualify under Section 401 of
the Code have been determined by the Internal Revenue Service ("IRS") to be so
qualified and, to the Company's knowledge, nothing has occurred with respect to
the operation of such Pension Benefit Plans which would cause the loss of such
qualification or exemption or the imposition of any material liability, penalty
or tax under ERISA or the Code. Such plans have been or will be amended on a
timely basis to comply with changes to the Code made by the Tax Reform Act of
1986 and other applicable legislative, regulatory or administrative
requirements.
(f) There are (i) no investigations pending, to the knowledge of the
Company, by any governmental entity involving the Pension Benefit Plans or
Welfare Plans, (ii) no termination proceedings involving the Pension Benefit
Plans and (iii) no pending or, to the Company's knowledge, threatened claims
(other than routine claims for benefits), suits or proceedings against any
Pension Benefit or Welfare Plan, against the assets of any of the trusts under
any Pension Benefit or Welfare Plan or against any fiduciary of any Pension
Benefit or Welfare Plan with respect to the operation of such plan or asserting
any rights or claims to benefits under any Pension Benefit Plan or against the
assets of any trust under such plan, except for those which would not,
individually or in the aggregate, give rise to any liability which would have a
Material Adverse Effect on the Company, nor, to the Company's knowledge, are
there any facts which would give rise to any liability except for those which
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company in the event of any such investigation, claim, suit or proceeding.
(g) To the Company's knowledge, none of the Company, any of the
Company Subsidiaries or any employee of the foregoing, nor any trustee,
administrator, other fiduciary or any other "party in interest" or "disqualified
person" with respect to the Pension Benefit Plans or Welfare Plans, has engaged
in a "prohibited transaction" (as such term is defined in Section 4975 of the
Code or Section 406 of ERISA) which would be reasonably likely to result in a
tax or penalty on the Company or any of the Company Subsidiaries under Section
4975 of the Code or Section 502(i) of ERISA, except any such transaction which
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company.
(h) Neither any Pension Benefit Plan subject to Title IV of ERISA nor
any trust created thereunder has been terminated nor have there been any
"reportable events" (as defined in Section 4043 of ERISA and the regulations
thereunder) with respect to either thereof, except any such event which would
not, individually or in the
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aggregate, have a Material Adverse Effect on the Company nor has there been any
event with respect to any Pension Benefit Plan requiring disclosure under
Section 4063(a) of ERISA or any event with respect to any Pension Benefit Plan
requiring disclosure under Section 4041(c)(3)(C) of ERISA, except any such event
which would not, individually or in the aggregate, have a Material Adverse
Effect on the Company.
(i) Neither the Company nor any Company Subsidiary nor any ERISA
Affiliate has incurred any currently outstanding liability to the Pension
Benefit Guaranty Corporation (the "PBGC") or to a trustee appointed under
Section 4042(b) or (c) of ERISA other than for the payment of premiums, all of
which have been paid when due. No Pension Benefit Plan has applied for, or
received, a waiver of the minimum funding standards imposed by Section 412 of
the Code. The information supplied to an actuary by the Company or any of the
Company Subsidiaries for use in preparing the most recent actuarial report for a
Pension Benefit Plan, if any, is complete and accurate in all material respects.
(j) Neither the Company, any of the Company Subsidiaries nor any of
the ERISA Affiliates has any liability (including any contingent liability under
Section 4204 of ERISA) with respect to any multi-employer plan, within the
meaning of Section 3(37) of ERISA, covering employees (or former employees)
employed in the United States.
(k) With respect to each of the Pension Benefit and Welfare Plans,
true, correct and complete copies of the following documents have been delivered
to Parent: (i) the current plans and related trust documents, including
amendments thereto, (ii) any current summary plan descriptions, (iii) the most
recent Forms 5500, financial statements and actuarial reports, if applicable,
and (iv) the most recent IRS determination letter, if applicable.
(l) Neither the Company, any of the Company Subsidiaries, any
organization to which the Company is a successor or parent corporation, within
the meaning of Section 4069(b) of ERISA, nor any of their ERISA Affiliates has
engaged in any transaction, within the meaning of Section 4069(a) of ERISA,
except where the liability for which would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
(m) None of the Welfare Plans maintained by the Company or any of the
Company Subsidiaries are retiree life or retiree health insurance plans which
provide for continuing benefits or coverage for any participant or any
beneficiary of a participant following termination of employment, except as may
be required under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"), or except at the expense of the participant or the
participant's beneficiary. The Company and each of the Company Subsidiaries
which maintain a "group health plan" within the meaning of Section 5000(b)(1) of
the Code have complied with the notice and continuation requirements of Section
4980B of the Code, COBRA, Part 6 of Subtitle B of Title I of ERISA and the
regulations thereunder except where the failure to comply would not,
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individually or in the aggregate, have a Material Adverse Effect on the Company.
(n) No liability under any Pension Benefit or Welfare Plan has been
funded nor has any such obligation been satisfied with the purchase of a
contract from an insurance company as to which the Company or any of the Company
Subsidiaries has received notice that such insurance company is in
rehabilitation.
(o) The consummation of the transactions contemplated by this
Agreement will not result in an increase in the amount of compensation or
benefits or accelerate the vesting or timing of payment of any benefits or
compensation payable to or in respect of any employee of the Company or any of
the Company Subsidiaries.
(p) The Company has disclosed to Parent in Section 4.8 of the Company
Disclosure Schedule each material Foreign Plan, if any, (as hereinafter defined)
to the extent the benefits provided thereunder are not mandated by the laws of
the applicable foreign jurisdiction. To the Company's knowledge, the Company
and each of the Company Subsidiaries and each of the Foreign Plans are in
compliance with applicable laws and all required contributions have been made to
the Foreign Plans, except where the failure to comply or make contributions
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company. For purposes hereof, the term "Foreign Plan" shall mean any plan,
program, policy, arrangement or agreement maintained or contributed to by, or
entered into with, the Company or any Company Subsidiary with respect to
employees (or former employees) employed outside the United States.
SECTION 4.9 NO VIOLATION OF LAW. Except as set forth in Section 4.9 of
the Company Disclosure Schedule, the Company and each Company Subsidiary is 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 applicable environmental law, ordinance or regulation)
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. Neither the Company nor any
Company Subsidiary has 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 and each Company Subsidiary
has all permits, licenses, franchises, variances, exemptions, orders and other
governmental authorizations, consents and approvals necessary to conduct its
business as presently conducted, except for those, the absence of which, alone
or in the aggregate, would not have a Material Adverse Effect on the Company
(collectively, "Permits"). The Company and each Company Subsidiary (a) has duly
and timely filed all reports and other information required to be filed with any
governmental or regulatory authority in connection with its Permits, and (b) 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 on the Company.
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Section 4.9 of the Company Disclosure Schedule contains a list of Permits.
SECTION 4.10 ENVIRONMENTAL MATTERS. (a) To the knowledge of the
Company, the Company and the Company Subsidiaries and the properties and assets
used in their respective businesses (including the Real Properties (as
hereinafter defined)) occupied by the Company are in material compliance with
all applicable Environmental Laws (as hereinafter defined), which compliance
includes, without limitation, the possession of all material licenses, permits,
registrations and other governmental authorizations (collectively,
"Environmental Authorizations") required under applicable Environmental Laws and
material compliance with the terms and conditions thereof. To the Company's
knowledge, since December 31, 1994, neither the Company nor any of the Company
Subsidiaries has received any communication, whether from a Governmental
Authority (as hereinafter defined), citizen group, employee or otherwise, that
alleges that the Company or any of the Company Subsidiaries or any of the
properties or assets used in their respective businesses (including the Real
Properties) is not in full compliance with Environmental Laws. To the Company's
knowledge, the Company has all material Environmental Authorizations necessary
for the conduct of the businesses of the Company and the Company Subsidiaries at
the Closing Date except for those that the failure to possess would not have a
Material Adverse Effect. Neither the Company nor any of the Company
Subsidiaries has been notified by a Governmental Authority since December 31,
1994, nor does the Company have reason to believe, that any such Environmental
Authorizations will be modified, suspended or revoked or cannot be renewed or
otherwise maintained in the ordinary course of business.
(b) There is no Environmental Notice (as hereinafter defined) that (i)
is pending or, to the knowledge of the Company, threatened against the Company
or any of the Company Subsidiaries, (ii) is pending or, to the knowledge of the
Company, threatened against any person or entity whose liability for such
Environmental Notice may have been retained or assumed contractually or
otherwise by the Company or the Company Subsidiaries, or (iii) to the Company's
knowledge, could subject Parent or the Subsidiary to any risk of loss or
damages, in each case which is reasonably likely to have a Material Adverse
Effect.
