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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
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SCHEDULE 13D
Under the Securities Exchange Act of 1934
ADVANCED MACHINE VISION CORPORATION
(Name of issuer)
Class A Common Stock, No Par Value
----------------------------------
(Title of class of securities)
00753B104
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(CUSIP number)
Steven H. Shapiro
FMC Corporation
200 East Randolph Drive
Chicago, Illinois 60601
(312) 861-6783
with a copy to:
Laura L. Gabriel
Latham & Watkins
505 Montgomery Street, Suite 1900
San Francisco, CA 94111
(415) 391-0600
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(Name, address and telephone number
of person authorized to receive
notices and communications)
October 15, 1998
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(Date of event which requires filing
of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
statement because of Rule 13d-1(b)(3) or (4), check the following box: [ ]
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SCHEDULE 13D
CUSIP No. 00753B104
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1. Name of Reporting Person
FMC Corporation
2. Check the Appropriate Box if a Member of a Group (a) [ ]
(b) [ ]
3. SEC Use Only
4. Source of Funds
WC
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
Delaware
7. Sole Voting Power
2,789,342 (Constituting 1,191,060 shares of Class A
Common Stock issuable upon Conversion of Series B
Preferred Stock and 1,598,282 shares of Class A
Common Stock issuable upon exercise of an option.)
Number of 8. Shared Voting Power
Shares -0-
Beneficially
Owned By 9. Sole Dispositive Power
Each 2,789,342 (Constituting 1,191,060 shares of Class
Reporting A Common Stock issuable upon Conversion of Series
Person B Preferred Stock and 1,598,282 shares of Class A
With Common Stock issuable upon exercise of an option.)
10. Shared Dispositive Power
-0-
11. Aggregate Amount Beneficially Owned by Each Reporting Person
2,789,342
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares [ ]
13. Percent of Class Represented by Amount in Row (11)
26%
14. Type of Reporting Person
CO
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ITEM 1. SECURITY AND ISSUER
This statement relates to the Class A Common Stock, no par value per share
(the "Class A Common Stock"), of Advanced Machine Vision Corporation, a
California corporation (the "Issuer"). The principal executive offices of the
Issuer are located at 2067 Commerce Drive, Medford, Oregon 97504.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(e). This Schedule 13D is being filed by FMC Corporation, a Delaware
corporation ("FMC"). The address of FMC's principal business and principal
office is 200 East Randolph Drive, Chicago, Illinois 60601. The principal
business of FMC is the manufacture and sale of chemicals and machinery for
industry and agriculture.
During the last five years, FMC has not (i) been convicted in a criminal
proceeding or (ii) been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, Federal or
State securities laws or finding any violation with respect to such laws.
The following sets forth as to each executive officer and director of FMC:
(a) name; (b) residence or business address; (c) present principal occupation or
employment and the name, principal business and address of any corporation or
other organization in which such employment is conducted; (d) whether or not,
during the last five years, the person has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors); (e) whether
or not, during the last five years, the person was a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, Federal or State securities laws or finding any violation with respect to
such laws; and (f) citizenship.
1. (a) Robert N. Burt - executive officer and director
(b) 200 East Randolph Drive, Chicago, Illinois 60601
(c) Chairman of the Board and Chief Executive Officer of FMC
(d) No
(e) No
(f) United States of America
2. (a) Larry D. Brady - executive officer
(b) 200 East Randolph Drive, Chicago, Illinois 60601
(c) President and director of FMC
(d) No
(e) No
(f) United States of America
3. (a) Michael J. Callahan - executive officer
(b) 200 East Randolph Drive, Chicago, Illinois 60601
(c) Executive Vice President and Chief Financial Officer
(d) No
(e) No
(f) United States of America
4. (a) William J. Kirby - executive officer
(b) 200 East Randolph Drive, Chicago, Illinois 60601
(c) Senior Vice President and Vice President-Administration
(d) No
(e) No
(f) United States of America
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5. (a) J. Paul McGrath - executive officer
(b) 200 East Randolph Drive, Chicago, Illinois 60601
(c) Senior Vice President, General Counsel and Corporate Secretary
(d) No
(e) No
(f) United States of America
6. (a) Charles H. Cannon, Jr. - executive officer
(b) 200 East Randolph Drive, Chicago, Illinois 60601
(c) Vice President and Group Manager of FMC Food Tech, a division of FMC
(d) No
(e) No
(f) United States of America
7. (a) W. Kim Foster - executive officer
(b) 200 East Randolph Drive, Chicago, Illinois 60601
(c) Vice President and General Manager-Agricultural Products Group of FMC
(d) No
(e) No
(f) United States of America
8. (a) Robert I. Harries - executive officer
(b) 200 East Randolph Drive, Chicago, Illinois 60601
(c) Vice President and Group Manager-Chemical Products Group of FMC
(d) No
(e) No
(f) United States of America
10. (a) Henry Kahn - executive officer
(b) 200 East Randolph Drive, Chicago, Illinois 60601
(c) Vice President and Treasurer of FMC
(d) No
(e) No
(f) United States of America
11. (a) Ronald D. Mambu - executive officer
(b) 200 East Randolph Drive, Chicago, Illinois 60601
(c) Vice President and Controller of FMC
(d) No
(e) No
(f) United States of America
12. (a) James A. McClung - executive officer
(b) 200 East Randolph Drive, Chicago, Illinois 60601
(c) Vice President-Worldwide Marketing of FMC
(d) No
(e) No
(f) United States of America
13. (a) Joseph H. Netherland - executive officer
(b) 200 East Randolph Drive, Chicago, Illinois 60601
(c) Executive Vice President of FMC
(d) No
(e) No
(f) United States of America
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14. (a) William H. Schumann - executive officer
(b) 200 East Randolph Drive, Chicago, Illinois 60601
(c) Vice President-Corporate Development of FMC
(d) No
(e) No
(f) United States of America
15. (a) William J. Wheeler - executive officer
(b) 200 East Randolph Drive, Chicago, Illinois 60601
(c) Vice President of FMC
(d) No
(e) No
(f) United States of America
16. (a) William G. Walter - executive officer
(b) 200 East Randolph Drive, Chicago, Illinois 60601
(c) Vice President and General Manager-Specialty Chemicals Group of FMC
(d) No
(e) No
(f) United States of America
17. (a) B.A. Bridgewater, Jr. - director
(b) Brown Group, Inc., 8300 Maryland Avenue, St. Louis, MO 63105
(c) Chairman of the Board, President and Chief Executive Officer of Brown
Group, Inc., a diversified marketer and retailer of footwear, 8300
Maryland Avenue, St. Louis, MO 63105
(d) No
(e) No
(f) United States of America
18. (a) Paul L. Davies, Jr. - director
(b) Lakeside Corporation, 50 Fremont St., Suite 3520, San Francisco, CA
94105
(c) President of Lakeside Corporation, a real estate investment company,
50 Fremont St., Suite 3520, San Francisco, CA 94105
(d) No
(e) No
(f) United States of America
19. (a) William F. Reilly - director
(b) PRIMEDIA Inc., 745 Fifth Avenue, Fl 23, New York, NY 10151
(c) Chairman and Chief Executive Officer of PRIMEDIA Inc., a diversified
media company, 745 Fifth Avenue, Fl 23, New York, NY 10151
(d) No
(e) No
(f) United States of America
20. (a) James R. Thompson - director
(b) Winston & Strawn, 35 West Wacker Drive, Chicago, Illinois 60601
(c) Chairman, Chairman of the Executive Committee and Partner of Law Firm
of Winston & Strawn, 35 West Wacker Drive, Chicago, Illinois 60601
(d) No
(e) No
(f) United States of America
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21. (a) Jean A. Francois-Poncet - director
(b) President de la Commission des Affairs Economique et du Plan
Le Senat, 15, rue de Vaugirard, 75006 Paris, France
(c) Member of the French Senate. President de la Commission des Affairs
Economique et du Plan Le Senat, 15, rue de Vaugirard, 75006 Paris,
France
(d) No
(e) No
(f) United States of America
22. (a) General Edward C. Meyer - director
(b) MITRETEK Systems, 7525 Colshire Dr., McLean, VA 22102-7492
(c) Chairman of MITRETEK Systems, an information technology company, 7525
Colshire Dr., McLean, VA 22102-7492. Managing Partner of Cilluffo
Associates, L.P., a private investment group, 181 Pleasant St.,
Portsmouth, NH 03801
(d) No
(e) No
(f) United States of America
23. (a) Edward J. Mooney - director
(b) Nalco Chemical Company, One Nalco Center, Naperville, IL 60563-1198
(c) Chairman and Chief Executive Officer of Nalco Chemical Company, a
specialty chemicals company, One Nalco Center, Naperville, IL 60563-
1198
(d) No
(e) No
(f) United States of America
24. (a) Patricia A. Buffler - director
(b) University of California at Berkeley, 140 Earl Warren Hall, Berkeley,
CA 94720-7360
(c) Dean and Professor of Epidemiology at the University of California,
Berkeley School of Health, 140 Earl Warren Hall, Berkeley, CA 94720-
7360
(d) No
(e) No
(f) United States of America
25. (a) Albert J. Costello - director
(b) W.R. Grace & Co., 1750 Clint Moore Rd., Boca Raton, FL 33487
(c) Chairman, President and Chief Executive Officer of W.R. Grace & Co.,
a supplier of flexible packaging and specialty chemicals, 1750 Clint
Moore Rd., Boca Raton, FL 33487
(d) No
(e) No
(f) United States of America
26. (a) Clayton Yeutter - director
(b) Hogan & Hartson L.L.P., Columbia Square, 555 Thirteenth Street NW,
Washington, D.C. 20004-1109
(c) Of Counsel, Law Firm of Hogan & Hartson L.L.P., Columbia Square, 555
Thirteenth Street NW, Washington, D.C. 20004-1109
(d) No
(e) No
(f) United States of America
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ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The 2,789,342 shares of Class A Common Stock beneficially owned by FMC are
comprised of 1,191,060 shares of Class A Common Stock issuable upon conversion
of 119,106 shares of the Issuer's Series B Preferred Stock, no par value per
share (the "Series B Preferred Stock"), held by FMC and 1,598,282 shares (the
"Option Shares") of Class A Common Stock currently issuable upon exercise of an
option (the "Option") to purchase the number of shares of Class A Common Stock
equal to 15% of the Issuer's outstanding shares of Class A Common Stock at the
time of exercise, subject to adjustment. FMC paid an aggregate of $2,620,332
for the Series B Preferred Stock, the source of which was FMC's general working
capital. Pursuant to the Option Agreement for the Purchase of Class A Common
Stock attached as Exhibit 1 hereto and incorporated herein by reference (the
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"Option Agreement"), FMC has the right to purchase the Option Shares for an
exercise price of the greater of $2.20 and the average closing bid price of a
share of Class A Common Stock for the forty-five (45) days immediately preceding
the day on which FMC sends the Issuer a notice of exercise, subject to
adjustment.
ITEM 4. PURPOSE OF TRANSACTION.
FMC acquired the Series B Preferred Stock and the Option for the purpose of
investing in the Issuer and its technology. FMC currently intends to review its
investment position in the Issuer periodically and, depending on such review and
factors including market conditions and share prices, the Issuer's business
prospects, technology, future developments and applicable legal requirements,
FMC may seek to acquire additional securities of the Issuer from time to time in
the open market or in negotiated transactions. Pursuant to the Series B
Preferred Stock Purchase Agreement entered into as of October 14, 1998 between
the Issuer and FMC, included as Exhibit 2 hereto and incorporated herein by
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reference, and the Certificate of Determination of the Series B Preferred Stock,
included as Exhibit 3 hereto and incorporated herein by reference, FMC has the
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right to elect one (1) of the Issuer's eight (8) directors. This director was
elected effective as of October 15, 1998. Pursuant to a side letter between the
Issuer and FMC dated October 14, 1998, included as Exhibit 4 hereto and
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incorporated herein by reference, if FMC exercises the Option, the Issuer has
agreed to fill a vacancy on its board of directors with one (1) additional
designee chosen by FMC or, if no such vacancy exists, to increase the size of
its board of directors by one (1) in order to create such vacancy. Except as
set forth above, FMC has no present plans or proposals which may be related to
or would result in:
(a) The acquisition by any person of additional securities of the Issuer,
or the disposition of securities of the Issuer;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its subsidiaries;
(c) A sale or transfer of a material amount of assets of the Issuer or any
of its subsidiaries;
(d) Any change in the present board of directors or management of the
Issuer, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the Issuer's board of directors;
(e) Any material change in the present capitalization or dividend policy of
the Issuer;
(f) Any other material change in the Issuer's business or corporate
structure;
(g) Changes in the Issuer's charter, bylaws or instruments corresponding
thereto or other actions which may impede the acquisition of control of the
Issuer by any person;
(h) Causing a class of securities of the Issuer to be delisted from a
national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(i) A class of equity securities of the Issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Act; or
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(j) Any action similar to any of those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
FMC beneficially owns 2,789,342 shares of Class A Common Stock,
constituting 26% of the outstanding shares of the Issuer's Class A Common Stock
as disclosed by the Issuer on Exhibit D to the Purchase Agreement. To the best
knowledge of FMC, none of the other persons listed in Item 2 hereof owns any
securities of the Issuer.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Pursuant to the Certificate of Determination, the Issuer has agreed that so
long as any shares of Series B Preferred Stock remain outstanding, without the
consent of a majority of the outstanding shares of Series B Preferred Stock, it
will not, among other things, (i) increase or decrease the authorized number of
shares of Series B Preferred Stock or create any class or series of shares
having rights, preferences or privileges senior to or on a parity with the
Series B Preferred Stock, (ii) redeem or repurchase or enter into any agreement
for the redemption or repurchase of any shares of its capital stock (with
certain exceptions), (iii) prior to October 14, 2002, merge with any other
entity or enter into any other reorganization, recapitalization, sale of control
or any transaction that results in the transfer of all or substantially all of
the Issuer's assets or (iv) issue or distribute any additional equity securities
other than pursuant to employee stock options or employee stock plans in effect
as of October 14, 1998 and, with the approval of the Issuer's board of
directors, no more than 100,000 shares of Class A Common Stock to unrelated
third parties in any fiscal year. FMC is currently the only holder of the
Issuer's Series B Preferred Stock. Pursuant to the Purchase Agreement, so long
as FMC holds any capital stock of the Issuer, the Issuer has agreed not to take
any of the actions specified in (iii) above prior to October 14, 2002 without
FMC's consent.
Pursuant to the Purchase Agreement, (i) if the Issuer issues additional
shares of capital stock, FMC will have the right to purchase the portion of such
shares necessary for FMC to maintain its percentage interest in the Issuer and
(ii) FMC has given the Issuer a right of first refusal to purchase its shares of
Series B Preferred Stock. Pursuant to a Registration Rights Agreement dated as
of October 14, 1998 by and between the Issuer and FMC, included as Exhibit 5
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hereto and incorporated herein by reference, the Issuer has granted FMC certain
registration rights with respect to the Class A Common Stock issuable upon
conversion of the Series B Preferred Stock and exercise of the Option.
Except as described herein, neither FMC nor, to the best knowledge of FMC,
any of the other persons listed in Item 2 hereof, has entered into any
contracts, arrangements, understandings or relationships with any person with
respect to any securities of the Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 Option Agreement for the Purchase of Class A Common Stock.
Exhibit 2 Series B Preferred Stock Purchase Agreement entered into as of
October 14, 1998 between the Issuer and FMC.
Exhibit 3 Certificate of Determination of the Series B Preferred Stock.
Exhibit 4 Side letter between the Issuer and FMC dated October 14, 1998.
Exhibit 5 Registration Rights Agreement dated as of October 14, 1998 by
and between the Issuer and FMC.
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SIGNATURE
After reasonable inquiry and to the best of the undersigned's knowledge and
belief, the undersigned certify that the information set forth in this statement
is true, complete and correct.
Dated: October 22, 1998 FMC Corporation
By: /s/ Charles H. Cannon, Jr.
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Name: Charles H. Cannon, Jr.
Title: Vice President
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EXHIBIT INDEX
Exhibit 1 Option Agreement for the Purchase of Class A Common Stock.
Exhibit 2 Series B Preferred Stock Purchase Agreement entered into as of
October 14, 1998 between the Issuer and FMC.
Exhibit 3 Certificate of Determination of the Series B Preferred Stock.
Exhibit 4 Side letter between the Issuer and FMC dated October 14, 1998.
Exhibit 5 Registration Rights Agreement dated as of October 14, 1998 by
and between the Issuer and FMC.
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OPTION FOR THE PURCHASE OF
CLASS A COMMON STOCK
OF ADVANCED MACHINE VISION CORPORATION
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THE OPTION (AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
THEREOF) REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE SECURITIES ACT"), AND MAY NOT BE
OFFERED OR SOLD IN THE ABSENCE OF SUCH REGISTRATION OR THE
AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION. THIS OPTION
MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED EXCEPT UPON COMPLIANCE
WITH THE REQUIREMENTS FOR TRANSFER SET FORTH HEREIN.
THIS IS TO CERTIFY THAT, for value received, FMC CORPORATION or its
registered assigns (collectively, the "Holder"), is the registered owner of the
Option set forth above, which entitles the Holder, subject to the terms and
conditions set forth hereinafter, to purchase shares of Class A Common Stock,
without par value ("Common Stock"), of Advanced Machine Vision Corporation, a
California corporation (the "Company"), at a purchase price per share equal to
the "Exercise Price" (as defined below). The number of shares of Common Stock
that may be received upon the exercise of this certificate (this "Option
Certificate") shall be equal to fifteen percent (15%) of the then issued and
outstanding shares of Common Stock of the Company. Each share of Common Stock
issuable upon the exercise of the Option (collectively, the "Option Shares")
when issued and paid for pursuant to the provisions of this Option shall be
validly issued, fully paid and nonassessable, shall be free from all taxes,
liens and charges with respect to the issuance thereof and shall be free of any
preemptive or similar rights.
This Option is the Option issued in connection with the Series B
Preferred Stock Purchase Agreement of even date herewith, between the Company
and the Holder, and other good and valuable consideration (the receipt, adequacy
and sufficiency of which is hereby acknowledged).
The Option is subject to the following terms and provisions:
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Section 1. Exercise of Option.
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(a) Subject to the provisions hereof, the Option evidenced hereby
may be exercised at the discretion of the Holder in whole (but not in part) at
any time on or before October 14, 2003 or, if such day is not a Trading Day (as
defined in Section 14), then on the next succeeding Trading Day, by presentation
and surrender hereof to the Company at its principal place of business (the
"Option Office"), with the Notice of Election to Exercise (the "Exercise
Notice") attached hereto duly executed and accompanied by payment to the Company
of the Exercise Price for the number of Option Shares specified in such Exercise
Notice.
(b) The Exercise Price for each share of Common Stock shall be the
average closing bid price of a share of Common Stock for the forty-five (45)
days immediately preceding the day on which the Exercise Notice is sent or $2.20
(the "Exercise Price", whichever is greater). The Exercise Price set forth in
the preceding sentence is subject to adjustment as set forth in Sections 5
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and 8.
-
(c) Payment of the Exercise Price shall be made in cash or by check,
certified bank check or wire transfer, at the option of the Holder.
(d) Upon receipt by the Company of this Option Certificate at the
Option Office, together with a properly completed Exercise Notice and payment of
the Exercise Price as provided above, the Holder shall be deemed to be the
holder of record of the Option Shares issuable upon such exercise,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such shares shall not then be actually
delivered to the Holder. The Company shall deliver such certificates to the
Holder as promptly as possible thereafter, but in any event within five (5)
Trading Days of receipt of the Exercise Notice. The Company shall pay all
expenses, and any and all United States federal, state and local taxes and other
charges that may be payable in connection with the preparation, issue and
delivery of stock certificates under this Section 1, except that the Company
---------
shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of the Option Shares in a name other
than that of the Holder of the Option evidenced hereby who shall have
surrendered the same in exercise of the subscription right evidenced hereby. If
Option Shares are issued prior to the time that an appropriate registration
statement with respect to the Option Shares has become effective under the
Securities Act, the Option Shares so issued shall have stamped or imprinted
thereon a legend in the form of Exhibit A. Any holder of Option Shares so
---------
legended shall be entitled to have such legend removed, upon surrender of Option
Shares to the Company or the transfer agent for the Common Stock, upon
effectiveness of such a registration statement or upon receipt by the
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Company of an opinion of counsel to the effect that such legend is no longer
required.
(e) Upon any partial exercise of the number of Option Shares to
which this Option Certificate entitles the Holder, there shall be issued to the
Holder hereof a new Option Certificate in respect of the percentage of shares of
Common Stock as to which this Option Certificate shall not have been exercised,
subject to the provisions of Section 3. Such new Option Certificate shall be
identical to this Option Certificate, except as to the percentage of shares of
Common Stock covered thereby.
Section 2. Exchange, Transfer, Assignment or Loss of Option
Certificate; Temporary Option Certificates.
------------------------------------------------
(a) If this Option Certificate shall be mutilated, lost, stolen, or
destroyed, the Company may, in its discretion, issue and deliver in exchange and
substitution for and upon cancellation of the mutilated Option Certificate, or
in lieu of and substitution for the Option Certificate lost, stolen, or
destroyed, a new Option Certificate of like tenor and representing an equivalent
right or interest, but only upon receipt of evidence reasonably satisfactory to
the Company of such loss, theft or destruction and indemnification reasonably
satisfactory to it. An applicant for such a substitute Option Certificate shall
also comply with such other reasonable regulations and pay such other reasonable
charges as the Company may prescribe.
(b) This Option Certificate shall be numbered and shall be
registered in a Option Register maintained by the Company as they are issued.
The registered owner on the Option Register may be treated by the Company and
all other Persons and entities dealing with the Option evidenced hereby as the
absolute owner hereof for any purpose and as the Person entitled to exercise the
right represented hereby, or to the transfer hereof on the books of the Company,
any notice to the contrary notwithstanding and, until such transfer on such
books, the Company may treat the registered owner on the Option Register as the
owner for all purposes. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
registration of transfer of Option Certificates.
(c) This Option Certificate may be subdivided or combined with other
Option Certificates evidencing the same rights as the rights evidenced hereby
and thereby upon presentation and surrender hereof to the Company, together with
a written notice signed by the Holder hereof specifying the denominations in
which new Option Certificates are to be issued. Upon presentation and surrender
of the Option Certificates, together with such written notice, for subdivision
or combination, the Company will issue a new Option Certificate or Certificates,
in the denominations requested, entitling the holders
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thereof to purchase the same aggregate number of shares of Common Stock as the
Option Certificate or Certificates so surrendered. Such new Option Certificates
will be registered in the name of the Holder submitting such request and
delivered to such Holder. The Option Certificate surrendered for subdivision or
combination shall be cancelled promptly upon the issuance of such new Option
Certificate(s). The term "Option Certificate" as used herein includes the Option
Certificate into which this Option Certificate may be subdivided, combined or
exchanged.
Section 3. Fractional Interests.
---------------------
(a) The Company shall not be required to issue fractions of Option
or to issue Option Certificates which evidence fractional Option.
(b) The Company shall not be required to issue fractions of shares
of Common Stock in the exercise of Option. If any fraction of a Option Share
would, except for the provisions of this Section, be issuable on the exercise of
the Option (or specified portion thereof), the Company shall purchase such
fraction for an appropriate amount in cash.
(c) The Holder, by the acceptance of this Option Certificate,
expressly waives his right to receive any fractional Option or any fractional
share upon exercise of a Option.
Section 4. Reservation of Option Shares, etc.
----------------------------------
The Company hereby agrees that at all times there shall be reserved
for issuance and/or delivery upon exercise of the Option evidenced by this
Option Certificate, free from pre-emptive rights, such number of shares of
authorized but unissued or treasury shares of Common Stock, or other stock or
securities deliverable pursuant to Section 5, as shall be required for issuance
---------
or delivery upon exercise of the Option evidenced hereby. The Company further
agrees: (a) that it shall not, by amendment of its Articles of Incorporation or
through reorganization, consolidation, merger, dissolution or sale of assets, or
by any other voluntary act, avoid or seek to avoid the observance or performance
of any of the covenants, stipulations or conditions to be observed or performed
hereunder by the Company; and (b) to promptly take all action as may from time
to time be reasonably required in order to permit the Holder to exercise the
Option evidenced hereby and the Company duly and effectively to issue the Option
Shares as provided herein upon the exercise hereof. Without limiting the
generality of the foregoing, the Company shall not take any action which would
result in Option Shares when issued not being validly and legally issued and
fully paid and nonassessable. The Company shall not increase the par value of
the Common Stock while the Option evidenced hereby is outstanding except to an
amount no greater than $.01 per share. The Company
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hereby represents that, as of the date hereof, it has sufficient shares of
Common Stock reserved for issuance upon exercise in full of the Option.
Section 5. Anti-Dilution.
-------------
The Exercise Price and the number of shares of Common Stock
purchasable upon the exercise hereof shall be subject to adjustment from time to
time as provided in this Section. Unless otherwise indicated, all calculations
under this Section 5 shall be made to the nearest $0.01 or 1/100th of a share,
---------
as the case may be.
(a) If the Company shall: (i) declare a dividend or make a
distribution on the outstanding shares of Common Stock in shares of capital
stock of the Company; (ii) subdivide or reclassify the outstanding shares of
Common Stock into a greater number of shares (or into other securities or
property); or (iii) combine or reclassify the outstanding shares of Common
Stock into a smaller number of shares (or into other securities or property),
the number of Option Shares issuable upon the exercise of the Option shall be
adjusted so that the Holder of the Option shall be entitled to purchase the kind
and number of shares of Common Stock or other securities or property of the
Company determined by multiplying the number of Option Shares issuable upon
exercise of the Option immediately prior to such event by a fraction, the
numerator of which shall be the total number of outstanding shares of Common
Stock immediately after such event, and the denominator of which shall be the
total number of outstanding shares of Common Stock immediately prior to such
event. An adjustment made pursuant to this paragraph (a) shall become
-------------
effective immediately after the effective date of such event, retroactive to the
record date, if any, for such event. Adjustments pursuant to this paragraph
shall be made successively whenever any event specified above shall occur.
Whenever the number of Option Shares issuable upon exercise of a Option is
adjusted pursuant to this paragraph, the Exercise Price payable upon exercise of
the Option shall be adjusted by multiplying the Exercise Price in effect
immediately prior to such adjustment by a fraction, the numerator of which
shall be the number of Option Shares issuable upon the exercise of the Option
immediately prior to such adjustment, and the denominator of which shall be the
number of Option Shares issuable immediately thereafter.
(b) [Intentionally Omitted.]
(c) In any case in which this Section shall require that an
adjustment shall become effective immediately after a record date for an event,
the Company may defer until the occurrence of such event: (i) issuing to the
Holder of the Option exercised after such record date and before the occurrence
of such event the additional shares of Common Stock issuable upon such exercise
by reason of the adjustment required by such event over
5
<PAGE>
and above the shares of Common Stock issuable upon such exercise before giving
effect to such adjustment; and (ii) paying to such Holder an amount in cash in
lieu of a fractional share of Common Stock pursuant to Section 3; provided,
--------- --------
however, that the Company shall deliver to such Holder a due bill or other
- -------
appropriate instrument evidencing such Holder's rights to receive such
additional shares of Common Stock, and such cash, upon the occurrence of the
event requiring such adjustment.
(d) No adjustment in the Exercise Price shall be required with
respect to shares of Common Stock issued upon exercise of the Option unless such
adjustment would require a decrease of at least $.02; provided, however, that
-------- -------
any such adjustment which is not required to be made shall be carried forward
and taken into account in any subsequent adjustment.
(e) The Company may make such reductions in the Exercise Price, in
addition to those required pursuant to other paragraphs of this Section, as it
considers to be advisable in order that any event treated for federal income tax
purposes as a dividend of stock or stock rights shall not be taxable to the
recipients.
(f) In case of any consolidation with or merger of the Company into
another corporation in which the Company is not the surviving entity, or in case
of any sale, lease or conveyance of assets to another corporation of the
property of the Company as an entirety or substantially as an entirety, such
successor, leasing or purchasing corporation, as the case may be, shall execute
and deliver to the Holder hereof simultaneously therewith a new Option
Certificate, reasonably satisfactory in form and substance to such Holder,
providing that the Holder of the Option then outstanding shall have the right
thereafter to exercise such Option solely for the kind and amount of shares of
stock, other securities, property or cash or any combination thereof receivable
upon such consolidation, merger, sale, lease or conveyance by a holder of the
number of shares of Common Stock for which such Option might have been exercised
immediately prior to such consolidation, merger, sale or conveyance.
(g) In case of any reclassification or change of the shares of
Common Stock issuable upon exercise of the Option (other than a change in par
value, from no par value to par value or from par value to no par value, or as a
result of a subdivision or combination, but including any change in the shares
of Common Stock into two or more classes or series of shares), or in case of any
consolidation or merger of another corporation into the Company in which the
Company is the continuing corporation and in which there is a reclassification
or change (including a change to the right to receive cash or other property) of
the shares of Common Stock (other than a change in par value, from no par value
to par value or from par value to no par value, or as a result of a subdivision
or combination, but including any change in the shares of
6
<PAGE>
Common Stock into two or more classes or series of shares), the Company shall
execute and deliver to the Holder hereof simultaneously therewith a new Option
Certificate, satisfactory in form and substance to such Holder, providing that
the Holder of the Option then outstanding shall have the right thereafter to
exercise such option solely for the kind and amount of shares of Common Stock,
other securities, property or cash or any combination thereof receivable upon
such reclassification, change, consolidation or merger by a holder of the number
of shares of Common Stock for which such Option might have been exercised
immediately prior to such reclassification, change, consolidation or merger.
(h) The foregoing paragraphs (f) and (g), however, shall not in any
-------------- ---
way affect the rights a Holder may otherwise have, pursuant to this Section, to
receive securities, evidences of indebtedness, assets, property rights or Option
upon exercise of a Option.
(i) Whenever there shall be any change in the Exercise Price under
any paragraph of this Section, and no specific means of adjusting the number of
Option Shares issuable upon exercise of the Option is provided in such
paragraph, then there shall be an adjustment (to the nearest hundredth of a
share) in the number of shares of Common Stock purchasable upon exercise of this
Option Certificate, which adjustment shall become effective at the time such
change in the Exercise Price becomes effective and shall be made by multiplying
the number of shares of Common Stock purchasable upon exercise of this Option
Certificate immediately before such change in the Exercise Price by a fraction,
the numerator of which is the Exercise Price immediately before such change, and
the denominator of which is the Exercise Price immediately after' such change.
If, following the declaration of a record date for the distribution of any
securities or property to be distributed to holders of Common Stock, such
securities or property are not so issued, the Exercise Price then in effect
shall be readjusted, effective as of the date when the Board of Directors
determines not to issue such securities or property, to the Exercise Price which
would then be in effect if a record date for such issuance had not been fixed.
(j) If any event occurs as to which the foregoing provisions of this
Section are not strictly applicable or, if strictly applicable, would not, in
the good faith judgment of the Board of Directors of the Company, fairly protect
the purchase rights of the Option in accordance with the essential intent and
principles of such provisions, then such Board shall make such adjustments in
the application of such provisions, in accordance with such essential intent and
principles, as shall be reasonably necessary, in the good faith opinion of such
Board, to protect such purchase rights as aforesaid.
(k) If, after one or more adjustments to the Exercise Price pursuant
to this Section 5, the Exercise Price cannot be reduced further without
---------
7
<PAGE>
falling below the greater of (i) $.01 or (ii) the lowest positive exercise price
legally permissible for Option Holder to acquire shares of Common Stock, the
Company shall make further adjustment to compensate the holder, consistent with
the foregoing principles, as the Board of Directors, acting in good faith, deems
necessary, including an increase in the number of Option Shares issuable upon
exercise of outstanding Option and/or a cash payment to the Holder.
Section 6. Notice of Adjustment.
--------------------
(a) Prior to the earlier to occur of: (i) the declaration of a
record date for; or (ii) the announcement and/or consummation of, any event or
action that would result in an adjustment pursuant to this Section or Section 7,
---------
the Company shall notify the Holder of such intended record date, announcement,
event or action. Such notice must be reasonably calculated to be delivered not
less than ten (10) nor more than ninety (90) days prior to the applicable event.
(b) Whenever the Exercise Price is adjusted as provided in
Section 5:
- ---------
(i) the Company shall compute the adjusted Exercise Price in
accordance with Section 5 and shall prepare a certificate signed by
---------
the chief financial officer of the Company setting forth the adjusted
Exercise Price and showing in reasonable detail the facts upon which
such adjustment is based; and
(ii) a notice stating that the Exercise Price and number of shares
for which the Option may be exercised have been adjusted and setting
forth the adjusted Exercise Price and number of shares for which the
Option may be exercised shall be communicated by telegram, facsimile,
telecopier or any other means of electronic communication capable of
producing a written record, or shall be delivered by hand or mailed as
soon as practicable by the Company to the Holder at its last address
as it shall appear upon the Option Register provided for in Section 2.
---------
Section 7. No Rights as Shareholders; Notice to Holder.
---------------------------------------------
Nothing contained herein shall be construed as conferring upon the
Holder the right to vote or to receive dividends or to receive notice as
shareholders in respect of the meetings of shareholders for the election of
directors of the Company or any other matter, or any rights whatsoever as
shareholders of the Company. If, however, at any time prior to the expiration
of the Option and prior to their exercise, any of the following shall occur:
8
<PAGE>
(a) The Company shall authorize the issuance to all holders of
Common Stock of rights, warrants or options to subscribe for or
purchase Common Stock, or of any other subscription rights or Option;
or
(b) The Company shall authorize the distribution to all holders of
Common Stock of evidences of its indebtedness or assets (other than
cash dividends or cash distributions payable out of consolidated
earnings or earned surplus or dividends payable in Common Stock); or
(c) The Company shall propose any consolidation or merger to which
the Company is a party and for which approval of any stock of the
Company is required, or the conveyance or transfer of properties and
assets of the Company substantially as an entirety (whether by sale,
lease or other disposition), or any reclassification or change of
outstanding Common Stock issuable upon exercise of the Option (other
than a change in par value, from no par value to par value or from par
value to no par value); or
(d) The Company shall propose the voluntary or involuntary
dissolution, liquidation or winding up of the Company;
then the Company shall cause to be given to the Holder at its address appearing
on the Option Register, at least ten (10) days prior to the applicable record
date hereinafter specified, by first class mail, postage prepaid, a written
notice stating (i) the date as of which the holders of record of shares of
Common Stock entitled to receive any such rights, warrants, options or
distribution are to be determined, or (ii) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective or consummated, and the date as of which it
is expected that the holders of record of shares of Common Stock shall be
entitled to exchange their shares for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up. The failure to give the
notice required by this Section or any defect therein shall not affect the
legality or validity of any distribution, right, warrants, options,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up, or the vote upon any action.