(c) Except as set forth in Section 4.10 of the Company Disclosure
Schedule, and to the Company's knowledge, there are no past or present actions,
activities, circumstances, conditions, events or incidents arising out of, based
upon, resulting from or relating to the operation, ownership or use by the
Company of any properties or assets (including the Real Properties) currently
owned, operated, leased or used by the Company or any of the Company
Subsidiaries, including, without limitation, the emission, discharge, disposal
or other release of any Hazardous Material (as hereinafter defined) in or into
the Environment (as hereinafter defined), that (i) could reasonably be expected
to result in the incurrence by the Company or any Company Subsidiary of material
liabilities under Environmental Laws, (ii) could reasonably be expected to form
the basis of any Environmental Notice relating to a material risk of loss or
damage against or with respect to the Company or any of the Company
Subsidiaries,
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or against any persons or entity whose liability for any Environmental Notice
may have been retained or assumed (contractually or otherwise) by or could be
imputed or attributed by law to the Company or any of the Company Subsidiaries
or (iii) could subject Parent or the Subsidiary to any material risk of loss or
damages.
(d) Without in any way limiting the generality of the foregoing, to
the Company's knowledge, and except as set forth in Section 4.10 of the Company
Disclosure Schedule, (1) there are and have been no underground or above ground
storage tanks or other storage receptacles, or related piping used for storage
or transport of Hazardous Materials, located on, at or under property (including
the Real Properties) owned, operated, leased or used by the Company or any of
the Company Subsidiaries, (2) there are and have been no polychlorinated
biphenyls used or stored by the Company or any of the Company Subsidiaries, (3)
there are and have been no properties (including the Real Properties) currently
or formerly owned, operated, managed, leased or used by the Company or any of
the Company Subsidiaries (or any of their respective predecessors in interest)
at which Hazardous Materials generated, used, owned, managed, stored or
controlled by the Company or any of the Company Subsidiaries may have been
disposed of or otherwise released into the Environment in violation of the law
and (4) there is no friable asbestos contained in or forming part of any
building, building component, structure or office space owned, operated, leased
or used by the Company or any of the Company Subsidiaries, in each case which is
reasonably likely to have a Material Adverse Effect.
(e) To the Company's knowledge, no lien has been recorded in the
public records under Environmental Laws with respect to any properties, assets
or facilities (including the Real Properties) owned, operated, managed, leased
or used by the Company or any of the Company Subsidiaries.
(f) To the Company's knowledge, the Company has given Parent, the
Subsidiary and their authorized representatives access to all material records
and files in its possession relating to actual or potential compliance or
liability issues of the Company and the Company Subsidiaries under Environmental
Laws, including, without limitation, all reports, studies, analyses, tests or
monitoring results pertaining to the existence of Hazardous Materials or any
other environmental concern relating to properties, assets or facilities
(including the Real Properties) currently or formerly owned, operated, managed,
leased, used or controlled by the Company or any of the Company Subsidiaries, or
otherwise concerning compliance with or liability under Environmental Laws.
(g) To the Company's knowledge, there has been no disposal, release,
discharge, spillage, uncontrolled loss, seepage or filtration of Hazardous
Material on-site at any properties, assets or facilities (including the Real
Properties) located in the State of Arizona at which business operations of the
Company or any of the Company Subsidiaries are or have been conducted in
material violation of the law (the "Properties") and, except as set forth in
Section 4.10 of the Company Disclosure
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Schedule, any Hazardous Material which remains on the Properties is being
managed in all material respects in accordance with applicable state and Federal
law and the regulations adopted thereunder.
(h) For purposes of this Agreement:
(i) "Environment" shall mean any surface water, ground water, or
drinking water supply, land surface or subsurface strata, or ambient
air and includes, without limitation, any indoor location.
(ii) "Environmental Laws" shall mean (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. (S)9601 et seq.; (ii) the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. (S)9601 et seq.; (iii) the Toxic
Substances Control Act, as amended, 15 U.S.C. (S)9601 et seq.; and
(iv) any other federal or state law or regulation relating to the
protection of the Environment.
(iii) "Environmental Notice" shall mean any written notice or
claim by any Governmental Authority or other third party alleging
liability (including, without limitation, potential liability for
investigatory costs, clean-up costs, governmental costs, compliance
costs or harm, injuries or damages to any person, property, natural
resources, or any fines or penalties) arising out of, based upon,
resulting from or relating to any Environmental Law.
(iv) "Governmental Authority" shall mean any government or
political subdivision or any agency, authority, bureau, central bank,
commission, department or instrumentality, or any court, tribunal,
grand jury or arbitrator, in each case whether foreign or domestic.
(v) "Hazardous Material" shall mean any substance included within
the definition of "hazardous substance," "hazardous waste," "toxic
substance," "toxic pollutant," "hazardous pollutant," or any similar
term under any Environmental Law and specifically includes
polychlorinated biphenyls and petroleum, oil, or petroleum or oil
products, derivatives or constituents, including, without limitation,
crude oil or any fraction thereof, excluding, however, a substance
present only in de minimis quantities that (i) does not present a
material risk of harm to public health or the Environment and that
(ii) would not be the subject of an enforcement action if brought to
the attention of appropriate governmental agencies.
(vi) "Real Property" shall mean all right, title and interest of
the Company or any of the Company Subsidiaries (including any
leasehold estate) in and to a parcel of real property owned or
operated by the
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Company or any of the Company Subsidiaries together with, in each
case, all improvements and appurtenant fixtures, equipment, personal
property, easements and other property and rights incidental to the
ownership, lease or operation thereof.
SECTION 4.11 INSURANCE. The Company and each Company Subsidiary is
covered by insurance policies, or renewals thereof, as identified and described
in Section 4.11 of the Company Disclosure Schedule. Neither the Company nor any
Company Subsidiary has 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, no such
improvements or expenditures are required (other than premium payments). To the
Company's knowledge, 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 4.12 PROPERTIES. Except as set forth in Section 4.12 of the
Company Disclosure Schedule, the Company and each Company Subsidiary 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
Company Financial Statements, or thereafter acquired (except assets and
properties sold or otherwise disposed of since the date of such balance sheet in
the ordinary course of business). The Company and each Company Subsidiary has a
valid leasehold interest in all properties of which it is the lessee and each
such lease is valid, binding and enforceable against the Company or a Company
Subsidiary, as applicable, and, to the knowledge of the Company, the other
parties thereto in accordance with its terms, subject to the Bankruptcy
Exception. Neither the Company nor any Company Subsidiary nor to the knowledge
of the Company, 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 or any Company Subsidiary 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, 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 or any Company
Subsidiary is subject to any restriction which would prevent continuation of the
use currently made thereof or materially adversely affect the value thereof.
SECTION 4.13 CONDITION OF ASSETS. The material equipment, fixtures and
other personal property of the Company and each Company Subsidiary are in good
operating condition and repair (ordinary wear and tear excepted) for the conduct
of its respective business as presently being conducted.
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SECTION 4.14 NO CONTRAVENTION. Subject to receipt of the Company
Stockholders' Approval and the Required Approvals, or as specified in Section
4.8 of the Company Disclosure Schedule, the making and performance of this
Agreement and the other agreements contemplated hereby by the Company will not
(i) conflict with or violate the Certificate 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 or any Company Subsidiary
is a party or by which the Company or any Company Subsidiary or any of their
respective material assets, businesses, or operations 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 the Company or any Company Subsidiary under, or create any
rights of termination, cancellation or acceleration in any person under, any
Contract.
SECTION 4.15 LABOR MATTERS. None of the Company or any of the Company
Subsidiaries is a party to any union contract or other collective bargaining
agreement, other than those set forth in Section 4.15 of the Company Disclosure
Schedule, true and complete copies of which contracts have been delivered to
Parent. Each of the Company and the Company Subsidiaries is in compliance in
all material respects with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
and neither the Company nor any of the Company Subsidiaries is engaged in any
unfair labor practice. There is no labor strike, slowdown or stoppage pending
(or, to the knowledge of the Company, any labor strike or stoppage threatened)
against or affecting the Company or any of the Company Subsidiaries. No
petition for certification has been filed and is pending before the National
Labor Relations Board with respect to any employees of the Company or any of the
Company Subsidiaries who are not currently organized.
SECTION 4.16 EMPLOYEES. Except as set forth in Section 4.16 of the
Company Disclosure Schedule, each employee of the Company and the Company
Subsidiaries with access to proprietary information regarding the Company has
entered into a confidentiality/assignment of inventions agreement with the
Company, the form of which has previously been delivered to Parent. To the
knowledge of the Company, no key employee or group of employees has any plans to
terminate employment with the Company or a Company Subsidiary. Except for the
Company's current executive officers, neither the Company nor any of the Company
Subsidiaries is a party to any employment, management services, consultation or
other contract or agreement with any past or present officer, director or
employee or, to the Company's knowledge, any entity affiliated with any past or
present officer, director or employee with obligations exceeding $100,000 other
than those set forth in Section 4.16 of the Company Disclosure Schedule, in each
case true and complete copies of which contracts have been delivered to Parent,
and other than the agreements executed by employees generally, the forms of
which have been provided to Parent.