9
<PAGE>
Section 8. Restrictions on Transfer of the Option and Option Shares.
--------------------------------------------------------
Until such time as an appropriate registration statement covering the
Option or the Option Shares has become effective under the Securities Act, the
Holder will not dispose of either the Option evidenced hereby or the Option
Shares, as the case may be, except for a transfer by the Holder to an Affiliate
(as defined in Section 14). In addition, the Company shall have received an
----------
opinion of counsel to Purchaser to the effect that the sale or other proposed
disposition of the Option or Option Shares may be accomplished without such
registration (or perfection of an exemption) under the Securities Act, which
opinion may be conditioned upon: (i) acceptance by the transferee of a Option
Certificate or Certificates or Option Shares bearing a legend similar to that
set forth in Exhibit A; and (ii) a certificate of the transferee stating that
----------
the Option(s) or Option Share(s) being acquired by such transferee are being
acquired by such transferee for its own account and not with a view to, or for
resale in connection with, the distribution thereof in violation of the
Securities Act.
Section 9. [Intentionally Omitted.]
Section 10. No Voting Rights.
-----------------
No Holder shall be entitled to any voting rights as a stockholder of
the Company by virtue of such Holder's ownership of Option; provided that
--------
Holders who also hold voting securities of the Company, including Option Shares,
shall be entitled to vote such securities on any matter upon which other holders
of such class of securities are entitled to vote.
Section 11. Execution of Option Certificates.
---------------------------------
The Option Certificate shall be executed on behalf of the Company by
the manual or facsimile signature of the present or any future Chairman of the
Board of Directors, President or Vice President of the Company.
Section 12. Severability.
-------------
In the event that any one or more of the provisions contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality, and
enforceability of any such provision in every other respect and the other
remaining provisions hereof shall not be in any way impaired or affected, it
being intended that all of the Holder's rights and privileges shall be
enforceable
10
<PAGE>
to the fullest extent permitted by law.
Section 13. Governing Law.
--------------
The Option shall be governed by and construed in accordance with the laws
of the State of Illinois.
Section 14. Definitions.
------------
For all purposes of this Option Certificate, in addition to the other
terms defined elsewhere herein, unless the context otherwise requires:
"Affiliate" of any specified Person means any other Person directly or
---------
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or
otherwise.
"Board of Directors" means either the Board of Directors of the
------------------
Company or any duly authorized committee of that board.
"Common Stock" means the Class A Common Stock of the Company which has
------------
no preference in respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
Company, and which is not subject to redemption by the Company. However,
subject to Section 5, shares issuable on exercise of the Option evidenced
hereby, as contemplated by the first paragraph of this Option Certificate,
shall include only shares of the class designated as Common Stock of the
Company as of the date of this Option or shares of any class or classes
resulting from any reclassification or reclassifications thereof and which
have no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding
up of the Company and which are not subject to redemption by the Company;
provided that if at any time there shall be more than one such resulting
--------
class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such
class resulting from all such reclassifications bears to the total number
of shares of all such classes resulting from all such reclassifications.
As used in this Option Certificate, "shares" shall include fractions
thereof to the extent that fractional shares of the Company are
outstanding.
"Person" shall mean any individual, firm, partnership, association,
------
11
<PAGE>
group (as such term is used in Rule 13d-5 under the Securities Exchange Act
of 1934, as amended, as in effect on the date of this Option), corporation
or other entity.
"Subsidiary" means any subsidiary of the Company, a majority of whose
----------
capital stock with voting power, under ordinary circumstances, to elect
directors is at the time, directly or indirectly owned by the Company, by
one or more subsidiaries of the Company or by the Company and one or more
subsidiaries of the Company.
"Trading Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
-----------
Friday, other than any day on which securities are not traded on the
exchange or market where the Common Stock is listed or sold.
Section 15. Fees and Expenses.
------------------
All fees and expenses incurred by the Holder in connection with the
Holder's ownership of Option and securities or other property received upon
exercise thereof which relate to: (a) any required regulatory filings by the
Company; and (b) stock exchange listing fees in connection with the foregoing
shall be paid by the Company.
Section 16. Contest and Appraisal Rights.
-----------------------------
Upon each determination of fair market value or other valuation
required hereunder, the Company shall promptly give notice thereof to all
Holders, setting forth in reasonable detail the calculation of such fair market
value or valuation and the method and basis of determination thereof, as the
case may be.
Dated: October 14, 1998
ADVANCED MACHINE VISION CORPORATION
By: /s/ Alan R. Steel
-----------------------------
Name Alan R. Steel
---------------------------
Title: Chief Financial Officer
--------------------------
12
<PAGE>
NOTICE OF ELECTION TO EXERCISE
------------------------------
The undersigned hereby irrevocably elects to exercise the within Option to
the extent of purchasing ___________________ shares of Class A Common Stock and
hereby makes payment of the Exercise Price in the amount of ____ Dollars
($________).
NAME OF HOLDER:
_____________________________
( Please Print )
By:__________________________
Date: ___________________.
* * * * * * * *
Instructions for Registration of Stock
--------------------------------------
Name_________________________________________________________
(please type or print in block letters)
Address______________________________________________________
13
<PAGE>
EXHIBIT A
---------
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE ABSENCE OF SUCH
REGISTRATION OR THE AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION.
SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED EXCEPT UPON
COMPLIANCE WITH THE REQUIREMENTS FOR TRANSFER SET FORTH HEREIN.
14
<PAGE>
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
-------------------------------------------
This SERIES B PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is
entered into as of October 14, 1998 by and between ADVANCED MACHINE VISION
CORPORATION, a California corporation (the "Company"), and FMC CORPORATION, a
Delaware corporation ("Purchaser").
RECITALS:
---------
WHEREAS, the Company has authorized the sale and issuance of an aggregate
of one hundred, nineteen thousand, one hundred, six (119,106) shares of Series B
Preferred Stock (the "Shares");
WHEREAS, Purchaser desires to purchase the Shares on the terms and
conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Shares to Purchaser on
the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
promises hereinafter set forth and other good and valuable consideration (the
receipt, sufficiency and adequacy of which are acknowledged), the parties hereto
agree as follows:
1. AGREEMENT TO SELL AND PURCHASE.
1.1 Authorization of Shares. On or prior to the Closing (as defined in
-----------------------
Section 2 below), the Company shall have authorized: (i) the sale and issuance
to Purchaser of the Shares and (ii) the issuance of shares of Common Stock to be
issued upon conversion the Shares (the "Conversion Shares"). The Shares shall
have the rights, preferences, privileges and restrictions set forth in the
Certificate of Determination of the Company in the form attached hereto as
Exhibit A (the "Certificate of Determination").
- ---------
1.2 Sale and Purchase. Subject to the terms and conditions hereof, at
-----------------
the Closing (as hereinafter defined) the Company hereby agrees to issue and sell
to Purchaser and Purchaser agrees to purchase from the Company the Shares, at a
purchase price of twenty-two dollars ($22.00) per share.
Page 1
<PAGE>
2. CLOSING, DELIVERY AND PAYMENT.
2.1 Closing. The closing of the sale and purchase of the Shares under
-------
this Agreement (the "Closing") shall take place at 5:00 p.m. at such time or
place as the Company and Purchaser mutually agree (such date is hereinafter
referred to as the "Closing Date").
2.2 Delivery. At the Closing, subject to the terms and conditions
--------
hereof, the Company will deliver to Purchaser certificates representing the
number of Shares to be purchased at the Closing by Purchaser, against payment of
the purchase price therefor by wire transfer made payable to the order of the
Company.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth on a Schedule of Exceptions delivered by the Company to
Purchaser at the Closing, the Company hereby represents and warrants to
Purchaser as of the date of this Agreement as follows:
3.1 Organization, Good Standing and Qualification. The Company is a
---------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of California. The Company has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement, the Option Agreement in the form attached hereto as Exhibit B,
----------
the Registration Rights Agreement in the form attached hereto as Exhibit C (the
---------
"Registration Rights Agreement") and all other documents, instruments,
agreements and certificates executed in connection herewith and therewith
(collectively, the "Related Agreements"), to issue and sell the Shares and the
Conversion Shares and to carry out the provisions of this Agreement, the Related
Agreements and the Certificate of Determination and to carry on its business as
currently conducted and as currently proposed to be conducted. The Company is
duly qualified and is authorized to do business and is in good standing as a
foreign corporation in all jurisdictions in which the nature of its activities
and of its properties (both owned and leased) makes such qualification
necessary, except for those jurisdictions in which failure to do so would not
have a material adverse effect on the business, assets, condition, affairs or
prospects of the Company or any of its subsidiaries, financially or otherwise
("Material Adverse Effect").
3.2 Subsidiaries. The Company owns no equity securities of any other
------------
corporation, limited partnership or similar entity, except as set forth in
Schedule 3.2. The Company is not a participant in any joint venture,
- ------------
partnership or similar arrangement.
Page 2
<PAGE>
3.3 Capitalization; Voting Rights. The authorized capital stock of
-----------------------------
the Company, immediately prior to the Closing, is set forth in Exhibit D. All
---------
issued and outstanding shares of the Company's Common Stock: (i) have been duly
authorized and validly issued; and (ii) are fully paid and nonassessable; and
(iii) were issued in compliance with all applicable state and federal laws
concerning the issuance of securities. The rights, preferences, privileges and
restrictions of the Shares are as stated in the Certificate of Determination.
The Shares are initially convertible into Common Stock on a ten (10)-for-one (1)
basis. The Conversion Shares have been duly and validly reserved for issuance.
Except as set forth on Exhibit D or may be granted pursuant to the Related
---------
Agreements, there are no outstanding options, warrants, rights (including,
without limitation, conversion or preemptive rights and rights of first
refusal), convertible debt instruments, proxy or shareholder agreements, or
agreements of any kind for the purchase or acquisition from the Company of any
of its securities. When issued in compliance with the provisions of this
Agreement and the Certificate of Determination, the Shares and the Conversion
Shares will be validly issued, fully paid and nonassessable, and shall be free
of any liens or encumbrances; provided, however, that the Shares and the
Conversion Shares may be subject to restrictions on transfer under state and/or
federal securities laws as set forth herein or as otherwise required by such
laws at the time a transfer is proposed. Except as set forth on Exhibit D, no
---------
stock plan, stock purchase, stock option or other agreement or understanding
between the Company and any holder of any equity securities or rights to
purchase equity securities provides for acceleration or other changes in the
vesting provisions or other terms of such agreement or understanding as the
result of any merger, consolidated sale of stock or assets, change in control or
other similar transaction by the Company.
3.4 Authorization; Binding Obligations. All corporate action on the
----------------------------------
part of the Company, its officers and directors necessary for the authorization
of this Agreement and the Related Agreements, the performance of all obligations
of the Company hereunder and thereunder at the Closing and the authorization,
sale, issuance and delivery of the Shares pursuant hereto and the Conversion
Shares pursuant to the Certificate of Determination has been taken or will be
taken prior to the Closing. The Agreement and the Related Agreements, when
executed and delivered, will be valid and binding obligations of the Company
enforceable in accordance with their terms, except: (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights, (b) general principles
of equity that restrict the availability of equitable remedies, and (c) to the
extent that the enforceability of the indemnification provisions in Section 5 of
---------
the Registration Rights Agreement may be limited by applicable laws. The sale
Page 3
<PAGE>
of the Shares and the subsequent conversion of the Shares into Conversion Shares
are not and will not be subject to any preemptive rights or rights of first
refusal that have not been properly waived or complied with.
3.5 Financial Statements. The Company has delivered to Purchaser: (a)
--------------------
its audited balance sheet as at December 31, 1997 and audited statement of
income and cash flows for the twelve months ending December 31, 1997; and (b)
its unaudited balance sheet as at June 30, 1998 (the "Statement Date") and
unaudited consolidated statement of income and cash flows for the three month
period ending on the Statement Date (collectively, the "Financial Statements").
The Financial Statements, together with the notes thereto, are complete and
correct in all material respects, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated, except as disclosed therein, and present
fairly the financial condition and position of the Company as of December 31,
1997 and the Statement Date; provided, however, that the unaudited financial
statements do not contain all disclosures and footnotes required under generally
accepted accounting principles.
3.6 Liabilities. The Company has no material liabilities and, to the
-----------
best of its knowledge, knows of no material contingent liabilities not disclosed
in the Financial Statements, except current liabilities incurred in the ordinary
course of business subsequent to the Statement Date that might result in, either
in any individual case or in the aggregate, a Material Adverse Effect.
3.7 Agreements; Action.
------------------
(a) Except for the agreements contemplated by this transaction, the
Representative Agreement dated April 16, 1998, or as set forth in filings with
the Securities and Exchange Commission (the "SEC Filings"), there are no
agreements, understandings or proposed transactions between the Company and any
of its officers, directors, affiliates or any affiliate thereof.
(b) Except as set forth in the SEC Filings, there are no material
agreements, understandings, instruments, contracts, proposed transactions,
judgments, orders, writs or decrees to which the Company is a party or to its
knowledge by which it is bound which may involve (i) obligations (contingent or
otherwise) of, or payments to, the Company (other than obligations of, or
payments to, the Company arising in the ordinary course of business); (ii) the
license of any patent, copyright, trade secret or other proprietary right to or
from the Company; (iii) provisions restricting or affecting the development,
manufacture or distribution of the
Page 4
<PAGE>
Company's products or services, or (iv) indemnification by the Company with
respect to infringements of proprietary rights (other than indemnification
obligations arising from purchase or sale agreements entered into in the
ordinary course of business).
(c) Except as set forth in the SEC Filings, the Company has not: (i)
declared or paid any dividends, or authorized or made any distribution upon or
with respect to any class or series of its capital stock; (ii) incurred any
indebtedness for money borrowed or any other liabilities (other than with
respect to indebtedness and other obligations incurred in the ordinary course of
business or as disclosed in the Financial Statements) individually in excess of
$10,000 or, in the case of indebtedness and/or liabilities individually less
than $10,000, in excess of $10,000 in the aggregate; (iii) made any loans or
advances to any person, other than ordinary advances for travel expenses except
as set forth in Schedule 3.7(c)(iii); or (iv) sold, exchanged or otherwise
disposed of any of its assets or rights, other than the sale of its inventory in
the ordinary course of business.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
(e) Except for the transaction contemplated in this Agreement, the
Company has not engaged in the past three (3) months in any discussion: (i) with
any representative of any corporation or corporations regarding the
consolidation or merger of the Company with or into any such corporation or
corporations; (ii) with any corporation, partnership, association or other
business entity or any individual regarding the sale, conveyance or disposition
of all or substantially all of the assets of the Company, or a transaction or
series of related transactions in which more than fifty percent (50%) of the
voting power of the Company is disposed of; or (iii) regarding any other form of
acquisition, liquidation, dissolution or winding up of the Company.
3.8 Obligations to Related Parties. Except for debt owed to the former
------------------------------
owners of Ventec, Inc., there are no obligations of the Company to officers,
directors, shareholders, or employees of the Company other than: (a) for payment
of salary for services rendered, (b) reimbursement for reasonable expenses
incurred on behalf of the Company and (c) for other standard employee benefits
made generally available to all employees (including stock option agreements
outstanding under any stock option plan
Page 5
<PAGE>
approved by the Board of Directors of the Company). Except as disclosed in
Schedule 3.7(c)(iii) none of the officers, directors or shareholders of the
- --------------------
Company, or any members of their immediate families, are indebted to the Company
or have any direct or indirect ownership interest in any firm or corporation
with which the Company is affiliated or with which the Company has a business
relationship, or any firm or corporation which competes with the Company, except
that officers, directors and/or shareholders of the Company may own stock in
publicly traded companies which may compete with the Company. No officer,
director or shareholder, or any member of their immediate families, is, directly
or indirectly, interested in any material contract with the Company (other than
such contracts as relate to any such person's ownership of capital stock or
other securities of the Company). Except as may be disclosed in the Financial
Statements, the Company is not a guarantor or indemnitor of any indebtedness of
any other person, firm or corporation.
3.9 Changes. Since the Statement Date, there has not been:
-------
(a) Any change in the assets, liabilities, financial condition or
operations of the Company from that reflected in the Financial Statements, other
than changes in the ordinary course of business, none of which individually or
in the aggregate has had or is expected to have a Material Adverse Effect;
(b) Any resignation or termination of any key officers of the
Company and the Company, to the best of its knowledge, does not know of the
impending resignation or termination of employment of any such officer;
(c) Any material change in the contingent obligations of the Company
by way of guaranty, endorsement, indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not covered by
insurance, that might result in a Material Adverse Effect;
(e) Any waiver by the Company of a valuable right or of a material
debt owed to it;
(f) Any direct or indirect loans made by the Company to any
shareholder, employee, officer or director of the Company, other than advances
made in the ordinary course of business;
Page 6
<PAGE>
(g) Any material change in any compensation arrangement or agreement
with any employee, officer, director or shareholder;
(h) Any declaration or payment of any dividend or other distribution
of the assets of the Company;
(i) Any labor organization activity;
(j) Any debt, obligation or liability incurred, assumed or
guaranteed by the Company, except for current liabilities incurred in the
ordinary course of business;
(k) Any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
(1) Any change in any material agreement to which the Company is a
party or by which it is bound that might result in a Material Adverse Effect; or
(m) Any other event or condition of any character that, either
individually or cumulatively, might result in a Material Adverse Effect.
3.10 Title to Properties and Assets; Liens, etc. The Company has good
------------------------------------------
and marketable title to its properties and assets, including, without
limitation, the properties and assets reflected in the most recent balance sheet
included in the Financial Statements, and good title to its leasehold estates,
in each case subject to no mortgage, pledge, lien, lease, encumbrance or charge,
other than: (a) those resulting from taxes which have not yet become delinquent;
(b) minor liens and encumbrances which do not materially detract from the value
of the property subject thereto or materially impair the operations of the
Company; and (c) those that have otherwise arisen in the ordinary course of
business. All facilities, machinery, equipment, fixtures, vehicles and other
properties owned, leased or used by the Company are in good operating condition
and repair and are reasonably fit and usable for the purposes for which they are
being used. The Company is in compliance with all material terms of each lease
to which it is a party or is otherwise bound.
3.11 Patents and Trademarks The Company owns or possesses sufficient
----------------------
legal rights to all "Intellectual Property" (as defined below) for its business
as now conducted and as currently proposed to be conducted, without any known
infringement of the rights of others. There are no outstanding options,
licenses or agreements of any kind relating to
Page 7
<PAGE>
the foregoing, nor is the Company bound by or a party to any options, licenses
or agreements of any kind with respect to the Intellectual Property of any other
person or entity other than such licenses or agreements arising from the
purchase of "off the shelf" or standard products or the license agreement with
Key Technology. The Company has not violated or, by conducting its business,
shall not violate any of the patents, trademarks, service marks, trade names,
copyrights or trade secrets or other proprietary rights of any other person or
entity. The Company is not aware that any of its employees is obligated under
any contract (including licenses, covenants or commitments of any nature) or
other agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with their duties to the Company or
that would conflict with the Company's business as currently proposed to be
conducted. Neither the execution nor delivery of this Agreement, nor the
carrying on of the Company's business by the employees of the Company, nor the
conduct of the Company's business as currently proposed, will, to the Company's
knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any employee is now obligated. The Company does not
believe it is or will be necessary to utilize any inventions, trade secrets or
proprietary information of any of its employees made prior to their employment
by the Company, except for inventions, trade secrets or proprietary information
that have been assigned to the Company. To the knowledge of the Company, no
third party has interfered with, infringed upon, misappropriated or violated any
material Intellectual Property of the Company. "Intellectual Property" means (a)
all inventions (whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent applications, and
patent disclosures, together with all reissuances, continuations, continuations-
in-part, revisions, extensions, and reexaminations thereof, (b) all trademarks,
service marks, trade dress, logos, trade names, and corporate names, together
with all translations, adaptations, derivations, and combinations thereof and
including all good-will associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications, registrations,
and renewals in connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals),
(f) all computer software (including data and related documentation), (g) all
other proprietary rights, and (h) all copies and tangible embodiments thereof
(in whatever form or medium).
Page 8
<PAGE>
3.12 Compliance with Other Instruments. The Company is not in violation
---------------------------------
or default of any term of its Restated Articles of Incorporation or By-laws, or
of any provision of any mortgage, indenture, contract, agreement, instrument or
contract to which it is party or by which it is bound or of any judgment,
decree, order, writ or, to its knowledge, any statute, rule or regulation
applicable to the Company that might result in a Material Adverse Effect. The
execution, delivery, and performance of and compliance with this Agreement, and
the Related Agreements, and the issuance and sale of the Shares pursuant hereto
and of the Conversion Shares pursuant to the Certificate of Determination, will
not, with or without the passage of time or giving of notice, result in any such
material violation, or be in conflict with or constitute a default under any
such term, or result in the creation of any mortgage, pledge, lien, encumbrance
or charge upon any of the properties or assets of the Company or the suspension,
revocation, impairment, forfeiture or nonrenewal of any permit license,
authorization or approval applicable to the Company, its business or operations
or any of its assets or properties.
3.13 Litigation. Except as set forth in Schedule 3.13, or disclosed in
---------- -------------
any SEC Filing, there is no action, suit, proceeding or investigation pending,
or to the Company's knowledge, currently threatened against the Company that
questions the validity of this Agreement or the Related Agreements or the right
of the Company to enter into any of such agreements, or to consummate the
transactions contemplated hereby or thereby, or that might result, either
individually or in the aggregate, in a Material Adverse Effect, or any change in
the current equity ownership of the Company, nor is the Company aware that there
is any basis for the foregoing. The foregoing includes, without limitation,
actions pending or threatened (or any basis therefor known to the Company)
involving the prior employment of any of the Company's employees, their use in
connection with the Company's business of any information or techniques
allegedly proprietary to any of their former employers, or their obligations
under any agreements with prior employers. The Company is not a party or
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Company currently pending or which the
Company intends to initiate.
3.14 Tax Returns and Payments. The Company has timely filed all tax
------------------------
returns (federal, state and local) required to be filed by it. All taxes shown
to be due and payable on such returns, any assessments imposed, and to the
Company's knowledge all other taxes due and payable by the Company on or before
the Closing have been paid or will be paid prior to the time they become
delinquent. The Company has not been advised (a) that any of its returns,
federal, state or other, have been or are
Page 9
<PAGE>
being audited as of the date hereof, or (b) of any deficiency in assessment or
proposed judgment to its federal, state or other taxes. The Company has no
knowledge of any liability of any tax to be imposed upon its properties or
assets as of the date of this Agreement that is not adequately provided for.
3.15 Employees. The Company has no collective bargaining agreements
---------
with any of its employees. There is no labor union organizing activity pending
or, to the Company's knowledge, threatened with respect to the Company. Except
as set forth in Schedule 3.15, no employee has any agreement or contract,
written or verbal, regarding his employment. Except as set forth in Schedule
3.15, the Company is not a party to or bound by any currently effective
employment contract, deferred compensation arrangement, bonus plan, incentive
plan, profit sharing plan, retirement agreement or other employee compensation
plan or agreement. To the Company's knowledge, no employee of the Company, nor
any consultant with whom the Company has contracted, is in violation of any term
of any employment contract, proprietary information agreement or any other
agreement relating to the right of any such individual to be employed by, or to
contract with, the Company because of the nature of the business to be conducted
by the Company; and to the Company's knowledge the continued employment by the
Company of its present employees, and the performance of the Company's contracts
with its independent contractors, will not result in any such violation. The
Company has not received any notice alleging that any such violation has
occurred. Except as set forth in Schedule 3.15 or disclosed in any SEC Filing,
-------------
no employee of the Company has been granted the right to continued employment by
the Company or to any material compensation following termination of employment
with the Company. The Company is not aware that any officer or key employee, or
that any group of key employees, intends to terminate their employment with the
Company, nor does the Company have a present intention to terminate the
employment of any officer, key employee or group of key employees.
3.16 Proprietary Information and Inventions Agreements. Each former
-------------------------------------------------
employee who joined SRC Vision, Inc. within the immediately preceding 36 months
and each current employee, officer and consultant of the Company's SRC Vision,
Inc. subsidiary has executed an Employee Proprietary Rights and Non-Disclosure
Agreement and Confidentiality Agreement in the form of Exhibit E attached
---------
hereto. No current employee, officer or consultant of the Company has excluded
works or inventions made prior to his or her employment with the Company from
his or her assignment of inventions pursuant to such employee, officer or
consultant's Employee Proprietary Rights and Non-Disclosure Agreement and
Confidentiality Agreement
Page 10
<PAGE>
3.17 Obligations of Management. Each officer of the Company is currently
-------------------------
devoting one hundred percent (100%) of his or her business time to the conduct
of the business of the Company. The Company is not aware of any officer or key
employee of the Company planning to work less than full time at the Company in
the future.
3.18 Registration Rights. Except as required pursuant to the
-------------------
Registration Rights Agreement and the Stock Option Agreements, dated as of
August 5, 1998, between the Company and Lyon Securities, Inc. and SRG &
Associates, Ltd., and possible registration resulting from the Company's Stock
Rights Plan, the Company is currently not under any obligation, and has not
granted any rights, to register any of the Company's current outstanding
securities or any of its securities that may hereafter be issued.
3.19 Compliance with Laws; Permits. The Company is not in violation of
-----------------------------
any applicable statute, rule, regulation, order or restriction of any domestic
or foreign government or any instrumentality or agency thereof in respect of the
conduct of its business or the ownership of its properties which violation would
result in a Material Adverse Effect. No governmental orders, permissions,
consents, approvals or authorizations are required to be obtained and no
registrations or declarations are required to be filed by the Company in
connection with the execution and delivery of this Agreement and the issuance of
the Shares or the Conversion Shares, except such as has been duly and validly
obtained or filed, or with respect to any filings that must be made after the
Closing, as will be filed in a timely manner. The Company has all franchises,
permits, licenses and any similar authority necessary for the conduct of its
business as now being conducted by it, the lack of which might result in a
Material Adverse Effect. The Company believes it can obtain, without undue
burden or expense, any similar authority for the conduct of its business as
planned to be conducted.
3.20 Environmental and Safety Laws. The Company is not in material
-----------------------------
violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety, and to its knowledge, no material
expenditures are or will be required in order to comply with any such existing
statute, law or regulations.
3.21 Offering Valid. Assuming the accuracy of the representations and
--------------
warranties of Purchaser contained in Section 4.2 hereof, the offer, sale and
-----------
issuance of the Shares and the Conversion Shares are exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and will have been registered or qualified (or are exempt
from registration and qualification) under the registration, permit or
qualification requirements of all applicable state
Page 11
<PAGE>
securities laws. Neither the Company nor any agent on its behalf has solicited
or will solicit any offers to sell or has offered to sell or will offer to sell
all or any part of the Shares to any person or persons so as to bring the sale
of such Shares by the Company within the registration provisions of the
Securities Act or any state securities laws.
3.22 Full Disclosure. This Agreement, the Exhibits hereto, the Related
---------------
Agreements and all other documents delivered by the Company to Purchaser or
their attorneys or agents in connection herewith or therewith or with the
transactions contemplated hereby or thereby, do not contain any untrue statement
of a material fact nor, to the Company's knowledge, omit to state a material
fact necessary in order to make the statements contained herein or therein not
misleading.
3.23 Insurance. The Company has fire and casualty insurance policies
---------
with coverage customary for companies similarly situated to the Company.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser hereby represents and warrants to the Company as follows (such
representations and warranties do not lessen or obviate the representations and
warranties of the Company set forth in this Agreement):
4.1 Requisite Power and Authority. Purchaser has all necessary power
-----------------------------
and authority under all applicable provisions of law to execute and deliver this
Agreement and the Related Agreements and to carry out their provisions. All
action on Purchaser's part required for the lawful execution and delivery of
this Agreement and the Related Agreements have been or will be effectively taken
prior to the Closing. Upon their execution and delivery, this Agreement and the
Related Agreements will be valid and binding obligations of Purchaser,
enforceable in accordance with their terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights, (b) general principles
of equity that restrict the availability of equitable remedies, and (c) to the
extent that the enforceability of the indemnification provisions of Section 5 of
---------
the Registration Rights Agreement may be limited by applicable laws.
4.2 Investment Representations. Purchaser understands that neither the
--------------------------
Shares nor the Conversion Shares have been registered under the Securities Act.
Purchaser also understands that the Shares are being offered and sold pursuant
to an exemption from registration contained in the Securities Act based in part
upon Purchaser's representations
Page 12
<PAGE>
contained in the Agreement. Purchaser hereby represents and warrants as follows:
(a) Purchaser Bears Economic Risk. Purchaser has substantial
-----------------------------
experience in evaluating and investing in transactions of securities so that it
is capable of evaluating the merits and risks of its investment in the Company
and has the capacity to protect its own interests. Purchaser must bear the
economic risk of this investment indefinitely until the Shares (or the
Conversion Shares) are registered pursuant to the Securities Act, or an
exemption from registration is available and the Shares or Conversion Shares are
subsequently sold. Purchaser also understands that there is no assurance that
any exemption from registration under the Securities Act will be available and
that, even if available, such exemption may not allow Purchaser to transfer all
or any portion of the Shares or the Conversion Shares under the circumstances,
in the amounts or at the times Purchaser might propose.
(b) Acquisition for Own Account. Purchaser is acquiring the Shares
---------------------------
and the Conversion Shares for Purchaser's own account for investment only, and
not with a view towards their distribution.
(c) Purchaser Can Protect Its Interest. Purchaser represents that by
----------------------------------
reason of its, or of its management's, business or financial experience,
Purchaser has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement, and the Related Agreements.
Further, Purchaser is aware of no publication of any advertisement in connection
with the transactions contemplated in the Agreement. Purchaser has carefully
reviewed and understands the risks of, and other considerations relating to, a
purchase of Shares and the Conversion Shares, including, but not limited to, the
risks set forth under "Risk Factors" in the Company's Form 10-K/A dated March 9,
1998 and Form 10-Q dated August 4, 1998.
Purchaser has been afforded the opportunity to obtain any
information necessary to make an informed investment decision and has had all
inquiries to the Company answered, and has been furnished all requested
materials relating to the Company and the offering and sale of the Shares and
the Conversion Shares.
(d) Accredited Investor. Purchaser represents that it is an
-------------------
accredited investor within the meaning of Regulation D under the Securities Act.
(e) Rule 144. Purchaser acknowledges and agrees that the Shares,
--------
and, if issued, the Conversion Shares must be held
Page 13
<PAGE>
indefinitely unless they are subsequently registered under the Securities Act or
an exemption from such registration is available. Purchaser has been advised or
is aware of the provisions of Rule 144 promulgated under the Securities Act as
in effect from time to time, which permits limited resale of shares purchased in
a private placement subject to the satisfaction of certain conditions,
including, among other things: the availability of certain current public
information about the Company, the resale occurring following the required
holding period under Rule 144 and the number of shares being sold during any
three-month period not exceeding specified limitations.
4.3 Transfer Restrictions. Purchaser acknowledges and agrees that the
---------------------
Shares and, if issued, the Conversion Shares are subject to restrictions on
transfer as set forth in the Registration Rights Agreement.
5. COVENANTS.
For as long as the Shares are outstanding and held by Purchaser, the
Company (and, with respect to Sections 5.1 and 5.2, Ventec, Inc. and SRC Vision,
Inc.) hereby covenant and agree that, without the consent of Purchaser, it (and,
with respect to Sections 5.1 and 5.2, they) shall not:
5.1 Consolidations, Mergers or Acquisitions. Until October 14, 2002,
---------------------------------------
merge with or into any entity or enter into any reorganization,
recapitalization, consolidation, sale of control or any transaction that,
directly or indirectly results in all or substantially all of the assets or
properties of the Company, Ventec, Inc. or SRC Vision, Inc. being sold,
licensed, leased, transferred, conveyed or otherwise disposed of.
5.2 Intellectual Property. Until October 14, 2002, sell, license,
---------------------
lease, transfer, convey or otherwise dispose of the Intellectual Property of the
Company, SRC Vision, Inc. or Ventec, Inc. (as the case may be).
5.3 Issuance of Stock. Issue or distribute any additional equity
-----------------
securities or other securities convertible or exchangeable into equity
securities (other than issuance of shares pursuant to employee stock options or
other stock plans in effect in effect on the date hereof and, with the approval
of the Board of Directors, shares to unrelated third parties, that do not exceed
100,000 for any fiscal year.
5.4 Amendment of Charter or By-laws. Amend its charter or By-laws.
-------------------------------
6. CONDITIONS TO CLOSING.
Page 14
<PAGE>
6.1 Conditions to Purchaser Obligations at the Closing. Purchaser's
--------------------------------------------------
obligations to purchase the Shares at the Closing are subject to the
satisfaction, at or prior to the Closing Date, of the following conditions:
(a) Representations and Warranties True; Performance of Obligations.
---------------------------------------------------------------
The representations and warranties made by the Company in Section 3 hereof shall
---------
be true and correct in all material respects as of the Closing Date with the
same force and effect as if they had been made as of the Closing Date, and the
Company shall have performed all obligations and conditions herein required to
be performed or observed by it on or prior to the Closing.
(b) Legal Investment. On the Closing Date, the sale and issuance of
----------------
the Shares and the proposed issuance of the Conversion Shares shall be legally
permitted by all laws and regulations to which Purchaser and the Company are
subject.
(c) Consents, Permits, and Waivers. The Company shall have obtained
------------------------------
any and all consents, permits and waivers necessary or appropriate for
consummation by the Company of the transactions contemplated by the Agreement
and the Related Agreements (except for such as may be properly obtained
subsequent to the Closing).
(d) Filing of Certificate of Determination. The Certificate of
--------------------------------------
Determination shall have been filed with the Secretary of State of California.
(e) Corporate Documents. The Company shall have delivered to
-------------------
Purchaser or its counsel, copies of all corporate documents of the Company as
Purchaser shall reasonably request.
(f) Reservation of Conversion Shares. The Conversion Shares issuable
--------------------------------
upon conversion of the Shares shall have been duly authorized and reserved for
issuance upon such conversion.
(g) Compliance Certificate. The Company shall have delivered to
----------------------
Purchaser a Compliance Certificate, executed by the Chairman of the Company,
dated the Closing Date, to the effect that the conditions specified in
subsections (a), (c), (d) and (f) of this Section 6.1 have been satisfied.