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SECTION 4.17 FINANCIAL STATEMENTS. Section 4.17 of the Company
Disclosure Schedule contains (i) an unaudited interim balance sheet of the
Company as of September 30, 1997 and related unaudited income statement and
statement of cash flows and (ii) year-end balance sheets, statements of income
and cash flows of the Company for each of the years ended December 31, 1996,
1995 and 1994 (collectively, the "Company Financial Statements"). The Company
Financial Statements present fairly, in all material respects, the financial
position of the Company as of the respective dates and the results of its
operations and cash flows for the respective years and periods covered in
accordance with GAAP consistently applied (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 Section
4.17 of the Company Disclosure Schedule, as of the date of the most recent
balance sheet comprising a portion of the Company Financial Statements, there
was no material debt, liability or obligation of any nature not reflected or
reserved against in the Company Financial Statements or in the notes thereto
required to be so reflected or reserved in accordance with GAAP; and (ii) there
are no assets of the Company, the value of which (in the reasonable judgment of
the Company) is materially overstated in the Company Financial Statements.
Except as disclosed therein or in Section 4.17 of the Company Disclosure
Schedule or as incurred in the ordinary course of business since September 30,
1997, the Company has no known material contingent liabilities (including
liabilities for Taxes). Except as disclosed in the Company Disclosure Schedule,
the Company is not a party to any contract or agreement for the forward purchase
or sale of any foreign currency and has not invested in any "derivatives."
SECTION 4.18 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in Section 4.18 of the Company Disclosure Schedule, since September 30, 1997
there has not been:
(a) any material adverse change in the financial condition, operations,
properties, assets, liabilities or business of the Company and the Company
Subsidiaries considered as one enterprise;
(b) any material damage, destruction or loss of any material properties of
the Company and the Company Subsidiaries considered as one enterprise, whether
or not covered by insurance;
(c) any material change in the manner in which the business of the Company
and the Company 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 the Company or any Company Subsidiary; and
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(e) any occurrence not included in paragraphs (a) through (d) of this
Section which has resulted, or which the Company has reason to believe, could
reasonably be expected to result, in a Material Adverse Effect on the Company.
SECTION 4.19 CUSTOMERS AND SUPPLIERS. Except as set forth in Section
4.19 of the Company Disclosure Schedule, the Company has no knowledge that,
either as a result of the transactions contemplated hereby or for any other
reason (inclusive 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 or any Company Subsidiary will not continue to conduct business
with the Company or a Company Subsidiary after the Effective Time in
substantially the same manner as it has conducted business with the Company and
the Company Subsidiaries in the past.
SECTION 4.20 INTELLECTUAL PROPERTY; SOFTWARE. (a) Section 4.20(a) of
the Company Disclosure Schedule sets forth a complete and correct list in all
material respects of all patents, trademarks, tradenames, service marks, service
names, brand names and copyright registrations, and applications therefor,
applicable to or used in the business of the Company and the Company
Subsidiaries, together with a complete list of all licenses granted by or to the
Company or a Company Subsidiary with respect to any of the above. All such
patents, trademarks, tradenames, service marks, service names, brand names and
copyrights are owned by the Company or by a Company Subsidiary, free and clear
of all liens, claims, security interests and encumbrances of any nature
whatsoever, except with respect to the credit agreements listed in Section 4.6
of the Company Disclosure Schedule, or are used by the Company or a Company
Subsidiary pursuant to valid licenses. Except as set forth in Section 4.20(a)
of the Company Disclosure Schedule, the Company is not currently in receipt of
any notice of any violation or infringement of, and neither the Company nor any
Company Subsidiary is knowingly violating or infringing in any material respect,
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) Except with respect to the credit agreements listed in
Section 4.6 of the Company Disclosure Schedule, except as set forth on Schedule
4.20(b)(i) of the Company Disclosure Schedule, the Company or a Company
Subsidiary, as applicable, has title to all material computer software owned by
the Company (other than "off-the-shelf" software not customized for its use
("Owned Software")) free and clear of all liens, claims, security interests and
encumbrances whatsoever or, 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. Except as set forth in Section 4.20(b)(i) or (ii) of
the Company Disclosure Schedule, 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. The source code of any Owned
Software has not been published or knowingly disclosed to any other parties,
except as set forth on Section
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4.20(b)(i) of the Company Disclosure Schedule, and except pursuant to contracts
requiring such other parties to keep the source code of any Owned Software
confidential. As of the date hereof, to the knowledge of the Company, no such
other party has breached any such obligation of confidentiality.
(ii) Section 4.20(b)(ii) of the Company Disclosure Schedule also sets
forth a list of the agreements which require the payment of license fees, rents,
royalties or other charges by the Company or a Company Subsidiary with respect
to all material software (other than "off-the-shelf" software that has not been
customized for its use) under which the Company or a Company Subsidiary is a
licensee, lessee or otherwise has obtained the right to use software and the
Company or a Company Subsidiary pays a royalty for the use of such software (the
"Licensed Software"). The Company or a Company Subsidiary, as applicable, 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
Section 4.20(b)(ii) of the Company Disclosure Schedule or in the agreements
referenced therein. The Company and each Company Subsidiary 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 on Section 4.20(b)(ii) of 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. Neither the Company nor any Company
Subsidiary has published or knowingly disclosed any Licensed Software to any
other party except, in the case of Licensed Software which the Company or a
Company Subsidiary 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. As of the date hereof, to the knowledge of
the Company, no party to whom the Company or a Company Subsidiary has disclosed
Licensed Software has breached such obligation of confidentiality.
(iii) The Owned Software and Licensed Software constitute all material
software used in the respective businesses of the Company and the Company
Subsidiaries (collectively, the "Company Software"). Subject to obtaining the
Required Approvals, the transactions contemplated herein will not cause a breach
or default under any license, leases or similar agreements relating to the
Company Software or impair the ability of Parent and the Company and the Company
Subsidiaries to use the Company Software subsequent to the Effective Time in the
same manner as the Company Software is currently used by the Company and the
Company Subsidiaries. Except as set forth in Section 4.20(a), neither the
Company nor any Company Subsidiary is knowingly infringing in any material
respect any intellectual property rights of any other person or entity with
respect to the Company Software, and, to the knowledge of the Company, no other
person or entity is infringing any intellectual property rights of the Company
and the Company Subsidiaries with respect to the Company Software.
SECTION 4.21 BUSINESS LOCATIONS. Neither the Company nor any Company
Subsidiary owns or leases any real property in any state or country except as
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set forth in Section 4.21 of the Company Disclosure Schedule. Neither the
Company nor any Company Subsidiary has executive offices or places of business
except as otherwise set forth on the Company Disclosure Schedule.
SECTION 4.22 DIRECTORS, OFFICERS AND COMPENSATION OF EMPLOYEES. There is
set forth in Section 4.22 of the Company Disclosure Schedule a true and complete
list showing (a) the names of all directors and officers of the Company and the
Company Subsidiaries; (b) the names of all salaried persons (other than
salespersons) whose aggregate compensation for purposes of tax reporting from
the Company and the Company Subsidiaries in the fiscal year ended December 31,
1996 was, or in the fiscal year ending December 31, 1997 is expected to be
$100,000 or more per year, together with a statement of the full amount expected
to be paid to each such person for services in all capacities to be rendered in
the fiscal year ending December 31, 1997, separately including the amounts paid
or payable, or expected to be paid or payable, under bonus or incentive
arrangements, if any; and (c) the names and titles of all salespersons whose
aggregate compensation for purposes of tax reporting from the Company and the
Company Subsidiaries in the fiscal year ended December 31, 1996 was, or in the
fiscal year ending December 31, 1997 is expected to be, $100,000 or more per
year, together with a statement of the base salary, the commission and any
amount or amounts under bonus or other incentive arrangements, expected to be
paid to each such person in the fiscal year ending December 31, 1997.
SECTION 4.23 BOOKS, RECORDS AND ACCOUNTS. The Company's books, records
and accounts fairly and accurately reflect in all material respects transactions
and dispositions of assets by the Company and the Company Subsidiaries, and the
system of internal accounting controls of the Company and the Company
Subsidiaries is sufficient to assure that: (a) transactions are executed in
accordance with management's 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 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 4.24 BROKERS AND FINDERS. Except for the fees and expenses
payable to Paine Webber or another nationally recognized investment banking firm
(as contemplated by Section 8.2(f) hereof), which fees and expenses will be paid
by the Company, the Company 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.
SECTION 4.25 TAX MATTERS. The representations set forth in the form of
Tax Matters Certificate of the Company, in substantially the form set forth in
Exhibit II hereto
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(the "Company Tax Matters Certificate"), are true and correct in all material
respects, and such representations are hereby incorporated herein by reference
with the same effect as if set forth herein in their entirety.
SECTION 4.26 NO OMISSIONS OR UNTRUE STATEMENTS. No representation or
warranty made by the Company to Parent in this Agreement, the Company Disclosure
Schedule or in any certificate of a Company officer required to be delivered to
Parent 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 in light of
the circumstances in which made not misleading as of the date hereof and as of
the Closing Date.
SECTION 4.27 SECURITIES LAWS AND RESTRICTIVE LEGENDS. The Company
understands that all shares of Parent Common Stock to be issued pursuant to this
Agreement, at the time of issuance, will not be registered under the Act and
neither such shares nor any interest therein may be sold, assigned, transferred
or otherwise disposed of unless they are registered or are disposed of in a
transaction that is exempt from such registration. The Company understands that
any issuance of Parent Common Stock to its stockholders will be conditioned upon
compliance with the provisions of Section 4(2) of the Securities Act of 1933, as
amended (the "Securities Act"), and/or Regulation D promulgated thereunder, or
another available exemption from registration. The Company acknowledges that
each of its stockholders will need to represent that he is acquiring shares of
Parent Common Stock for his own account and with no intention of distributing or
reselling such securities or any part thereof in any transaction that would be
in violation of the securities laws of the United States of America, or any
state. The Company agrees that, so long as required by law, such shares shall
be subject to the following restrictions and certificates evidencing such
securities and any securities issued in exchange for or in respect thereof shall
bear a legend to the following effect:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE ACT AND SUCH LAWS (AND BASED UPON AN
OPINION OF COUNSEL IF THE ISSUER REASONABLY REQUESTS)."
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows, with the
knowledge
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and understanding that the Company is relying on such representations and
warranties:
SECTION 5.1 ORGANIZATION AND QUALIFICATION OF PARENT AND SUBSIDIARY.
Each of Parent and Subsidiary 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 set forth in Section 5.1 of the Parent
Disclosure Schedule, and to its knowledge, such jurisdictions are the only ones
in which the properties owned, leased or operated by Parent or the nature of the
business conducted by Parent makes such qualification necessary, except where
the failure to be so qualified (individually or in the aggregate) and in good
standing will not have a Material Adverse Effect on Parent. The copies of the
Certificate of Incorporation and By-laws of Parent and Subsidiary, as amended to
date and delivered to the Company, are true and complete copies of those
documents as now in effect.
SECTION 5.2 CAPITALIZATION. The authorized capital stock of Parent
consists of 40,000,000 shares of Parent Common Stock. As of October 29, 1997,
there were 21,071,584 shares of Parent Common Stock issued and outstanding. As
of October 29, 1997, there were 183,196 shares of Parent Common Stock reserved
for issuance upon the exercise of outstanding common stock purchase warrants of
the Parent ("Warrants"), and 3,866,941 shares of Parent Common Stock reserved
for issuance upon the exercise of outstanding options and options or restricted
stock 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
and all shares to be issued in connection with Parent's assumption of the
Company Purchase Rights 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
Section 5.3 of 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 Section 5.3 of the Parent
Disclosure Schedule, as of the date of this Agreement, Parent does not own any
capital stock (or other ownership interests) in any other corporation or similar
business entity nor is Parent a
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partner in any partnership or joint venture. The Parent Disclosure Schedule
describes the state or other jurisdiction of incorporation or organization of
each Parent Subsidiary. Parent owns the percentage of capital stock (or other
ownership interests specified) of each Subsidiary as set forth in the Parent
Disclosure Schedule. Each Parent Subsidiary is a corporation or other entity
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 Parent. All of the outstanding shares of capital stock (or other
ownership interest specified) of each of the Parent Subsidiaries have been duly
authorized and validly issued and are fully paid and non-assessable, and were
not issued in violation of the preemptive rights of any persons. Other than as
set forth in the Parent Disclosure Schedule, there are no outstanding securities
convertible or exchangeable, currently or contingently, into common stock or any
other securities of any Parent Subsidiary. As of the date hereof and the
Effective Time, 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 or
entered into any agreements, instruments, commitments, or other arrangements
with any person or entity.
SECTION 5.4 PARENT'S AUTHORITY. (a) Parent has full corporate power and
authority to enter into this Agreement and, subject to (i) filings in connection
with the applicable requirements of the HSR Act and (ii) the making of the
Merger Filing in connection with the Merger (collectively, the "Required
Statutory Approvals"), to consummate the transactions contemplated hereby.
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 and no other corporate proceedings on Parent's part are necessary
to authorize its execution and delivery of this Agreement and its consummation
of the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Parent, and constitutes the legal, valid and
binding obligation of Parent, enforceable against Parent in accordance with its
terms, except that such enforcement may be limited by the Bankruptcy Exception.
(b) Except for (i) the Required Statutory Approvals and following the
Closing Date, (ii) the filing of the Regulation D Notice with respect to the
issuance of shares of Parent Common Stock pursuant to Section 3.1(a) with the
SEC and (iii) the filing with the SEC, and the declaration of effectiveness by
the SEC, of the respective registration statements of Parent referred to in
Sections 7.11 and 7.12 hereof, and any state securities or "blue sky" compliance
contemplated by Schedule 7.11 hereto, 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 the execution
and
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delivery of this Agreement by Parent or the consummation by 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 on it.
SECTION 5.5 THE SUBSIDIARY'S AUTHORITY. Subsidiary has full corporate
power and authority to enter into this Agreement and, subject to the Required
Statutory Approvals, to consummate the transactions contemplated hereby. Its
execution and delivery of this Agreement, and its consummation of the
transactions contemplated hereby, have been duly authorized by its Board of
Directors and no other corporate proceedings on its part are necessary to
authorize its execution and delivery of this Agreement and its consummation of
the transactions contemplated hereby, except for obtaining the Required
Statutory Approvals. This Agreement has been duly and validly executed and
delivered by Subsidiary, and constitutes the valid and binding obligation of the
Subsidiary, enforceable in accordance with its terms, except that such
enforcement may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally and (ii) general equitable principles.
SECTION 5.6 CONTRACTS; NO DEFAULT. All material contracts, agreements,
licenses, leases, permits, 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 valid and binding upon Parent or a Parent Subsidiary, as applicable, and to
the knowledge of Parent, the Parent Contracts are valid, binding and enforceable
by Parent or a Parent Subsidiary, as applicable, against the other parties
thereto in accordance with their terms. Neither Parent nor a Parent Subsidiary,
as applicable, nor, to the knowledge of Parent, any of the other parties thereto
is in material default or breach of any provision of the Parent Contracts, nor
has any event occurred which, with the lapse of time or action by a third party,
could result in a material default under the terms hereof.
SECTION 5.7 LITIGATION. Except as set forth in Parent's SEC Reports,
there is no (i) claim, action, suit or proceeding pending or, to the knowledge
of Parent, threatened against or directly relating to Parent or any Parent
Subsidiary before any court or governmental or regulatory authority or body or
arbitration tribunal, or (ii) outstanding judgment, order, writ, injunction or
decree, or application, request or motion therefor, of any court, governmental
agency or arbitration tribunal in a proceeding to which Parent, any Parent
Subsidiary or any of their respective assets was or is a party except, in the
case of clauses (i) and (ii) above, such as would not, individually or in the
aggregate, either materially impair or preclude the Parent's ability to
consummate the Merger or the other transactions contemplated hereby or have a
Material Adverse Effect on Parent.
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SECTION 5.8 TAXES. Each of Parent and the Parent Subsidiaries have timely
filed all Tax Returns required to be filed by it other than Returns which the
failure to file would have no Material Adverse Effect on Parent. All such Tax
Returns were, when filed, and to Parent's knowledge are, accurate and complete
in all material respects and were prepared in conformity with applicable laws
and regulations. Parent has paid in full or will pay in full or has adequately
reserved against or accrued for in accordance with GAAP all Taxes otherwise
assessed against Parent and the Parent Subsidiaries in respect of all periods
prior to the Effective Time regardless of whether reflected on any Tax Return.
Parent is not a party to any pending action or proceeding by any taxing
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 and
the Parent Subsidiaries (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. To Parent's knowledge, (a) no
material deficiency has been asserted or assessed against Parent Subsidiaries
and is pending, and (b) no examination of Parent or any Parent Subsidiaries is
pending or threatened for any material amount of Tax by any taxing authority
(with respect to any such action, Section 5.8 of the Parent Disclosure Schedule
sets forth the periods at issue and the category of Tax, and the examining
authority's and any corresponding revenue agents' reports relating to the issue
provided to Parent have been delivered to the Company).