-----------
(h) Option Agreement. An Option Agreement substantially in the form
----------------
attached hereto as Exhibit B shall have been executed and delivered by the
---------
parties thereto.
Page 15
<PAGE>
(i) Registration Rights Agreement. A Registration Rights Agreement
-----------------------------
substantially in the form attached hereto as Exhibit C shall have been executed
----------
and delivered by the parties thereto.
(j) Collateral Documents. All documents necessary to grant Purchaser
--------------------
a perfected security interest in the Intellectual Property of the Company and
its subsidiaries shall have been executed and delivered by the parties thereto.
(k) Board of Directors. Upon the Closing, the authorized size of the
------------------
Board of Directors of the Company shall be eight (8) members, and Marc Giles,
John Hartner or another person designated by Purchaser shall have been elected
to the Board.
(l) Legal Opinion. Purchaser shall have received from legal counsel
-------------
to the Company an opinion addressed to it, dated as of the Closing Date, in
substantially the form attached hereto as Exhibit F.
---------
(m) Proceedings and Documents. All corporate and other proceedings
-------------------------
in connection with the transactions contemplated at the Closing hereby and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to Purchaser and its counsel, and Purchaser
and its counsel shall have received all such counterpart originals or certified
or other copies of such documents as they may reasonably request.
6.2 Conditions to Obligations of the Company. The Company's obligation
----------------------------------------
to issue and sell the Shares at each Closing is subject to the satisfaction, on
or prior to such Closing, of the following conditions:
(a) Representations and Warranties True. The representations and
-----------------------------------
warranties made by Purchaser acquiring Shares in Section 4 hereof shall be true
---------
and correct in all material respects at the date of the Closing, with the same
force and effect as if they had been made on and as of said date.
(b) Performance of Obligations. Purchaser shall have performed and
--------------------------
complied with all agreements and conditions herein required to be performed or
complied with by Purchaser on or before the Closing.
(c) Wire Transfer. Purchaser shall have paid to the Company the
-------------
amount of $2,620,332 in immediately available funds.
Page 16
<PAGE>
(d) Option Agreement. An Option Agreement substantially in the form
----------------
attached hereto as Exhibit B shall have been executed and delivered by
---------
Purchaser.
(e) Registration Rights Agreement. A Registration Rights Agreement
-----------------------------
substantially in the form attached hereto as Exhibit C shall have been executed
---------
and delivered by Purchaser.
(f) Consents, Permits, and Waivers. The Purchaser shall have
------------------------------
obtained any and all consents, permits and waivers necessary or appropriate for
consummation by Purchaser of the transactions contemplated by the Agreement and
the Related Agreements (except for such as may be property obtained subsequent
to the Closing).
7. TRANSFERS OF STOCK.
7.1 Right of First Refusal. If (a) Purchaser has received a bona fide
---------------------- ---- ----
offer to purchase any of the Shares from a third party unaffiliated with
Purchaser (the "Third Party") and (b) Purchaser intends to sell such Shares to
such Third Party, Purchaser shall notify the Company in writing (the "Written
Notice") of such proposed sale no less than sixty (60) days prior to the closing
(the "Proposed Closing") for such proposed sale. The Written Notice shall
contain all material terms of the proposed sale, including, without limitation,
the proposed price and the date of the Proposed Closing (the "Proposed Closing
Date"). Unless: (i) Purchaser receives from the Company on or before the day
occurring thirty (30) days prior to the Proposed Closing, a written offer from
the Company to purchase the Shares; and (ii) such offer by the Company to
purchase the Shares (A) is for a price equal to or greater than the purchase
price of the Shares set forth in the Written Notice; (B) provides for the
payment to Purchaser for the Shares of such amount in the form and in accordance
with the same payment schedule as set forth in the Written Notice; and (C)
otherwise contains the same terms for purchasing the Shares as is provided for
in the Written Notice ("Written Offer"), then Purchaser may sell the Shares to
the Third Party on the terms provided for in the Written Notice on the Proposed
Closing Date. If Purchaser receives a Written Offer from the Company on or
before the day occurring thirty (30) days before the Proposed Closing Date, then
Purchaser shall accept the Written Offer and Purchaser shall sell, and the
Company shall purchase, the Shares on the terms provided for in the Written
Offer on the Proposed Closing Date.
7.2 Purchaser Issuance of Shares. For as long as the Shares are
----------------------------
outstanding and are owned by Purchaser, if the Company intends to issue or sell
any shares of its capital stock, or any securities convertible or exchangeable
into such shares, except for securities issued or sold (i) in any
Page 17
<PAGE>
merger or acquisition, (ii) to Purchaser; and (iii) securities permitted under
Section 5.3; provided that such securities are sold and issued in accordance
with the terms of this Agreement (collectively "Permitted Securities"), it shall
notify Purchaser in writing no less than forty-five (45) days prior to such
issuance or sale, which notice shall contain the terms of the proposed
securities. Purchaser shall then have the right to purchase a portion of such
securities on the same terms so that, after such proposed issuance, Purchaser
retains the right to own, convert or exchange the same percentage of shares of
the Company's capital stock it had immediately preceding such issuance or sale
minus Permitted Securities. Purchaser shall notify the Company of its intention
to purchase such securities no later than thirty (30) days after its receipt of
such notice.
7.3 Sale of Shares Upon Change in Control. If a "Change of Control" (as
-------------------------------------
defined below) occurs, Purchaser may notify the Company that Purchaser intends
to sell all or any portion of the shares of Series B Preferred Stock that
Purchaser holds ("Selling Shares"). Subject to California General Corporation
Law Chapter 5, the Company shall purchase such Selling Shares on the fifteenth
(15th) day after the date of such notice. On such day, Purchaser shall deliver
the stock certificates for the Selling Shares, and in exchange for such
delivery, the Company shall pay Purchaser in immediately available funds an
amount equal to: (a) the number of Selling Shares being sold, multiplied by (b)
-------------
the greater of: (i) $22.00; and (ii) the average closing bid of the Common Stock
of the Company for the consecutive forty-five day period immediately preceding
the day before the date of such purchase and sale.
"Change of Control" means the occurrence of any of the following:
(1) the sale, transfer, conveyance or other disposition (other than
by way of merger or consolidation), in one or a series of
related transactions, of all or substantially all of the assets
of the Corporation,
(2) the adoption of a plan relating to the liquidation or
dissolution of the Corporation;
(3) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is
that any person or entity becomes the "beneficial owner" (as
such term is defined in Rule 13d-3 and Rule 13d-5 under the
Exchange Act, except that in calculating the beneficial
ownership of any particular "person", such "person" shall be
deemed to have
Page 18
<PAGE>
beneficial ownership of all securities that such person has the
right to acquire, whether such right it currently exercisable
or is exercisable only upon the occurrence of a subsequent
condition), directly or indirectly, of more than 37.5% of the
Voting Stock of the Corporation (measured by voting power
rather than number of shares);
(4) the first day on which a majority of the members of the Board
of Directors of the Corporation are not Continuing Directors
(as defined below); or
(5) the shareholders of the Corporation approve a consolidation of
the Corporation with, or a merger of the Corporation with or
into, any entity, or the shareholders of the Corporation (if
required) or the shareholders of any entity approve a
consolidation of such entity with, or merger of such entity
with or into, the Corporation, other than any such transaction
whether the Corporation's shareholders of record immediately
prior to such transaction hold more than 80% of the Voting
Stock of the surviving corporation or entity immediately after
giving effect to such issuance.
A Change of Control shall not be deemed to have occurred if any of the above
events occur by virtue of transactions effected by FMC or its affiliates.
"Continuing Director" means any member of the Board of Directors of
the Corporation who (i) was a member of such Board of Directors on the date on
which a share of Series B Preferred Stock is first issued (the "Original Issue
Date") or (ii) was nominated for election or elected to such Board of Directors
with the approval of a majority of the Continuing Directors who were members of
such Board at the time of such nomination or election.
8. MISCELLANEOUS.
8.1 Governing Law. This Agreement shall be governed in all respects by
-------------
the internal laws of the State of Illinois.
8.2 Survival. The representations, warranties, covenants and agreements
--------
made herein shall not survive the Closing. All statements as to factual matters
contained in any certificate or other instrument delivered by or on behalf of
the Company pursuant hereto in connection
Page 19
<PAGE>
with the transactions contemplated hereby shall be deemed to be representations
and warranties by the Company hereunder solely as of the date of such
certificate or instrument.
8.3 Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by the
holder of 100% of the Shares from time to time.
8.4 Indemnity. The Company agrees to defend, protect, indemnify and
---------
hold harmless Purchaser and each and all of its respective officers, directors,
employees, attorneys and agents ("Indemnified Parties") from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including without limitation the fees and disbursements of counsel
for the Indemnified Parties in connection with any investigative, administrative
or judicial proceeding, whether or not the Indemnified Parties shall be
designated by a party thereto), which may be imposed on, incurred by, or
asserted against any Indemnified Party (whether direct, indirect or
consequential and whether based on any federal or state laws or other statutory
regulations, including without limitation securities, environmental and
commercial laws and regulations, under common law or at equitable cause, or on
contract or otherwise) in any manner relating to or arising out of the operation
of the businesses operated by the Company, or any act, event or transaction
related or attendant thereto; provided, that the Company shall not have any
obligation to any Indemnified Party hereunder with respect to matters caused by
or resulting from the willful misconduct or gross negligence of such Indemnified
Party; provided further, that this indemnity shall not be deemed to obligate the
Company for any liability arising in connection with products manufactured by
Purchaser. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Company shall contribute the maximum
portion which it is permitted to pay and satisfy under applicable law, to the
payment and satisfaction of all matters incurred by the Indemnified Parties.
8.5 Entire Agreement. This Agreement, the Exhibits and Schedules
----------------
hereto, the Related Agreements and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and no party shall be liable or bound to any
other in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein.
Page 20
<PAGE>
8.6 Severability. In case any provision of the Agreement shall be
------------
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
8.7 Amendment. This Agreement may be amended or modified only upon the
---------
written consent of the Company and Purchaser.
8.8 Delays or Omissions. It is agreed that no delay or omission to
-------------------
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement, the Related
Agreements or the Certificate of Determination, shall impair any such right,
power or remedy, nor shall it be construed to be a waiver of any such breach,
default or noncompliance, or any acquiescence therein, or of or in any similar
breach, default or noncompliance thereafter occurring. It is further agreed
that any waiver, permit, consent or approval of any kind or character on
Purchaser's part of any breach, default or noncompliance under this Agreement,
the Related Agreements or under the Certificate of Determination or any waiver
on such party's part of any provisions or conditions of the Agreement, the
Related Agreements, or the Certificate of Determination must be in writing and
shall be effective only to the extent specifically set forth in such writing.
All remedies, either under this Agreement, the Related Agreements, the
Certificate of Determination, by law, or otherwise afforded to any party, shall
be cumulative and not alternative.
8.9 Notices. All notices required or permitted hereunder shall be in
-------
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified; (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (d) one (1) day after deposit with
Federal Express or other nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt. All communications
shall be sent to the parties at the addresses as set forth on the signature page
hereof or at such other address as the Company or Purchaser, as the case may be,
may designate by ten (10) days advance written notice to the other parties
hereto.
8.10 Expenses. Each party shall pay all costs and expenses that it
--------
incurs with respect to the negotiation, execution, delivery and performance of
the Agreement.
8.11 Titles and Subtitles. The titles of the sections and subsections
--------------------
of the Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
Page 21
<PAGE>
8.12 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
8.13 Broker's Fees. Each party hereto represents and warrants that no
-------------
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein. Each party hereto further agrees to
indemnify each other party for any claims, losses or expenses incurred by such
other party as a result of the representation in this Section 8.13 being untrue.
8.14 Pronouns. All pronouns contained herein, and any variations
--------
thereof, shall be deemed to refer to the masculine, feminine or neutral,
singular or plural, as to the identity of the parties hereto may require.
8.15 California Corporate Securities Law. THE SALE OF THE SECURITIES
-----------------------------------
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR
PRIOR TO SUCH QUALIFICATION OR IN THE ABSENCE OF AN EXEMPTION FROM SUCH
QUALIFICATION IS UNLAWFUL. PRIOR TO ACCEPTANCE OF SUCH CONSIDERATION BY THE
COMPANY, THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED
UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION FROM SUCH QUALIFICATION
BEING AVAILABLE.
Page 22
<PAGE>
IN WITNESS WHEREOF, the parties have executed this SERIES B PREFERRED STOCK
PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof.
ADVANCED MACHINE VISION
CORPORATION FMC CORPORATION
By /s/ William J. Young By /s/ Charles H. Cannon, Jr.
------------------------ --------------------------
William J. Young Charles H. Cannon, Jr.
Chief Financial Officer Vice President
The undersigned acknowledge and agree to Sections 5.1 and 5.2 above.
SRC VISION, INC. VENTEC, INC.
By /s/ Alan R. Steel By /s/ Alan R. Steel
------------------------ --------------------------
Alan R. Steel Alan R. Steel
Chief Financial Officer Chief Financial Officer
Page 23
<PAGE>
EXHIBIT D
Capitalization; Voting Rights
<TABLE>
<CAPTION>
Class A Shares
Reserved
Shares for Outstanding
Security Authorized Issuance Shares
-------- ---------- -------------- -----------
<S> <C> <C> <C>
Advanced Machine Vision Corporation:
Class A Common Stock 60,000,000 10,655,218
Class B Common Stock 3,000,000 64,335
Series A Preferred Stock 400,000
Series B Preferred Stock 119,106 1,191,060 119,106
Issuable upon exercise or conversion:
Stock Option Plans (A)
Options outstanding 3,088,501
Available for grant 138,817
Non-plan options 631,538
FMC 15% option 1,598,282
Ventek convertible note 1,000,000
Ventek stock note 1,800,000
6.75% convertible debt 423,529
Class G & I Warrants 540,000
Ventek warrants 250,000
1997 restricted stock plan (B) 1,800,000
SRC Vision, Inc.: (C)
Options outstanding 317,425
Available for grant 78,575
</TABLE>
(A) Includes 1991, 1994 and 1997 stock option plans.
(B) Excludes 200,000 issued shares included in Class A Common Stock
outstanding.
(C) The SRC Vision Plan was established on 1/10/97. Vesting of options will
accelerate if SRC Vision or its parent (currently Advanced Machine Vision
Corporation) consummates an agreement to sell a majority of SRC Vision's
business or assets, or merge with another entity that is not at least 50%
owned by its parent company or other affiliated entity owned by its parent
company.
<PAGE>
Exhibit E
- ---------
Proprietary Information Agreement
- ---------------------------------
EMPLOYEE PROPRIETARY RIGHTS
AND NON-DISCLOSURE AGREEMENT
I recognize that Advanced Machine Vision, SRC VISION(R), Inc., ARC Netherlands
b.v. and each of their current or future subsidiaries, divisions, affiliated
entities, successor entities or assigns, (hereafter called "the Company") must
initiate, make and develop technological innovations and inventions, develop
valuable information, and trade secrets, and protect its legal rights in such
matters. Therefore, in consideration of my employment by the Company, I hereby
agree:
To maintain in strictest confidence, both during the term of my employment and
thereafter, all confidential technical and business information, trade secrets,
inventions and innovations of the Company, its successors or assigns, and my co-
workers, either learned or developed by me during the term of my employment; and
To promptly disclose and assign to the Company all rights to any and all
inventions or innovations that are conceived or first actually reduced to
practice by me, either alone or jointly with others, during my term of
employment by the Company; except that I need not assign to the Company title in
any invention for which no equipment, supplies, facility, or trade secret
information of the Company was used and which was developed entirely on my own
time, and (a) which does not relate (1) to the business of the Company or (2) to
the Company's actual or demonstrably anticipated research or development, or (b)
which does not result from any work performed by me for the Company, unless full
title in the United States or any other country to the invention is required by
contract between the Company and the United States or any other country or any
of their agencies. I understand that all those disclosures of my inventions and
innovations made to the Company under this paragraph for which I need not assign
title to the Company shall be held in confidence by the Company.
To advise the Company prior to entering into a consulting agreement with any
outside agency while in the Company's employ, and to exercise my best judgment
before accepting such consulting agreement as not to compromise the Company.
I understand that a breach of any of the above clauses may cause termination of
my employment, in addition to giving rise to claims for remedies or damages as
provided by applicable law.
- --------------------------- --------------------------------------
Date Employee (please type or print)
- --------------------------- --------------------------------------
Place of Signing Employee's signature
<PAGE>
CONFIDENTIALITY AGREEMENT
1. COMPANY AND JURISDICTION
1.1 Definition of Company. As used in this agreement, the term "Company" means
Advanced Machine Vision (AMV), SRC VISION(R), Inc., ARC Netherlands b.v. and
each of their current or future subsidiaries, divisions, affiliated entities,
successor entities or assigns. This agreement shall be governed by the laws of
the Employee's country of employment, whether it be the United States of
America, the Netherlands, or any other country. Notwithstanding the previous
sentence, the parties to this agreement agree to submit to the laws of any
jurisdiction in which a breach of this agreement may occur.
2. CONFIDENTIALITY
2.1 Definition of Confidential Information. As used in this agreement, the term
"Confidential Information" means: (a) proprietary information of the Company;
(b) information marked or designated by the Company as confidential; (c)
information, whether or not in written form and whether or not designated as
confidential, which is known to me ("Employee") as being treated by the Company
as confidential; and (d) information provided to the Company by third parties
which the Company is obligated to keep confidential. Confidential Information
includes, but is not limited to, know-how, customer lists, marketing plans,
financial and technical information, prospect lists and data base, development
plans, business plans, project development plans, long range and strategic
plans, budgets and compensation information.