SECTION 5.9 ERISA. Each "employee benefit plan" as defined in Section
3(2) of ERISA covering employees (or former employees) employed in the United
States, maintained or contributed to by Parent or any of the Parent Subsidiaries
or any of their Parent ERISA Affiliates, or to which Parent of any of the Parent
Subsidiaries or any of heir Parent ERISA Affiliates contributes or is obligated
to make payments thereunder or otherwise may have any liability ("Parent Pension
Benefit Plans") which is intended to qualify under Section 401 of the Code have
been determined by the IRS to be so qualified and, to Parent's knowledge,
nothing has occurred with respect to the operation of such Parent Pension
Benefit Plans which could cause the loss of such qualification or exemption or
the imposition of any material liability, penalty or tax under ERISA or the
Code. For purposes of this Agreement, "Parent ERISA Affiliate" shall mean any
person (as defined in Section 3(9) of ERISA) that is a member of any group of
persons described in Section 414(b), (c), (m) or (o) of the Code of which Parent
or a Parent Subsidiary is a member. Except as set forth in Section 5.9 of the
Parent Disclosure Schedule, Parent and each of the Parent Subsidiaries, and each
of the Parent Pension Benefit Plans are in compliance with applicable funding
requirements and provisions of ERISA and other applicable laws except where the
failure to comply would not, individually or in the aggregate, have a Material
Adverse Effect on Parent.
SECTION 5.10 NO VIOLATION OF LAW. Parent and each Parent Subsidiary is
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
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limitation, any applicable environmental law, ordinance or regulation) 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 Parent. 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.
SECTION 5.11 NO CONTRAVENTION. The making and performance of this
Agreement and the other agreements contemplated hereby by Parent will not (i)
conflict with or violate the Certificate of Incorporation or the By-laws of
Parent or Subsidiary, (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 other than the consent of lenders referred to in Section 5.11 of Parent
Disclosure Schedule (the "Lenders Consent").
SECTION 5.12 LABOR MATTERS. Each of Parent and the Parent Subsidiaries
is in compliance in all material respects with all applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and neither Parent nor any of the Parent Subsidiaries is
engaged in any unfair labor practice or a party to or directly bound by any
union or collective bargaining agreement.
SECTION 5.13 ENVIRONMENTAL MATTERS. To the knowledge of Parent, Parent
and the Parent Subsidiaries are in material compliance with all applicable
Environmental Laws, which compliance includes, without limitation, the
possession of all material Environmental Authorizations required under
applicable Environmental Laws and material compliance with the terms and
conditions thereof. To Parent's knowledge, there are no past or present
actions, activities, circumstances, conditions, events or incidents arising out
of based upon, resulting from or relating to the operation, ownership or use of
any properties or assets currently or formerly owned, operated, leased or used
by Parent or any of the Parent Subsidiaries, including without limitation, the
emission, discharge, disposal or other release of any Hazardous Material in or
into the Environment that could reasonably be expected to (i) result in the
incurrence of material costs under Environmental Laws or (ii) form the basis of
any Environmental Notice relating to a material risk of loss or damage against
or with respect to Parent of any of the Parent Subsidiaries (or any of their
respective agents). To Parent's knowledge, there has been no disposal,
releases, discharge, spillage, uncontrolled loss, seepage or filtration of
Hazardous Material at any properties, assets or facilities at which business
operations
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of Parent or any of the Parent Subsidiaries are or have been conducted in
material violation of the law.
SECTION 5.14 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 and the Parent Subsidiaries as of the respective dates and the results of
its operations and cash flows 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 Section 5.12 of the Parent Disclosure
Schedule, as of the date of the most recent balance sheet comprising a portion
of the Parent Financial Statements, there was no material debt, liability or
obligation of any nature not fully reflected or reserved against in the Parent
Financial Statements or in the notes thereto required to be so reflected or
reserved in accordance with GAAP; 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 Section 5.15 of the Parent Disclosure Schedule or as incurred in
the ordinary course of business since June 30, 1997, neither Parent nor any
Parent Subsidiary has any known material contingent liabilities (including
liabilities for Taxes). Except as set forth in Section 5.15 of the Parent
Disclosure Schedule, Parent is not a party to any contract or agreement for the
forward purchase or sale of any foreign currency and has not invested in any
"derivatives."
SECTION 5.15 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in Parent's SEC Reports or in Parent Disclosure Schedule, since June 30, 1997
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 and the Parent Subsidiaries considered as one enterprise, 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 5.16 which has resulted, or which Parent has reason to believe, could
reasonably be
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expected to result, in a Material Adverse Effect on Parent.
SECTION 5.16 PARENT'S SEC REPORTS. Parent has timely 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 since October 1,
1995 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 5.17 NO OMISSIONS OR UNTRUE STATEMENTS. No representation or
warranty made by Parent to the Company in this Agreement, in the 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 in light of the circumstances in which made not misleading as of the
date hereof and as of the Closing Date.
SECTION 5.18 BROKERS AND FINDERS. Except for the fees and expenses
payable to BT Alex. Brown Incorporated, 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.
SECTION 5.19 TAX MATTERS. The representations set forth in the form of
Tax Matters Certificate of Parent, in substantially the form set forth in
Exhibit III hereto (the "Parent Tax Matters Certificate"), are true and correct
in all respects, and such representations are hereby incorporated herein by
reference with the same effect as if set forth herein in their entirety.
SECTION 5.20 PROPERTIES. Except as set forth in Section 5.20 of the
Parent Disclosure Schedule, Parent and each Parent Subsidiary has good and
marketable title to all of the assets and properties which they purport to own
as reflected on the most recent balance sheet comprising a portion of Parent
Financial Statements, or thereafter acquired (except assets and properties sold
or otherwise disposed of since the date of such balance sheet in the ordinary
course of business). Parent and each Parent Subsidiary has a valid leasehold
interest in all properties of which it is the lessee and each such lease is
valid, binding and enforceable against the Parent or a Parent Subsidiary, as
applicable, and, to the knowledge of Parent, the other parties thereto in
accordance with its terms, subject to the Bankruptcy Exception. Neither Parent
nor any
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Parent Subsidiary nor to the knowledge of Parent, 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 Parent or any Parent
Subsidiary 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 Parent, has
any such condemnation, expropriation or taking been proposed. Except as set
forth in the Parent Disclosure Schedule, none of the material assets of Parent
or any Parent Subsidiary is subject to any restriction which would prevent
continuation of the use currently made thereof or materially adversely affect
the value thereof.
SECTION 5.21 BOOKS, RECORDS AND ACCOUNTS. Parent's books, records and
accounts fairly and accurately reflect in all material respects 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
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 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 5.22 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 5.23 ABSENCE OF INTENTION. Parent has no present intention to
cause the Company, following the Effective Time, to take any action which would
require notice to employees under the Worker Adjustment and Retraining
Notification Act.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.1 CONDUCT OF BUSINESS PRIOR TO EFFECTIVE TIME. Each of Parent
(for itself and the Subsidiary) and the Company (which for the purpose of this
Section 6.1 shall be deemed to include the Company and the Company Subsidiaries)
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hereby covenants and agrees to do the following, from and after the date of this
Agreement and until the Effective Time, except as otherwise specifically
consented to in writing by the other or as specifically contemplated hereby:
(a) not amend or propose to amend its Certificate of Incorporation or By-
Laws;
(b) conduct its business in the ordinary and usual course of business and
consistent with past practice (which in the case of Parent shall be deemed to
include business acquisitions in addition to the Merger);
(c) not (i) split, combine or reclassify its outstanding capital stock or
declare, set aside or pay any dividend or distribution payable in cash, stock,
property or otherwise, (ii) spin-off any assets or businesses, (iii) engage in
any transaction for the purpose of effecting a recapitalization, or (iv) engage
in any transaction or series of related transactions which has a similar effect
to any of the foregoing; and
(d) use all reasonable efforts to preserve intact its business organization
and goodwill, keep available the services of its present officers and key
employees, and preserve the goodwill and business relationships with suppliers,
distributors, customers, and others having business relationships with it, and
not engage in any action, directly or indirectly, with the intent to impact
adversely the transactions contemplated by this Agreement.