2.2 Acknowledgment of Receipt of Confidential Information. Employee
acknowledges that in the course of performing duties for the Company, he or she
will have access to Confidential Information, the ownership and confidential
status of which are highly important to the Company, and Employee agrees in
addition to the specific covenants contained herein, to comply with all Company
policies and procedures for the protection of such Confidential Information.
2.3 Ownership. Employee acknowledges that all Confidential Information is and
shall continue to be the exclusive property of the Company, whether or not
prepared in whole or part by Employee and whether or not disclosed to or
entrusted to Employee in connection with employment by the Company.
<PAGE>
2.4 Acknowledgment of Irreparable Harm. Employee acknowledges that any
disclosure of Confidential Information will cause irreparable harm to the
Company.
2.5 Covenant of Nondisclosure. Employee agrees not to disclose Confidential
Information, directly or indirectly, under any circumstances or by any means, to
any third person without the express written consent of the Company.
2.6 Covenant of Nonuse. Employee agrees that Employee will not copy, transmit,
reproduce, summarize, quote or make any commercial or other use whatsoever of
the Confidential Information, except as may be necessary to perform work done by
Employee for the Company.
2.7 Safeguard of Confidential Information. Employee agrees to exercise the
highest degree of care in safeguarding Confidential Information against loss,
theft, or other inadvertent disclosure and agrees generally to take all steps
necessary or requested by the Company to ensure maintenance of confidentiality.
2.8 Exclusions. This section shall not apply to the following information:
(a) information now and hereafter voluntarily disseminated by the Company to the
public or which otherwise becomes part of the public domain through lawful
means; (b) information already known or acquired by Employee other than in
conjunction with Employment by the Company and as documented by written records
which predate this Agreement; (c) information subsequently and rightfully
received from third parties and not subject to any obligation of
confidentiality; (d) information independently developed by Employee after
termination of employment.
2.9 Prior Employment. Employee acknowledges and understands that the Company is
not employing Employee to obtain any information which is the property of any
previous employers or any other person for whom Employee has performed services.
Employee also acknowledges that the Company expects that the product of any
services performed hereunder, or knowledge or information, such as trade
secrets, trade lists, plans, or other confidential information developed in the
course of or as a result of service hereunder will be the property of the
Company in accordance with the terms hereof. Accordingly, Employee warrants and
represents to the Company that Employee will not, in performing services
hereunder, make use of information which is the property of and/or confidential
to any previous employer or other person or entity for whom services have been
furnished and that Employee has disclosed to the Company all prior employment
agreements which may impose restrictions on Employee's activities.
3. DELIVERY OF MATERIALS
Upon termination of employment status, Employee will deliver to the Company all
materials, including without limitation customer lists, documents, records,
drawings, prototypes, models and schematic diagrams, which describe, depict,
contain, constitute, reflect, record or in any way relate to inventions or
Confidential Information, which are in
<PAGE>
Employee's possession or under Employee's control, whether or not the materials
were prepared by Employee.
4. SUBPOENAS
If Employee, during and after employment, is served with any subpoena or other
compulsory judicial or administrative process calling for production of
Confidential Information or if Employee is otherwise required by law or
regulation to disclose Confidential Information, Employee will immediately, and
prior to production or disclosure, notify the Company and provide it with such
information as may be necessary in order that the Company may take such action
as it deems necessary to protect its interest.
5. REMEDIES
Employee acknowledges that breach of the obligations imposed by this Agreement
will cause irreparable harm to the Company and, in that event, if Employee fails
to abide by these obligations, the Company will be entitled to specific
performance, including immediate issuance of temporary restraining order or
preliminary injunction enforcing this Agreement, and to judgment for damages
caused by Employee's breach, and to other remedies provided by applicable law.
6. DURATION
The obligations set forth in this Agreement will continue beyond the terms of
Employee's employment by the Company.
I understand and agree to the terms of this Confidentiality Agreement.
- --------------------------------------
Employee's signature
- --------------------------------------
Date
<PAGE>
EXHIBIT F
[LETTERHEAD OF TROY & GOULD]
October 14, 1998
FMC Corporation
200 E. Randolph Drive
Chicago, IL 60601
Ladies and Gentlemen:
We have acted as special counsel to Advanced Machine Vision
Corporation, a California corporation (the "Company") in connection with the
issuance on the date hereof by the Company of 119,106 shares (the "Shares") of
the Company's Series B Preferred Stock, without par value (the "Series B
Preferred Stock") pursuant to a Series B Preferred Stock Purchase Agreement of
even date herewith (the "Purchase Agreement") between the Company and FMC
Corporation, a Delaware corporation ("FMC"). This opinion is rendered to you
pursuant to Section 6.1(1) of the Purchase Agreement.
As such counsel, we have made such legal and factual examinations and
inquiries as we have deemed necessary or appropriate for purposes of this
opinion, except where a statement is qualified as to knowledge or awareness, in
which case we have made no or limited inquiry as specified below. In connection
with this transaction, we have examined the following:
(a) The Purchase Agreement;
(b) The Registration Rights Agreement of even date herewith between
the Company and FMC (the "Registration Rights Agreement");
(c) The Option of even date herewith, issued by the Company;
(d) The Intellectual Property Security Agreement of even date herewith
between the Company and FMC;
(e) The Certificate of Determination of the Company (the
"Certificate");
(f) The agreements listed on Schedules to the Purchase Agreement (the
"Material Agreements").
<PAGE>
FMC Corporation
October 14, 1998
Page 2
The documents described in subsections (a), (b), (c), (d) and (e)
above are referred to herein collectively as the "Transaction Documents."
In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, and the
conformity to authentic original documents of all documents submitted to us as
copies.
As to facts material to the opinions, statements and assumptions
expressed herein, we have, with your consent, relied upon written
representations of officers of the Company and others. In addition, we have
obtained and relied upon such certificates and assurances from public officials
as we have deemed necessary. Except as set forth above, we have made no
independent investigation of factual information contained in any of the
documents reviewed by us.
We are opining herein as to the effect on the subject transaction only
of the federal securities laws of the United States and the laws of the State of
California, and we express no opinion with respect to the applicability thereto,
or the effect thereon, of the laws of any other jurisdiction, or as to any
matters of municipal law or the laws of any local agencies within any state.
Whenever a statement herein is qualified by "to our knowledge" or a
similar phrase, it is intended to indicate that those attorneys in this firm who
have rendered legal services in connection with the above transaction do not
have current actual knowledge of the inaccuracy of such statement. However,
except as otherwise expressly indicated, we have not undertaken any independent
investigation to determine the accuracy of any such statement, and no inference
that we have any knowledge of any matters pertaining to such statement should be
drawn from our representation of the Company.
Subject to the foregoing and the other matters set forth herein, it is
our opinion that, as of the date hereof:
1. The Company has been duly incorporated and is validly existing and
in good standing under the laws of the State of California with corporate power
and authority to enter into the Transaction Documents and perform its
obligations thereunder and to carry on its business as presently conducted.
2. The execution, delivery and performance of the Transaction
Documents have been duly authorized by all necessary corporate action of the
Company, and the Transaction Documents have been duly executed and delivered by
the Company.
3. Each of the Transaction Documents constitutes a legally valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms.
<PAGE>
FMC Corporation
October 14, 1998
Page 3
4. The execution, delivery and performance by the Company of the
Transaction Documents do not (i) violate any federal or California statute, rule
or regulation; (ii) violate the provisions of the Company's Articles of
Incorporation or By-laws; (iii) to our knowledge result in the breach of or a
default under any of the Material Agreements; (iv) to our knowledge require any
consents, approvals, authorizations or filings by the Company under any federal
or California statute, rule or regulation, except under federal or state
securities or Blue Sky laws or (v) to our knowledge, based solely on a
certificate of an officer of the Company, violate the terms of any judgment,
writ or court order applicable to the Company. No opinion is expressed in this
paragraph 4 as to the application of any antifraud laws, antitrust laws or trade
regulation laws.
5. The authorized capital stock of the Company consists or 60,000,000
shares of authorized Class A Common Stock (the "Common Stock"), of which
10,655,218 are issued and outstanding; 3,000,000 authorized shares of Class B
Common Stock, of which 64,335 shares are issued and outstanding; 400,000
authorized shares of Series A Preferred Stock, of which no shares are issued and
outstanding; and 119,106 authorized shares of Series B Preferred Stock, of which
119,106 are issued and outstanding as of the closing of the transactions set
forth in the Purchase Agreement. The Shares have been duly and validly
authorized and are validly issued, fully paid and nonassessable.
6. The Shares have been duly and validly authorized, and, when issued
and delivered against payment therefor pursuant to the Purchase Agreement, will
be validly issued, fully paid and nonassessable.
7. Subject to the accuracy of FMC's representations as set forth in
the Purchase Agreement and assuming that FMC's principal executive offices are
located outside the State of California and that payment for and delivery of the
shares takes place outside of California, the Shares, upon issuance, delivery
and payment therefor in the manner described in the Purchase Agreement, will be
issued in a transaction exempt from the registration requirements of the
Securities Act and the qualification requirements of Section 25110 of the
California Corporate Securities Law.
8. The shares of Common Stock of the Company issuable upon conversion
of the Shares have been duly reserved for issuance and when issued in compliance
with the provisions of the Certificate, will be validly issued, fully paid and
nonassessable.
9. The certificates representing the Shares are in compliance with the
requirements of the California General Corporations Law and have been duly and
validly executed by the officers of the Company named thereon.
The opinions expressed in paragraph 3 and paragraph 4 are subject to
the following limitations, qualifications and exceptions:
<PAGE>
FMC Corporation
October 14, 1998
Page 4
(a) the effect of bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting the rights of creditors,
including, without limitation, section 548 of the federal Bankruptcy Code
and section 547 of the federal Bankruptcy Code and comparable provisions of
state law;
(b) the effect of any antifraud laws, antitrust or trade regulation
laws;
(c) the effect of general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing and the possible unavailability of specific performance or
injunctive relief regardless of whether considered in a proceeding in equity
or at law;
(d) certain rights, remedies and waivers contained in the Transaction
Documents may be limited or rendered ineffective by applicable California
laws or juridical decisions governing such provisions, but such laws or
judicial decisions do not render the Transaction Documents invalid or
unenforceable as a whole;
(e) the unenforceability under certain circumstances under law or
court decisions of provisions in Section 5 of the Registration Rights
Agreement and Section 8.4 of the Purchase Agreement providing for the
indemnification of or contribution to a party with respect to a liability
where such indemnification or contribution is contrary to public policy or
prohibited by law;
(f) the effect of Section 1717 of the California Civil Code, which
provides that, where a contract permits one party to the contract to recover
attorneys' fees, the prevailing party in any action to enforce any provision
of the contract shall be entitled to recover its reasonable attorneys' fees;
and
(g) the effect of California law, which provides that a court may
refuse to enforce, or may limit the application of, a contract or any clause
thereof which the court finds as a matter of law to have been unconscionable
at the time it was made or contrary to public policy.
In addition, with respect to our opinion expressed in paragraph 2 as
to authorization by all necessary corporate action of the Company, we call your
attention to the fact that in conversations with the Nasdaq Stock Market
("Nasdaq"), we have been informed by Nasdaq that it will not require shareholder
approval for the issuance of the Shares or the Option. However, Nasdaq has
indicated that in the event any additional shares are issued to FMC by the
Company, Nasdaq will "link the transactions" (quoted from conversation with
Nasdaq) and require shareholder approval for such additional issuance of shares.
In rendering the opinions expressed in paragraph 3 and paragraph 4
insofar as they require interpretation of the Material Agreements (i) we have
assumed with your permission the
<PAGE>
FMC Corporation
October 14, 1998
Page 5
application of all internal laws of the State of California without giving
effect to any choice of law provisions contained therein or any choice of law
principles which would result in application of the internal laws of any other
state and (ii) to the extent that any questions or legality or legal
construction have arisen in connection with our review, we have applied the laws
of the State of California in resolving such questions. We advise you that
certain of the Material Agreements may be governed by other laws, that such laws
may vary substantially from the law assumed to govern for purposes of this
opinion, and that this opinion may not be relied upon as to whether or not a
breach or default would occur under the law actually governing such Material
Agreements.
We express no opinion as to the title of any property subject to the
Intellectual Property Security Agreement, the adequacy of any description of the
collateral, or the perfection or priority of any security interests granted
pursuant to such agreement.
To the extent that the obligations of the Company may be dependent
upon such matters, we assume for purposes of this opinion that: all parties to
the Transaction Documents other than the Company have complied with all
applicable requirement to file returns and pay taxes under the Franchise Tax Law
of the State of California; all parties to the Transaction Documents other than
the Company are duly incorporated or formed, and are validly existing and in
good standing under the laws of their respective jurisdictions of incorporation
or formation, all parties to the Transaction Documents other than the Company
have the requisite power to perform their respective obligations under the
Transaction Documents; and the Transaction Documents have been duly authorized,
executed and delivered by all parties to the Transaction Documents other than
the Company and constitute their legally valid and binding obligations,
enforceable against them in accordance with their terms. We express no opinion
as to compliance by any party to the Transaction Documents other than the
Company with any state or federal law or regulations applicable to the subject
transactions because of the nature of their business.
This opinion is rendered only to you and is solely for your benefit in
connection with the transactions covered hereby. This opinion may not be relied
upon by you for any other purpose, or furnished to, quoted to, or relied upon by
any other person, firm or corporation for any purpose, without our prior written
consent.
Very truly yours,
TROY & GOULD
Professional Corporation
<PAGE>
CERTIFICATE OF DETERMINATION
OF
SERIES B PREFERRED STOCK
OF
ADVANCED MACHINE VISION CORPORATION,
A CALIFORNIA CORPORATION
William J. Young and Alan R. Steel each certifies that:
1. They are the duly elected and acting Chairman of the Board and
Chief Financial Officer, respectively, of Advanced Machine Vision Corporation, a
corporation organized and existing under the General Corporation Law of the
State of California (the "Corporation").
2. The number of shares of Series B Preferred Stock is 119,106, none
of which has been issued.
3. The Board of Directors duly adopted the following resolution
creating a series of its Preferred Stock designated as Series B Preferred Stock:
WHEREAS, the Articles of Incorporation of the Corporation authorize
the Preferred Stock of the Corporation to be issued in series and authorize the
Board of Directors to determine the rights, preferences, privileges and
restrictions granted to or imposed upon any wholly unissued series Preferred
Stock and to fix the number of shares and designation of any such series;
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does
hereby establish a series of the class of authorized preferred stock, no par
value, of the Corporation ("Preferred Stock"), and that the designation and
amount thereof and the voting powers, preferences and relative, participating,
optional and other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof, are as follows:
1. Designation and Amount. The shares of the series of Preferred
----------------------
Stock hereby established shall be designated as "Series B Preferred Stock" and
the number of shares constituting such series shall be 119,106.
2. Dividends. The holders of the Series B Preferred Stock shall have
---------
no right to receive dividends.
3. Liquidation Preference.
----------------------
(a) In the event of any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the holders of the Series B
Preferred Stock shall be entitled to receive, prior and in preference to any
distribution of any of the assets or surplus funds of the Corporation to the
holders of the Corporation's common stock, no par value ("Common Stock") or
Series A Preferred Stock by reason of their ownership thereof, the amount
1
<PAGE>
of $22.00 per share (as adjusted for any stock dividends, combinations or splits
with respect to such shares) (the "Liquidation Preference"). If upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Series B Preferred Stock shall be insufficient to permit the
payment to such holders of the full Liquidation Preference, then the entire
assets and funds of the Corporation legally available for distribution shall be
distributed ratably among the holders of the Series B Preferred Stock in
proportion to the preferential amount each such holder is otherwise entitled to
receive.
(b) After the payment or distribution to the holders of the Series
B Preferred Stock of the full Liquidation Preference set forth above, the
holders of the Series B Preferred Stock shall receive no further distribution
with respect to such shares.
(c) For purposes of this Section 3, (i) any acquisition of the
Corporation by means of merger or other form of corporate reorganization in
which outstanding shares of the Corporation are sold or exchanged for securities
or other consideration issued, or caused to be issued, by the acquiring
corporation or its subsidiary (other than a mere reincorporation transaction) or
(ii) a sale of all or substantially all of the assets of the Corporation, shall,
at the option of the holders of a majority of the outstanding shares of Series B
Preferred Stock, be treated as a liquidation, dissolution or winding up of the
Corporation and shall entitle the holders of Series B Preferred Stock to receive
at the closing in cash, securities or other property (valued as provided in
Section 3(d) below) amounts as specified in Section 3(a) above; provided,
--------
however, that, in each such case, the applicable transaction shall not be
- -------
treated as a liquidation, dissolution or winding up of the Corporation and shall
not entitle the holders of Series B Preferred Stock to receive such amounts
unless the Corporation's shareholders of record as constituted immediately prior
to such acquisition or sale hold less than a majority of the Voting Stock (as
defined below) of the surviving corporation or acquiring entity immediately
after such acquisition or sale. "Voting Stock" means the capital stock of an
entity that is entitled to vote in the election of the Board of Directors of
such entity.
(d) Whenever the distribution provided for in this Section 3 shall
be payable in securities or property other than cash, the value of such
distribution shall be the fair market value of such securities or other property
as determined in good faith by the Board of Directors.
4. Repurchase at the Option of the Series B Preferred Shareholders.
---------------------------------------------------------------
Upon the occurrence of a Change of Control (as defined below),
each holder of shares of Series B Preferred Stock shall have the right to
require the Corporation to repurchase all or any part of such holder's shares of
Series B Preferred Stock at a price in cash equal to the greater of (a) $22.00
per share (as adjusted for any stock dividends, combinations or splits with
respect to such shares) or (b) the market value of the shares of Class A Common
Stock issuable upon conversion of such shares of Series B Preferred Stock,
calculated as the average of the closing bid price of the Class A Common Stock
for the forty-five (45) consecutive trading days immediately preceding the date
of repurchase, subject to the Corporation's ability to legally do so under
California General Corporation Law, Chapter 5. The Corporation shall repurchase
such
2
<PAGE>
shares within 30 days of the receipt of notice by the Corporation that such
shareholder has elected to have the Corporation repurchase its shares pursuant
to this Section 4.
"Change of Control" means the occurrence of any of the following:
(i) the sale, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Corporation, (ii) the adoption of a plan
relating to the liquidation or dissolution of the Corporation, (iii) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any person or entity becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under
the Exchange Act, except that in calculating the beneficial ownership of any
particular "person," such "person" shall be deemed to have beneficial ownership
of all securities that such person has the right to acquire, whether such right
is currently exercisable or is exercisable only upon the occurrence of a
subsequent condition), directly or indirectly, of more than 37.5% of the Voting
Stock of the Corporation (measured by voting power rather than number of
shares), (iv) the first day on which a majority of the members of the Board of
Directors of the Corporation are not Continuing Directors (as defined below) or
(v) the shareholders of the Corporation approve a consolidation of the
Corporation with, or a merger of the Corporation with or into, any entity, or
the shareholders of the Corporation (if required) or the shareholders of any
entity approve a consolidation of such entity with, or merger of such entity
with or into, the Corporation, other than any such transaction where the
Corporation's shareholders of record immediately prior to such transaction hold
more than 80% of the Voting Stock of the surviving corporation or entity
immediately after giving effect to such issuance. A Change of Control shall not
be deemed to have occurred if any of the above events occur by virtue of
transactions effected by FMC Corporation or its affiliates.
"Continuing Director" means any member of the Board of Directors
of the Corporation who (i) was a member of such Board of Directors on the date
on which a share of Series B Preferred Stock is first issued (the "Original
Issue Date") or (ii) was nominated for election or elected to such Board of
Directors with the approval of a majority of the Continuing Directors who were
members of such Board at the time of such nomination or election.
5. Voting Rights.
-------------
(a) Each holder of shares of the Series B Preferred Stock shall be
entitled to the number of votes equal to the number of shares of Class A Common
Stock into which such shares of Series B Preferred Stock could then be converted
and shall have voting rights and powers equal to the voting rights and powers of
the Class A Common Stock (except in the election of directors, which shall be
governed by Section 5(c), and except as otherwise expressly provided herein or
as required by law, voting together with the Common Stock as a single class) and
shall be entitled to notice of any shareholders' meeting in accordance with the
By-laws of the Corporation. Fractional votes shall not, however, be permitted
and any fractional voting rights resulting from the above formula (after
aggregating all shares into which shares of Series B Preferred Stock held by
each holder could be converted) shall be rounded to the nearest whole number
(with one-half being rounded upward).
3
<PAGE>
(b) So long as any shares of Series B Preferred Stock remain
outstanding (or, in the case of (vi) and (vii) below, until October 14, 2002 and
have not been transferred by the original holder of such Series B Preferred
Stock), the Corporation shall not, without the vote or written consent by the
holders of at least a majority of the then outstanding shares of the Series B
Preferred Stock, voting or acting together as a single class, take any of the
following actions:
(i) take any action which adversely alters or changes or may
adversely alter or change the rights, preferences or privileges of the Series B
Preferred Stock;
(ii) increase or decrease the authorized number of shares of
Series B Preferred Stock;
(iii) create (by reclassification or otherwise) any class or
series of shares having rights, preferences or privileges senior to or on a
parity with the Series B Preferred Stock;
(iv) redeem or repurchase any shares of capital stock (other
than repurchases from employees upon termination of employment pursuant to
written employment agreements with such employees in effect on the Original
Issue Date);
(v) enter into any agreement for the redemption or repurchase
of any shares of capital stock except pursuant to repurchases permitted pursuant
to (iv) above;
(vi) merge with or into any other entity or enter into any
other corporate reorganization, recapitalization, sale of control or any
transaction that, directly or indirectly, results in the sale, license, lease,
transfer, conveyance or other disposition of all or substantially all of the
assets or properties of the Corporation;
(vii) sell, license, lease, transfer, convey or otherwise
dispose of the Corporation's Intellectual Property, as defined below;
(viii) amend or waive any provision of the Corporation's
Articles of Incorporation or By-laws;
(ix) purchase, lease or acquire assets or securities of
another person or entity, in one or more related or unrelated transactions, if
the aggregate consideration paid or payable in all such transactions (other than
those in the ordinary course of business) combined exceeds two million dollars
($2,000,000) or any one such transaction exceeds five hundred thousand
($500,000) dollars;
(x) issue or distribute any additional equity securities or
any other securities convertible or exchangeable into equity securities (other
than issuance of shares of Class A Common Stock pursuant to employee stock
options or other employee stock plans in effect as of the Original Issue Date
and, with the approval of the Board of Directors, shares of Class A Common Stock
to unrelated third parties, in arms-length transactions, in consideration for
the payment of fair value, that do not exceed 100,000 shares for any fiscal
year); or
4
<PAGE>
(xi) approves the liquidation, dissolution or winding up of
the Corporation.
"Intellectual Property" means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications, and patent
disclosures, together with all reissuances, continuations, continuations-in-
part, revisions, extensions, and reexaminations thereof, (b) all trademarks,
service marks, trade dress, logos, trade names, and corporate names, together
with all translations, adaptations, derivations, and combinations thereof and
including all good-will associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications, registrations,
and renewals in connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals),
(f) all computer software (including data and related documentation), (g) all
other proprietary rights, and (h) all copies and tangible embodiments thereof
(in whatever form or medium).
(c) The holders of Series B Preferred Stock, voting as a separate
class, shall be entitled to elect one (1) member of the Board of Directors.
6. Conversion. The holders of the Series B Preferred Stock shall
----------
have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series B Preferred Stock shall
----------------
be convertible, at the option of the holder thereof, at any time after the date
of issuance of such share at the office of the Corporation or any transfer agent
for such stock, into such number of fully paid and nonassessable shares of the
Corporation's Class A Common Stock, no par value ("Class A Common Stock") as is
determined by dividing $22.00 by the Series B Conversion Price (as defined
below) applicable to such share, determined as hereinafter provided, in effect
on the date the certificate is surrendered for conversion. The "Series B
Conversion Price" shall initially be $2.20 per share of Class A Common Stock.
Such initial Series B Conversion Price shall be adjusted as hereinafter
provided.
(b) Automatic Conversion. Each share of Series B Preferred Stock
--------------------
shall automatically be converted into shares of Class A Common Stock at the
then-effective Series B Conversion Price, upon the later of (i) the third
anniversary of the date of issuance or (ii) the sixtieth day after the
termination of that certain Representative Agreement between the Corporation and
the initial holder of the Series B Preferred Stock.
(c) Mechanics of Conversion.
-----------------------
(i) Before any holder of Series B Preferred Stock shall be
entitled to convert the same into shares of Class A Common Stock, such holder
shall surrender the certificate or certificates therefor, duly endorsed, at the
office of the Corporation or of any
5
<PAGE>
transfer agent for such stock, and shall give written notice to the Corporation
at such office that such holder elects to convert the same and shall state
therein the name or names in which such holder wishes the certificate or
certificates for shares of Class A Common Stock to be issued. The Corporation
shall, as soon as practicable thereafter, issue and deliver at such office to
such holder of Series B Preferred Stock, a certificate or certificates for the
number of shares of Class A Common Stock to which such holder shall be entitled
as aforesaid. Such conversion shall be deemed to have been made immediately
prior to the close of business on the date of surrender of the shares of Series
B Preferred Stock to be converted, and the person or persons entitled to receive
the shares of Class A Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of Class
A Common Stock on such date.
(d) Adjustment to Series B Conversion Price for Certain Diluting
------------------------------------------------------------
Issues
- ------
(i) Special Definitions. For purposes of this Section 6(d),
-------------------
the following definitions apply:
(1) "Options" shall mean rights, options, or warrants to
-------
subscribe for, purchase or otherwise acquire Common Stock, Series B Preferred
Stock or Convertible Securities (defined below).
(2) "Convertible Securities" shall mean any evidences of
----------------------
indebtedness, shares (other than Common Stock or Series B Preferred Stock) or
other securities convertible into or exchangeable for Common Stock.
(3) "Additional Shares of Common Stock" shall mean all
---------------------------------
shares of Common Stock issued (or, pursuant to Section 6(d)(iii), deemed to be
issued) by the Corporation after the Original Issue Date, other than shares of
Common Stock issued or issuable:
(A) upon conversion of shares of Series B Preferred
Stock;
(B) to officers, directors or employees of, or
consultants to, the Corporation pursuant to stock option or stock purchase plans
or agreements on terms approved by the Board of Directors and shares to
unrelated third parties with approval of the Board of Directors (provided that
the amount of such shares issued does not exceed 100,000 shares of Common Stock
in any fiscal year) (net of any repurchases of such shares, but including all
shares issuable upon exercise of Options), subject to adjustment for all
subdivisions and combinations;
(C) as a dividend or distribution on Series B
Preferred Stock; or
(D) for which adjustment of the Series B Conversion
Price is made pursuant to Section 6(e).
6
<PAGE>
(ii) No Adjustment of Series B Conversion Price. Any provision
------------------------------------------
herein to the contrary notwithstanding, no adjustment in the Series B Conversion
Price for Series B Preferred Stock shall be made in respect of the issuance of
Additional Shares of Common Stock unless the consideration per share (determined
pursuant to Section 6(d)(v) hereof) for an Additional Share of Common Stock
issued or deemed to be issued by the Corporation is less than the Series B
Conversion Price in effect on the date of, and immediately prior to such issue.
(iii) Deemed Issuance of Additional Shares of Common Stock. In
----------------------------------------------------
the event the Corporation at any time or from time to time after the Original
Issue Date shall issue any Options (excluding the option granted pursuant to the
Series B Preferred Stock Purchase Agreement to FMC Corporation of even date
herewith) or Convertible Securities or shall fix a record date for the
determination of holders of any class of securities then entitled to receive any
such Options or Convertible Securities, then the maximum number of shares (as
set forth in the instrument relating thereto without regard to any provisions
contained therein designed to protect against dilution) of Common Stock issuable
upon the exercise of such Options or, in the case of Convertible Securities and
Options for Convertible Securities or for Series B Preferred Stock, the
conversion or exchange of such Convertible Securities or Series B Preferred
Stock, shall be deemed to be Additional Shares of Common Stock issued as of the
time of such issue or, in case such a record date shall have been fixed, as of
the close of business on such record date, provided further that in any such
case in which Additional Shares of Common Stock are deemed to be issued:
(1) no further adjustments in the Series B Conversion
Price shall be made upon the subsequent issue of Convertible Securities, or
Series B Preferred Stock or shares of Common Stock upon the exercise of such
Options or conversion or exchange of such Convertible Securities or Series B
Preferred Stock;
(2) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any increase or
decrease in the consideration payable to the Corporation, or decrease or
increase in the number of shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof, the Series B Conversion Price computed upon the
original issue thereof (or upon the occurrence of a record date with respect
thereto), and any subsequent adjustments based thereon, shall, upon any such
increase or decrease becoming effective, be recomputed to reflect such increase
or decrease insofar as it affects such Options or the rights of conversion or
exchange under such Convertible Securities (provided, however, that no such
adjustment of the Series B Conversion Price shall affect Common Stock previously
issued upon conversion of the Series B Preferred Stock);
(3) upon the expiration of any such Options or any such
Options or any rights of conversion or exchange under such Convertible
Securities which shall not have been exercised, the Series B Conversion Price
computed upon the original issue thereof (or upon the occurrence of a record
date with respect thereto), and any subsequent adjustments based thereon, shall,
upon such expiration, be recomputed as if:
7
<PAGE>
(A) in the case of Convertible Securities or Options
for Common Stock the only Additional Shares of Common Stock issued were the
shares of Common Stock, if any, actually issued upon the exercise of such
Options or the conversion or exchange of such Convertible Securities and the
consideration received therefor was the consideration actually received by the
Corporation for the issue of all such Options, whether or not exercised, plus
the consideration actually received by the Corporation upon such exercise, or
for the issue of all such Convertible Securities which were actually converted
or exchanged, plus the additional consideration, if any, actually received by
the Corporation upon such conversion or exchange and
(B) in the case of Options for Convertible Securities
or Series B Preferred Stock only the Convertible Securities or Series B
Preferred Stock, if any, actually issued upon the exercise thereof were issued
at the time of issue of such Options, and the consideration received by the
Corporation for the Additional Shares of Common Stock deemed to have been then
issued was the consideration actually received by the Corporation for the issue
of all such Options, whether or not exercised, plus the consideration deemed to
have been received by the Corporation (determined pursuant to Section 6(d)(v))
upon the issue of the Convertible Securities or Series B Preferred Stock with
respect to which such Options were actually exercised;
(4) no readjustment pursuant to clause (2) or (3) above
shall have the effect of increasing the Series B Conversion Price to an amount
which exceeds the lower of (a) the Series B Conversion Price on the original
adjustment date, or (b) the Series B Conversion Price that would have resulted
from any issuance of Additional Shares of Common Stock between the original
adjustment date and such readjustment date;
(5) in the case of any Options which expire by their terms
not more than 30 days after the date of issue thereof, no adjustment of the
Series B Conversion Price shall be made until the expiration or exercise of all
such Options, whereupon such adjustment shall be made in the same manner
provided in clause (3) above.
(iv) Adjustment of Series B Conversion Price Upon Issuance of
--------------------------------------------------------
Additional Shares of Common Stock. In the event the Corporation, at any time
- ---------------------------------
after the Original Issue Date shall issue Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be issued pursuant to
Section 6(d)(iii) without consideration or for a consideration per share less
than the Series B Conversion Price as in effect immediately prior to such issue,
then and in such event, the Series B Conversion Price shall be reduced,
concurrently with such issue, to a price (calculated to the nearest cent)
determined by multiplying such Series B Conversion Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issue plus the number of shares of Common Stock which
the aggregate consideration received by the Corporation for the total number of
Additional Shares of Common Stock so issued would purchase at such Series B
Conversion Price in effect immediately prior to such issuance, and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issue plus the number of such Additional Shares of
Common Stock so issued. For the purpose of the above calculation, the number of
shares of Common Stock outstanding immediately prior to such issue shall be
calculated on a fully diluted basis, as if all shares of Series B Preferred
Stock and all
8
<PAGE>
Convertible Securities had been fully converted into shares of Common Stock
immediately prior to such issuance and any outstanding warrants, options or
other rights for the purchase of shares of stock or convertible securities had
been fully exercised (and the resulting securities fully converted into shares
of Common Stock, if so convertible) as of such date.
(v) Determination of Consideration. For purposes of this
------------------------------
Section 6(d), the consideration received by the Corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(1) Cash and Property: Such consideration shall:
-----------------
(A) insofar as it consists of cash, be computed at the
aggregate amount of cash received by the Corporation excluding amounts paid or
payable for accrued interest or accrued dividends;
(B) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of such issue, as
determined in good faith by the Board; and
(C) in the event Additional Shares of Common stock are
issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (A) and (B) above, as
determined in good faith by the Board.
(2) Options and Convertible Securities. The consideration
----------------------------------
per share received by the Corporation for Additional Shares of Common Stock
deemed to have been issued pursuant to Section 6(d)(iii), relating to Options
and Convertible Securities shall be determined by dividing:
(A) the total amount, if any, received or receivable
by the Corporation as consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any provision
contained therein designed to protect against dilution) payable to the
Corporation upon the exercise of such Options or the conversion or exchange of
such Convertible Securities, or in the case of Options for Convertible
Securities or Series B Preferred Stock, the exercise of such Options for
Convertible Securities or Series B Preferred Stock and the conversion or
exchange of such Convertible Securities or Series B Preferred Stock by
(B) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without regard to any provision
contained therein designed to protect against the dilution) issuable upon the
exercise of such Options or conversion or exchange of such Convertible
Securities.
(e) Adjustments to Series B Conversion Price for Stock Dividends
------------------------------------------------------------
and for Combinations or Subdivisions of Common Stock. In the event that the
- ----------------------------------------------------
Corporation at any time
9
<PAGE>
or from time to time after the Original Issue Date shall declare or pay, without
consideration, any dividend on the Common Stock payable in Common Stock or in
any right to acquire Common Stock for no consideration, or shall effect a
subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock (by stock split, reclassification or otherwise than by
payment of a dividend in Common Stock or in any right to acquire Common Stock),
or in the event the outstanding shares of Common Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser number of shares
of Common Stock, then the Series B Conversion Price in effect immediately prior
to such event shall, concurrently with the effectiveness of such event, be
proportionately decreased or increased, as appropriate. In the event that the
Corporation shall declare or pay, without consideration, any dividend on the
Common Stock payable in any right to acquire Common Stock for no consideration
then the Corporation shall be deemed to have made a dividend payable in Common
Stock in an amount of shares equal to the maximum number of shares issuable upon
exercise of such rights to acquire Common Stock.