SECTION 6.2 ADDITIONAL COVENANTS OF THE COMPANY. The Company hereby
covenants and agrees to do the following, from and after the date of this
Agreement and until the Effective Time, except as otherwise specifically
consented to in writing by Parent or as specifically contemplated hereby:
(a) comply with the terms of the Management Agreement referred to in
Section 6.4;
(b) not incur or become contingently liable with respect to any
indebtedness for borrowed money, except in the ordinary course of business and
pursuant to the revolving credit arrangements referred to in Section 4.6(a) of
the Company Disclosure Schedule or any successor arrangements thereto, or
pursuant to the potential indebtedness to Silicon Valley Bank disclosed in the
Company Disclosure Schedule;
(c) not enter into or amend in any respect any employment, severance, or
special pay arrangement with respect to termination of employment or other
similar material arrangements or agreements with any directors, officers or key
employees;
(d) not increase the rate of remuneration payable to any of its directors
or officers, or, except in the ordinary course of business and consistent with
past practices or as required by existing contractual arrangements, to any other
employees or other representatives, or agree to do so;
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(e) not adopt, enter into or amend any bonus, profit sharing, compensation,
stock option, pension, retirement, deferred compensation, health care,
employment or other employee benefit plan, agreement, trust, fund or arrangement
for the benefit or welfare of any employee or retiree, except as required to
comply with changes in applicable law;
(f) use its best efforts to maintain in force the insurance coverage
described in Section 4.11 of the Company Disclosure Schedule;
(g) not issue, sell, pledge or dispose of, or agree to issue, sell pledge
or dispose of, any additional shares of, or any options, warrants or rights of
any kind to acquire any shares of its capital stock of any class or any debt or
equity securities convertible into or exchangeable for such capital stock or
amend or modify the terms and conditions of any of the foregoing, except that it
may issue shares of Company Common Stock upon conversion of preferred stock of
the Company and upon exercise of outstanding Company Purchase Rights referred to
in Section 4.2 of the Company Disclosure Schedule; and
(h) not (i) redeem, purchase, acquire or offer to purchase or acquire any
shares of its capital stock, other than as required by the governing terms of
such securities, (ii) take any action (either before or after the Effective
Time) which would jeopardize the treatment of the Merger as a "reorganization"
within the meaning of Section 368(a) of the Code or as a "pooling of interests"
for accounting purposes, (iii) take or fail to take any action which action or
failure to take action would cause the Company or its stockholders (except to
the extent that any stockholders receive cash in lieu of fractional shares) to
recognize gain or loss for federal income tax purposes as a result of the
consummation of the Merger, (iv) make any acquisition of any material assets
(except in the ordinary course of business and consistent with past practices),
(v) sell any material assets (except in the ordinary course of business and
consistent with past practices), or (vi) enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
SECTION 6.3 NO SOLICITATION. The Company agrees that, prior to the
Effective Time or the termination or abandonment of this Agreement, the Company
and the Company Subsidiaries shall not give authorization or permission to any
of their respective directors, officers, employees, agents or representatives
to, and each shall use all reasonable efforts to see that such persons do not,
directly or indirectly, solicit, initiate, facilitate or encourage (including by
way of furnishing or disclosing information) any merger, consolidation, other
business combination involving the Company or any Company Subsidiary,
acquisition of all or any substantial portion of the assets or capital stock of
the Company or of the assets of any division or Subsidiary of the Company, or
inquiries or proposals concerning or which may reasonably be expected to lead
to, any of the foregoing (an "Acquisition Transaction") or negotiate, explore or
otherwise knowingly communicate in any way with any third party (other than
Parent or its affiliates) with respect to any Acquisition Transaction or enter
into any agreement, arrangement or understanding requiring it to abandon,
terminate or fail to consummate
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the Merger or any other transactions expressly contemplated by this Agreement,
or contemplated to be a material part thereof. The Company shall advise Parent
in writing of any bona fide inquiries or proposals relating to an Acquisition
---- ----
Transaction, within one business day following the Company's receipt of any such
inquiry or proposal. The Company shall also promptly advise any person seeking
an Acquisition Transaction that it is bound by the provisions of this Section,
but without identifying Parent.
SECTION 6.4 MANAGEMENT AGREEMENT. Between the date of this Agreement
and the Effective Time, Parent shall provide operating assistance to the
business of the Company in accordance with the terms of the Management Agreement
between the Company and Parent entered into contemporaneously with the execution
and delivery of this Agreement (the "Management Agreement").
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1 FURNISHING OF INFORMATION. Each of Parent and the Company
throughout the period prior to the Effective Time shall furnish to the other
promptly (a) a copy of each report, schedule and other document filed or
received by it during such period pursuant to the requirements of federal or
state securities laws or filed by it during such period with the SEC in
connection with the transactions contemplated by this Agreement (in case of
Parent) or which may have a material effect on its business, properties or
personnel and those of its Subsidiaries and (b) such other information
concerning its business, properties and personnel and those of its Subsidiaries
as the other shall reasonably request; provided, however, that, no furnishing of
information pursuant to this Section 7.1 (other than pursuant to Section 1.3)
shall affect any representation or warranty made herein or the conditions to the
obligations of the respective parties to consummate the Merger. All non-public
documents and information furnished to Parent or to the Company, as the case may
be, in connection with the transactions contemplated by this Agreement shall be
deemed to have been received pursuant to and shall be subject to the provisions
of the respective confidentiality and non-disclosure agreements heretofore
entered into between Parent and the Company (collectively, the "Confidentiality
Agreement"), except that Parent and the Company may disclose such information as
may be necessary in connection with seeking the Required Statutory Approvals,
the Required Approvals and the Company Stockholders' Approval. The Company shall
promptly advise Parent, and Parent shall promptly advise the Company, in
writing, of any change or the occurrence of any event after the date of this
Agreement having, or which, insofar as can reasonably be foreseen, in the future
may have, any Material Adverse Effect on the Company or Parent, as the case may
be.
SECTION 7.2 STOCKHOLDER APPROVAL. The Company shall use all reasonable
efforts to obtain stockholder approval and adoption (the "Company Stockholders'
Approval") of this Agreement and the transactions contemplated hereby
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by required class and series vote at a special meeting of its stockholders duly
convened or by other permissible means (the "Meeting") as soon as practicable
following the date of execution of this Agreement. Subject to the fiduciary
duties of the Board of Directors of the Company under applicable law, the
Company's Board of Directors shall recommend to the holders of Company Common
Stock approval of this Agreement and the transactions contemplated by this
Agreement. Parent, in its capacity as the sole stockholder of Subsidiary, has
approved and adopted this Agreement and the transactions contemplated by this
Agreement upon its execution hereof.
SECTION 7.3 NASDAQ NATIONAL MARKET. Parent shall use its reasonable
best efforts to effect, at or before the Effective Time, authorization for
listing on the NASDAQ National Market, upon official notice of issuance, of the
shares of Parent Common Stock to be issued upon consummation of the Merger and
as a result of the assumption of the Company Purchase Rights.
SECTION 7.4 UNDERTAKING OF PARENT PRIOR TO EFFECTIVE TIME. The Parent
(for itself and the Subsidiary) hereby covenants and agrees as follows, from and
after the date of this Agreement and until the Effective Time, except as
otherwise specifically consented to in writing by the Company, that it shall not
(i) redeem, purchase, acquire or offer to purchase or acquire any shares of its
capital stock, other than as required by the governing terms of such securities,
(ii) take any action (either before or after the Effective Time) which would
jeopardize the treatment of the Merger as a "reorganization" within the meaning
of Section 368(a) of the Code or as a "pooling of interests" for accounting
purposes, (iii) take or fail to take any action which action or failure to take
action would cause the Company or its stockholders (except to the extent that
any stockholders receive cash in lieu of fractional shares) to recognize gain or
loss for federal income tax purposes as a result of the consummation of the
Merger, or (iv) enter into any contract, agreement, commitment or arrangement to
do any of the foregoing;
SECTION 7.5 AGREEMENT TO COOPERATE. Subject to the terms and conditions
herein provided, each of the parties hereto shall cooperate and use their
respective reasonable best efforts to take, or cause to be taken, all action and
to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including using its reasonable best
efforts to obtain all necessary or appropriate waivers, consents and approvals
(including, without limitation, any required under the HSR Act including request
for early termination of waiting periods under the HSR Act), to effect all
necessary registrations, filings and submissions and to lift any injunction or
other legal bar to the Merger (and, in such case, to proceed with the Merger as
expeditiously as possible), subject, however, to obtaining the Required
Approvals and the Required Statutory Approvals and the Company Stockholders'
Approval; and provided, that nothing in this Section 7.5 shall affect any
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responsibility or obligation specifically allocated to any party in this
Agreement.
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SECTION 7.6 PUBLIC STATEMENTS. The parties shall consult with each other
prior to issuing any press release or making any written public statement with
respect to this Agreement or the transactions contemplated hereby and shall not
issue any such press release or written public statement prior to such
consultation, except that prior review and approval shall not be required if, in
the reasonable judgment of the party seeking to issue such release or make such
public statement, prior review and approval would prevent the timely
dissemination of such release or statement in violation of applicable law, rule,
regulation or policy of the NASDAQ National Market, as the case may be.
SECTION 7.7 AGREEMENTS OF AFFILIATES. Within seven (7) days after the
date of this Agreement, each of the Company and Parent shall identify in a
letter to the other, after consultation with its outside counsel, all Persons
who it believes may be deemed to be "affiliates" of it (and/or, in the case of
Parent, of Subsidiary), as that term, in the case of the Company, is (i) defined
for purposes of paragraphs (c) and (d) of Rule 145 under the Securities Act or
(ii) used in and for purposes of Accounting Series, Releases 130 and 135, as
amended, of the Securities and Exchange Commission ("SEC"), and in the case of
Parent and Subsidiary, is used in and for purposes of Accounting Series Releases
130 and 135, as amended, of the SEC. Each of the Company and Parent shall use
its reasonable best efforts to cause each Person who is so identified by it as a
possible Affiliate, to deliver to it prior to the Closing Date, an executed copy
of an Affiliate's Agreement substantially in the form of the attached Exhibit
IV-1 or IV-2, as applicable (each an "Affiliate's Agreement"), and shall
promptly provide a copy of each such Affiliate's Agreement to the other. Prior
to the Closing Date, each of the Company and Parent shall amend and supplement
its letter referred to above and shall use all reasonable efforts to cause each
additional person who is identified therein as a possible Affiliate to execute
and deliver a copy of the applicable Affiliate's Agreement in accordance with
the foregoing.
SECTION 7.8 ASSURANCES RELATING TO TAX MATTERS CERTIFICATE. Each of
Parent and the Company shall use all reasonable efforts to obtain, as promptly
as is practicable following the date hereof and in any event prior to the
Effective Time, such oral or written assurances as it reasonably deems
sufficient to enable it to execute and deliver to the other a certificate
substantially in the form of that attached as an exhibit to the tax matters
opinion of the other party's tax counsel referred to in Sections 8.2(e) and
8.3(f) hereof.
SECTION 7.9 DISCLOSURE SUPPLEMENTS. From time to time prior to the
Effective Time, and in any event immediately prior to the Effective Time, each
of Parent and the Company shall promptly supplement or amend its Disclosure
Schedule with respect to any matter hereafter arising that, if existing,
occurring, or known at the date of this Agreement, would have been required to
be set forth or described in such Disclosure Schedule or that is necessary to
correct any information in such Disclosure Schedule that is or has become
inaccurate in any material respect.
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SECTION 7.10 SATISFACTION OF CONDITIONS PRECEDENT. Each of the parties
shall use its reasonable best efforts to cause the satisfaction on or before
December 31, 1997, of the conditions precedent contained in Article VIII of this
Agreement that impose obligations on it or require action on its part or on the
part of any of its stockholders or Affiliates.
SECTION 7.11 FILING OF FORM S-3 REGISTRATION STATEMENT. Parent covenants
that, within 10 business days following the Effective Time, it shall prepare and
file with the SEC a registration statement under the Securities Act covering
resales of the Parent Common Stock, issued pursuant to Section 3.1(a) and the
shares of Company Common Stock issuable upon exercise of the common stock
purchase warrants owned by Harold Baldauf and thereafter use its reasonable best
efforts to have such registration statement declared effective as promptly as is
practicable after filing, all in accordance with the procedures set forth in
Schedule 7.11 attached hereto and forming a part hereof. Parent agrees to be
bound by the provisions of Schedule 7.11 hereto. Parent is currently eligible
to use a registration statement on Form S-3 for the purposes set forth in
Schedule 7.11 and shall use such form (or other eligible form) to register such
Parent Common Stock.
SECTION 7.12 FILING OF FORM S-8 REGISTRATION STATEMENT. Parent covenants
that, within 10 business days following the Effective Time, it shall prepare and
file with the SEC a registration statement on Form S-8 for the shares of Parent
Common Stock issuable with respect to the assumed Company Purchase Rights (other
than the common stock purchase warrants owned by Harold Baldauf and any other
Company Purchase Rights not eligible for a registration statement on Form S-8,
provided that the same shall be registered pursuant to Section 7.11 in such
case). Parent further agrees to keep such registration statement current for so
long as the Company Purchase Rights remain outstanding.
SECTION 7.13 CONTINUING DIRECTOR AND OFFICER INDEMNIFICATION. Parent
will indemnify, hold harmless and reimburse expenses (including in advance), for
a period of six years following the Effective Time (the "Indemnification
Period"), the directors and officers of the Company from and against any and all
liabilities, fines, penalties, losses, costs and expenses that any such director
or officer may incur by reason of his service as a director or officer of the
Company prior to the Effective Time including with respect to this Agreement and
the transactions contemplated hereby to the same extent as the Company shall
have agreed to indemnify and reimburse expenses such directors and officers as
of the date of this Agreement pursuant to the Company's Bylaws or otherwise. In
connection with the foregoing, Parent will maintain the separate existence of
the Company as a subsidiary of Parent for the duration of the Indemnification
Period; provided, that in the event Parent shall sell, liquidate, combine or
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reorganize the Company at any time during the Indemnification Period, adequate
provision shall be made as a condition thereto to ensure that the rights of such
directors and officers pursuant to this Section 7.13 are preserved for the then
remaining duration of the Indemnification Period. During the Indemnification
Period, Parent, to the extent
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it maintains directors' and officers' liability insurance, shall use its
reasonable best efforts to include the aforesaid officers and directors of the
Company as additional covered persons (assuming that such coverage is available
at commercially reasonable rates).
ARTICLE VIII
CONDITIONS
SECTION 8.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions:
(a) The Company shall have obtained the Company Stockholders' Approval and
holders of no more than the greater of (i) five percent (5%) or (ii) the maximum
permitted to achieve pooling treatment, of the aggregate outstanding shares of
Company Common Stock and Preferred Stock on an as converted basis shall have
perfected dissenters' rights in accordance with the provisions of Section 262(a)
and (d) of the DGCL ("Shareholder Approval Condition");
(b) No preliminary or permanent injunction or other order or decree by any
federal or state court which prevents the consummation of the Merger shall have
been issued and remain in effect (each party agreeing to use its reasonable
efforts to have any such injunction, order or decree lifted and no governmental
challenge shall have been made and be continuing);
(c) No action shall have been taken, and no statute, rule or regulation
shall have been enacted, by any state or federal government or governmental
agency in the United States which would prevent the consummation of the Merger;
(d) All governmental and third party consents, orders and approvals legally
required for the consummation of the Merger and the transactions contemplated
hereby (including without limitation all Required Statutory Approvals, the
Lenders Consent and Required Approvals but excluding those approvals or orders
contemplated by Sections 7.11 and 7.12) shall have been obtained and be in
effect at the Effective Time without any material limitations or conditions; and
(e) All waiting times and conditions applicable to the Merger under the HSR
Act shall have expired and been satisfied.
SECTION 8.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY TO EFFECT THE
MERGER. Unless waived in writing by the Company, the obligation of the Company
to effect the Merger shall be subject to the fulfillment at or prior to the
Closing Date of the following additional conditions:
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(a) Parent and the Subsidiary shall have performed in all material respects
their agreements contained in this Agreement required to be performed on or
prior to the Closing Date and the representations and warranties of Parent and
the Subsidiary contained in this Agreement (without regard to any materiality
exceptions or provisions therein) shall be true and correct in all respects on
and as of (i) the date made and (ii) the Closing Date (except for those
variations, changes and inaccuracies which, taken as a whole, do not result in a
Material Adverse Effect with respect to Parent); and the Company shall have
received a certificate of the Chairman of the Board and the President or a Vice
President of Parent to that effect;
(b) The Company shall have received an opinion from Cooperman Levitt
Winikoff Lester & Newman, P.C., counsel to Parent and Subsidiary, dated the
Closing Date, substantially in the form set forth in Exhibit V hereto;
(c) All of the shares of Parent Common Stock to be issued to the Company's
stockholders pursuant to this Agreement and such other shares required to be
reserved for issuance in connection with the Merger shall have been authorized
for listing on the NASDAQ National Market upon official notice of issuance; and
(d) The Company shall have received an opinion of Snell & Wilmer, dated the
Effective Time, to the effect that (i) the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section 368(a) of
the Code; (ii) each of Parent, Subsidiary and the Company will be a party to the
reorganization within the meaning of Section 368(b) of the Code, (iii) no gain
or loss will be recognized by the Company as a result of the Merger, and (iv) no
gain or loss will be recognized by a stockholder of the Company as a result of
the Merger with respect to Company Common Stock converted solely into Parent
Common Stock. In rendering such opinion, Snell & Wilmer may receive and rely
upon representations contained in certificates of Parent, Subsidiary and the
Company, including the Company Tax Matters Certificate and the Parent Tax
Matters Certificate.
(e) The Company shall have received from Parent an executed original of the
Parent Tax Matters Certificate;
(f) If required by the Company, the Company shall have received an opinion
of Paine Webber, or another nationally recognized investment banking firm, that
the Exchange Ratio is fair, from a financial point of view, to the Company's
stockholders; and
(g) The Company shall have received an opinion from Deloitte & Touche LLP,
independent public accountants for Parent, dated the Closing Date, addressed to
the Company, and supported by a customary letter by Arthur Andersen LLP,
independent public accountants for the Company, each in form and substance
reasonably satisfactory to the Company, stating that the Merger will qualify as
a "pooling of interests" transaction under GAAP;
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(h) All proceedings in connection with the Merger and the other
transactions contemplated by this Agreement and all agreements, instruments,
certificates and other documents delivered to the Company by or on behalf of the
Parent pursuant to this Agreement shall be reasonably satisfactory to the
Company and its counsel.
SECTION 8.3 CONDITIONS TO OBLIGATIONS OF PARENT AND SUBSIDIARY TO EFFECT
THE MERGER. Unless waived in writing by Parent, the obligations of Parent and
Subsidiary to effect the Merger shall be subject to the fulfillment at or prior
to the Closing Date of the additional following conditions:
(a) The Company shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or prior to
the Closing Date and the representations and warranties of the Company contained
in this Agreement (without regard to any materiality exceptions or provisos
therein) shall be true and correct in all material respects on and as of (i) the
date made and (ii) the Closing Date (except for those variations, changes and
inaccuracies which, taken as a whole, do not result in a Material Adverse Effect
with respect to the Company); and Parent shall have received a Certificate of
the President or of a Vice President of the Company to that effect;
(b) Parent shall have received an opinion from Snell & Wilmer, counsel to
the Company, dated the Closing Date, substantially in the form set forth in
Exhibit VI hereto;
(c) Parent shall have received an opinion from Deloitte & Touche LLP,
independent public accountants for Parent, dated the Closing Date, addressed to
Parent, and supported by a customary letter by Arthur Andersen LLP, independent
public accountants for the Company, each in form and substance reasonably
satisfactory to Parent, stating that the Merger will qualify as a "pooling of
interests" transaction under GAAP;
(d) Parent shall have received an opinion of Cooperman Levitt Winikoff
Lester & Newman, P.C., dated the Effective Time, to the effect that (i) the
Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code; (ii) each of Parent,
Subsidiary and the Company will be a party to the reorganization within the
meaning of Section 368(b) of the Code; (iii) no gain or loss will be recognized
by the Company, Parent or Subsidiary as a result of the Merger, and (iv) no gain
or loss will be recognized by a stockholder of the Company as a result of the
Merger with respect to Company Common Stock converted solely into Parent Common
Stock. In rendering such opinion, Cooperman Levitt Winikoff Lester & Newman may
receive and rely upon representations contained in certificates of Parent,
Subsidiary and the Company, including the Company Tax Matters Certificate and
the Parent Tax Matters Certificate, respectively;
(e) Parent shall have received all of the Affiliate's Agreements
contemplated by Section 7.9 to have been received by it;
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(f) Parent shall have received from the Company an executed original of the
Company Tax Matters Certificate;
(g) Parent shall have received an opinion of BT Alex. Brown, or another
nationally recognized investment banking firm, dated as of the Closing Date,
that the Exchange Ratio is fair, from a financial point of view, to Parent's
public stockholders;
(h) All shareholder or similar agreements regarding the voting, holding or
granting of registration rights with respect to shares of capital stock of the
Company shall have been terminated, and evidence of termination satisfactory to
Parent shall have been delivered to Parent to the extent of any agreement in
which termination is not automatically provided for therein in the event of the
consummation of the Merger;
(i) All proceedings in connection with the Merger and the other
transactions contemplated by this Agreement and all agreements, instruments,
certificates, and other documents delivered to Parent by or on behalf of the
Company pursuant to this Agreement shall be reasonably satisfactory to Parent
and its counsel.
ARTICLE IX
TERMINATION AND ABANDONMENT
SECTION 9.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing Date, whether before or after approval by the stockholders
of the Company:
(a) by mutual written consent of the Boards of Directors of Parent and the
Company;
(b) unilaterally by Parent in the event of the Company's material breach
when made of any material representation or warranty of the Company
contained in this Agreement, or the Company's willful failure to comply
with or satisfy any material covenant or condition of the Company contained
in this Agreement in each case which is not cured within 30 days of written
notice to the Company of the breach, or if the Shareholder Approval
Condition is not met or in the event of a Material Adverse Effect with
respect to the Company (including, without limitation, the determination of
the occurrence of a Material Adverse Effect in the manner contemplated by
Section 1.3);
(c) unilaterally by the Company in the event of Parent's material breach
when made of any material representation or warranty contained in this
Agreement, or the willful failure of Parent or the Subsidiary to comply
with or satisfy any material covenant or condition contained in this
Agreement
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in each case which is not cured within 30 days of written notice to Parent
of the breach, or in the event of a Material Adverse Effect with respect to
Parent or in the event the Shareholder Approval Condition is not met;
(d) unilaterally by either Parent or the Company if the Merger is not
consummated for any reason not specified or referred to in the preceding
provisions of this Section 9.1 by the close of business on December 31,
1997 which date may be extended by mutual consent of the parties, provided,
however, that the party seeking to terminate this Agreement pursuant to
this Section 9.1(d) shall not have breached in any material respect its
obligations under this Agreement in any manner that shall have been the
cause of, or shall have resulted in, the failure to consummate the Merger
on or before such date; and
(e) unilaterally by either Parent or the Company if a Governmental
Authority shall have issued an order, decree or ruling or taken any other
action, in any case having the effect of permanently restraining, enjoining
or otherwise prohibiting the Merger, which order, decree or ruling is final
and non-appealable.
SECTION 9.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Parent or the Company as provided in Section 9.1, this
Agreement shall forthwith become void and there shall be no further obligation
on the part of any of the Company, Parent or Subsidiary except as set forth in
this Section 9.2, the penultimate sentence of Section 7.1 (with respect to
confidential and non-public information), and Sections 9.1 and 9.5, which shall
survive such termination. Nothing in this Section 9.2 shall relieve any party
from liability for any breach of this Agreement.
SECTION 9.3 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto and in
compliance with applicable law.
SECTION 9.4 WAIVER. At any time prior to the Effective Time, any party
hereto may (i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
SECTION 9.5 EXPENSES. Except as otherwise provided in Section 6.3,
whether or not the Merger is consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.
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ARTICLE X
MISCELLANEOUS
SECTION 10.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
respective representations, warranties, obligations, agreements, and promises of
the parties contained in this Agreement and in any schedule, certificate, or
other document delivered pursuant to this Agreement, other than those agreements
that by their terms are to be performed or otherwise are to apply after the
Effective Time (including without limitation the agreements set forth in
Sections 7.4, 7.11, 7.12 and 7.13 herein), shall terminate as of, and shall not
survive, the Effective Time.
SECTION 10.2 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 parties. 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 except
with respect to the tax matters provision set forth in Section 7.4 and the
indemnification and registration provisions of Sections 7.11, 7.12 and 7.13.
SECTION 10.3 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 confirmation of receipt), (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: Pat V. Costa, President
Fax No.: (516) 273-6055
With a copy to:
Cooperman Levitt Winikoff Lester & Newman, P.C.
800 Third Avenue
New York, New York 10022
Attn: Ira I. Roxland, Esq.
Fax No.: (212) 755-2839
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(b) To the Company:
Vanguard Automation, Inc.
10900 N. Stallard Place
Tucson, Arizona 85737
Attn: Devin F. Hosea, Acting President
Fax No.: (520) 297-1706
With a copy to:
Snell & Wilmer
One Arizona Center
400 E. Van Buren Street
Phoenix, Arizona 85004-0001
Attn: Steven D. Pidgeon, Esq.
Fax No.: (602) 382-6070
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 10.4 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 except that the
effectiveness of the Merger and the rights of shareholders of the Company upon
effectiveness of the Merger shall be governed by the DGCL.
SECTION 10.5 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 10.6 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 10.7 ENTIRE AGREEMENT. This Agreement, including the Exhibits,
Schedule and Disclosure Schedules attached hereto and the documents and
instruments
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referred to herein or delivered pursuant hereto, and the Confidentiality
Agreement, 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, and cannot be amended or changed except in writing, signed by the
parties.
SECTION 10.8 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 10.9 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 Bilodeau
-------------------------------------------
Name: Steven Bilodeau
Title: Executive Vice President
RVSI SOUTHWEST ACQUISITION CORP.
By:/s/Steven Bilodeau
----------------------------------------------
Name: Steven Bilodeau
Title: President
VANGUARD AUTOMATION, INC.
By:Devin F. Hosean
----------------------------------------------
Name: Devin F. Hosea
Title: President
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