(f) Adjustments for Reclassification and Reorganization. If
---------------------------------------------------
the Class A Common Stock issuable upon conversion of the Series B Preferred
Stock shall be changed into the same or a different number of shares of any
other class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a subdivision or combination of shares
provided for in Section 6(e) above or a merger or other reorganization referred
to in Section 3(c) above), the Series B Conversion Price then in effect shall,
concurrently with the effectiveness of such reorganization or reclassification,
be proportionately adjusted so that the Series B Preferred Stock shall be
convertible into, in lieu of the number of shares of Class A Common Stock which
the holders would otherwise have been entitled to receive, a number of shares of
such other class or classes of stock equivalent to the number of shares of Class
A Common Stock that would have been subject to receipt by the holders upon
conversion of Series B Preferred Stock immediately before that change.
(g) No Impairment. The Corporation will not, by amendment of
-------------
its Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 6 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series B Preferred Stock against impairment.
(h) Certificate as to Adjustment. Upon the occurrence of each
----------------------------
adjustment or readjustment of the Series B Conversion Price pursuant to this
Section 6, the Corporation at its expense shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and prepare and furnish to
each holder of Series B Preferred Stock a certificate executed by the
Corporation's President or Chief Financial Officer setting forth such adjustment
or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any holder of Series B Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Series B Conversion Price at the time in effect, and
10
<PAGE>
(iii) the number of shares of Class A Common Stock and the amount, if any, of
other property which at the time would be received upon the conversion of the
Series B Preferred Stock. Notwithstanding anything herein to the contrary, no
adjustment of the conversion price shall be made unless all such adjustments,
cumulatively, would require an in crease or a decrease of at least $.02.
(i) Notices of Record Date. In the event that the Corporation
----------------------
shall propose at any time: (i) to declare any dividend or distribution upon its
Common Stock, whether in cash, property, stock or other securities, whether or
not a regular cash dividend and whether or not out of earnings or earned
surplus; (ii) to offer the subscription pro rata to the holders of any class or
series of its stock any additional shares of stock of any class or series or
other rights; (iii) to effect any reclassification or recapitalization of its
Common Stock outstanding involving a change in the Common Stock; or (iv) to
merge or consolidate with or into any other corporation, or sell, lease or
convey all or substantially all of its assets, or to liquidate, dissolve or wind
up;
Then, in connection with each such event, the Corporation shall send
to the holders of Series B Preferred Stock: (1) at least twenty (20) days prior
written notice of the date on which a record shall be taken for such dividend,
distribution or subscription rights (and specifying the date on which the
holders of Class A Common Stock shall be entitled thereto) or for determining
rights to vote, if any, in respect of the matters referred to in (iii) and (iv)
above; and (2) in the case of the matters referred to in (iii) and (iv) above,
at least twenty (20) days prior written notice of the date when the same shall
take place (and specifying the date on which the holders of Common Stock shall
be entitled to exchange their Common Stock for securities or other property
deliverable upon the occurrence of such event).
(j) Issue Taxes. The Corporation shall pay any and all issue
-----------
and other taxes that may be payable in respect of any issue or delivery of
shares of Class A Common Stock on conversion of shares of Series B Preferred
Stock pursuant hereto; provided, however, that the Corporation shall not be
-------- -------
obligated to pay any transfer taxes resulting from any transfer requested by any
holder in connection with any such conversion.
(k) Reservation of Stock Issuable Upon Conversion. The Corporation
---------------------------------------------
shall at all times reserve and keep available out of its authorized but unissued
shares of Class A Common Stock, solely for the purpose of effecting the
conversion of the shares of Series B Preferred Stock, such number of its shares
of Class A Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of Series B Preferred Stock; and if at any
time the number of authorized but unissued shares of Class A Common Stock shall
not be sufficient to effect the conversion of all then outstanding shares of
Series B Preferred Stock, the Corporation will take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Class A Common Stock to such number of shares as shall be
sufficient for such purpose, including, without limitation, engaging in
reasonable efforts to obtain the requisite shareholder approval of any necessary
amendment to this Certificate.
11
<PAGE>
(l) Fractional Shares. No fractional share shall be issued upon
-----------------
the conversion of any share or shares of Series B Preferred Stock. All shares of
Class A Common Stock (including fractions thereof) issuable upon conversion of
more than one share of Series B Preferred Stock by a holder thereof shall be
aggregated for purposes of determining whether the conversion would result in
the issuance of any fractional share. If, after the aforementioned aggregation,
the conversion would result in the issuance of a fraction of a share of Class A
Common Stock, the Corporation shall, in lieu of issuing any fractional share,
pay the holder otherwise entitled to such fraction a sum in cash equal to the
fair market value of such fraction on the date of conversion (as determined in
good faith by the Board of Directors).
(m) Notices. Any notice required by the provisions of this Section
-------
6 to be given to the holders of shares of Series B Preferred Stock shall be
deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his address appearing on the books of the
Corporation.
7. No Reissuance of the Series B Preferred Stock. No share or shares
---------------------------------------------
of the Series B Preferred Stock acquired by the Corporation by reason of
redemption, purchase, conversion or otherwise shall be reissued.
12
<PAGE>
VERIFICATION BY WRITTEN DECLARATION
William J. Young and Alan R. Steel each declares under penalty of
perjury under the laws of the State of California that he has read the foregoing
certificate and knows the contents thereof and that the same is true of his own
knowledge.
Dated: October 14, 1998 /s/ William J. Young
------------------------------
Name: William J. Young
Title: Chairman of the Board
/s/ Alan R. Steel
------------------------------
Name: Alan R. Steel
Title: Chief Financial Officer
<PAGE>
October 14, 1998
Advanced Machine Vision Corporation
2067 Commerce Drive
Medford, OR 97504
Attention: Mr. Alan Steel
Dear Alan:
Reference is made to the Series B Preferred Stock Purchase Agreement of even
date herewith between Advanced Machine Vision Corporation, a California
corporation ("AMV"), and FMC Corporation, a Delaware corporation ("FMC"), and
the documents, instruments and agreements executed in connection therewith
(collectively, the "Executed Documents").
In furtherance of the Executed Documents, and notwithstanding anything to the
contrary contained therein, subject to compliance with applicable laws and the
Nasdaq Stock Market requirements, the parties agree that if FMC exercises its
option to acquire fifteen percent (15%) of the then issued and outstanding
shares of AMV, AMV will fill a vacancy on the Board with one designee chosen by
FMC Corporation or, if no such vacancy exists, AMV will increase the size of its
board by one (1) in order to create such vacancy.
FMC and AMV agree to cooperate with each other in effectuating the terms of this
letter and to execute and deliver such further documents or instruments and take
such further actions as shall be necessary, appropriate and desirable in order
to carry out the full intent and purposes of the terms of this Letter.
FMC Corporation
By: /s/ Charles H. Cannon, Jr.
----------------------------
Its: Vice President
---------------------------
Advanced Machine Vision Corporation
By: /s/ Alan R. Steel
--------------------------
Its: Chief Financial Officer
-------------------------
<PAGE>
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is dated as of
October 14, 1998, by and between ADVANCED MACHINE VISION CORPORATION, a
California corporation (the "Company"), and FMC CORPORATION, a Delaware
corporation, along with its successors and assigns ("Purchaser").
WHEREAS, pursuant to that certain Series B Preferred Purchase
Agreement of even date herewith (the "Purchase Agreement") between the Company
and Purchaser, the Company issued One Hundred Nineteen Thousand One Hundred Six
(119,106) shares of Series B Preferred Stock ("Series B Preferred") to
Purchaser;
WHEREAS, in consideration of its purchase of Series B Preferred,
Purchaser has received an option (the "Option") to acquire "Common Shares" (as
defined below); and
WHEREAS, in order to induce Purchaser to enter into the Purchase
Agreement, the Company has agreed to provide registration rights to Purchaser
on the terms and subject to the conditions provided herein.
NOW THEREFORE, in consideration of the premises contained herein and
for other good and valuable consideration (the receipt, sufficiency and adequacy
of which are hereby acknowledged), and intending to be legally bound hereby, the
parties hereto agree as follows:
Section 1. Definitions.
-----------
(a) As used in this Agreement, the following terms shall have the
following meanings:
"Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
---------
under the Exchange Act.
"Business Day" shall mean any day other than a Saturday or Sunday that
------------
banks are open for business in Illinois and California.
"Common Shares" shall mean shares of Class A Common Stock, without par
-------------
value of the Company.
Page 1
<PAGE>
"Company" shall have the meaning set forth in the preamble and shall
-------
also include the Company's successors.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended from time to time.
"Incidental Registration" shall mean a registration required to be
-----------------------
effected by the Company pursuant to Section 2(b).
-----------
"Incidental Registration Statement" shall mean a registration
---------------------------------
statement of the Company, as provided in Section 2(b), which covers any of the
-----------
Registrable Securities on an appropriate form in accordance with the Securities
Act and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"NASD" shall mean the National Association of Securities Dealers, Inc.
----
"NASDAQ" shall mean the NASDAQ Stock Market of the NASD.
------
"Option" shall mean the Option issued to Purchaser in connection with
------
the Purchase Agreement.
"Permitted Transferee" shall mean any Person which would be a
--------------------
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act.
"Person" shall mean any individual, limited or general partnership,
------
corporation, trust, joint venture, association, joint stock company, limited
liability company or unincorporated organization.
"Prospectus" shall mean the prospectus included in a Registration
----------
Statement, including any preliminary Prospectus, and any such Prospectus as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities and by all other
amendments and supplements to such Prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
therein.
"Purchaser" shall have the meaning set forth in the preamble.
---------
"Registrable Securities" shall mean any Common Shares held by
----------------------
Purchaser, but shall not include the Option or any Common Share (i) which has
been effectively registered under the Securities Act and disposed of in
accordance with a Registration Statement covering such security or (ii) which
has been distributed to the
Page 2
<PAGE>
public pursuant to Rule 144 under the Securities Act.
"Registration Expenses" shall mean any and all expenses incident to
---------------------
performance of or compliance with this Agreement by the Company and its
subsidiaries, including, without limitation: (i) all SEC, stock exchange, NASD
and other registration, listing and filing fees, (ii) all fees and expenses
incurred in connection with compliance with state securities or blue sky laws
and compliance with the rules of the NASDAQ or any stock exchange (including,
without limitation, reasonable fees and disbursements of counsel in connection
such compliance and the preparation of a Blue Sky Memorandum and legal
investment survey), (iii) all expenses of any Persons in preparing or assisting
in preparing, printing, distributing, mailing and delivering any Registration
Statement, any Prospectus, any underwriting agreements, transmittal letters,
securities sales agreements, securities certificates and other documents
relating to the performance of and compliance with this Agreement, (iv) the
reasonable fees and disbursements of (A) counsel for the Company, (B) counsel
for Purchaser (other than in-house counsel) in connection with such registration
and (C) the independent public accountants of the Company, including, without
limitation, the expenses of any "cold comfort" letters required by or incident
to such performance and compliance, (v) the fees and expenses of any trustee,
transfer agent, registrar, escrow agent or custodian, (vi) the fees and
expenses of any special experts or other persons retained by the Company in
connection with any Registration Statement, (vii) the expenses incurred in
connection with making road show presentations and holding meetings with
potential investors to facilitate the distribution and sale of Registrable
Securities which are customarily borne by the issuer, and (viii) all internal
expenses of the Company (including all salaries and expenses of officers and
employees performing legal or accounting duties); provided, however,
--------
Registration Expenses shall not include discounts and commissions and
accountable expense allowances payable to underwriters, selling brokers,
managers or other similar Persons engaged in the distribution of any of the
Registrable Securities.
"Registration Statement" shall mean any registration statement of the
----------------------
Company which covers any Registrable Securities and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Required Registration" shall mean a registration required to be
---------------------
effected pursuant to Section 2(a).
-----------
"Required Registration Statement" shall mean a Registration Statement
-------------------------------
which covers the Registrable Securities requested to be included therein
pursuant to the provisions of Section 2(a) on an appropriate form (in accordance
-----------
with Section 4(a) hereof) pursuant to the Securities Act, and which form shall
-----------
be available for the sale of
Page 3
<PAGE>
the Registrable Securities in accordance with the intended method or methods of
distribution thereof, and all amendments and supplements to such Registration
Statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
---
"Securities Act" shall mean the Securities Act of 1933, as amended
--------------
from time to time.
"Underwriter" shall have the meaning set forth in Section 5(a).
----------- -----------
"Underwritten Offering" shall mean a sale of securities of the Company
---------------------
to an Underwriter or Underwriters for reoffering to the public.
Section 2. Registration Under the Securities Act.
-------------------------------------
(a) Required Registration. At any time and from time to time after
---------------------
the execution of the Purchase Agreement, Purchaser shall have the right to
request in writing (a "Request") (which request shall specify the Registrable
Securities intended to be disposed of by such Purchaser and the intended method
of distribution thereof) that the Company register Purchaser's Registrable
Securities by filing with the SEC a Required Registration Statement. Upon the
receipt of such a Request, the Company shall, as soon as practicable (but no
later than 120 days, which period may be extended by a written extension signed
by one or more Purchasers holding a majority of the Registrable Securities)
after the receipt of such a Request by the Company, cause to be filed with the
SEC a Required Registration Statement covering the Registrable Securities that
the Company has been so requested to register in such Request, and shall use its
best efforts to have such Required Registration Statement declared effective by
the SEC as soon as practicable thereafter. The Company shall keep such Required
Registration Statement effective for a period of at least three hundred sixty
(360) days (and, within such period, continuously effective for a period of at
least one hundred eighty (180) days) following the date on which such Required
Registration Statement is declared effective (or such shorter period that will
terminate when all of the Registrable Securities covered by such Required
Registration Statement have been sold pursuant thereto), including, if
necessary, by filing with the SEC a post-effective amendment or a supplement to
the Required Registration Statement or the related Prospectus or any document
incorporated therein by reference or by filing any other required document or
otherwise supplementing or amending the Required Registration Statement, if
required by the rules, regulations or instructions applicable to the
registration form used by the Company for such Required Registration Statement
or by the Securities Act, the Exchange Act, any state securities or blue sky
laws, or any rules and regulations thereunder.
Page 4
<PAGE>
(b) Incidental Registration.
-----------------------
(i) Right to Include Registrable Securities. If at any time after
---------------------------------------
the execution of this Agreement the Company proposes to register any of its
Common Shares under the Securities Act (other than (A) any registration of
public sales or distributions solely by and for the account of the Company of
securities issued (x) pursuant to any employee benefit or similar plan or any
dividend reinvestment plan or (y) in any acquisition by the Company, or (z)
pursuant to its shareholder rights plan or (B) pursuant to Section 2(a) hereof),
------------
either in connection with a primary offering for cash for the account of the
Company or a secondary offering, the Company will, each time it intends to
effect such a registration, give written notice to Purchaser at least thirty-
five (35) Business Days (which period may be reduced by written agreement of one
or more Purchasers holding a majority of the Registrable Securities) prior to
the initial filing of a Registration Statement with the SEC pertaining thereto,
informing Purchaser of its intent to file such Registration Statement and of
Purchaser's rights to request the registration of the Registrable Securities
held by Purchaser under this Section 2(b) (the "Company Notice"). Upon the
-----------
written request of Purchaser made within seven (7) Business Days after any such
Company Notice is given (which request shall specify the Registrable Securities
intended to be disposed of by Purchaser and the intended method of distribution
thereof), the Company shall use all good faith reasonable efforts to include in
the Registration Statement all Registrable Securities that the Company has been
so requested to register by Purchaser to the extent required to permit the
disposition (in accordance with the intended methods of distribution thereof or,
in the case of a registration which is intended to effect a primary offering for
cash for the account of the Company, in accordance with the Company's intended
method of distribution) of the Registrable Securities so requested to be
registered, including, if necessary, by filing with the SEC a post-effective
amendment or a supplement to the Incidental Registration Statement or the
related Prospectus or any document incorporated therein by reference or by
filing any other required document or otherwise supplementing or amending the
Incidental Registration Statement, if required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Incidental Registration Statement or by the Securities Act, any state securities
or blue sky laws, or any rules and regulations thereunder; provided, however,
-------- -------
that if, at any time after giving written notice of its intention to register
any securities and prior to the effective date of the Incidental Registration
Statement filed in connection with such registration, the Company shall
determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to Purchaser and, thereupon, (A) in the case of a determination
not to register, the Company shall be relieved of its obligation to register any
Registrable Securities in connection with such registration (but not from its
obligation to pay the Registration Expenses incurred in connection therewith),
and (B) in the case of a determination to delay such registration, the Company
shall be relieved
Page 5
<PAGE>
of its obligation to register any Registrable Securities requested to be
included in such Incidental Registration Statement unless Purchaser elects to
continue such registration as a Required Registration.
The registration rights granted pursuant to the provisions of this
Section 2(b) shall be in addition to the registration rights granted pursuant to
- ------------
the other provisions of this Section.
(ii) Priority in Incidental Registrations. If a registration
------------------------------------
pursuant to this Section 2(b) involves an Underwritten Offering of the
------------
securities so being registered, whether or not for sale for the account of the
Company, and the sole Underwriter or the lead managing Underwriter, as the case
may be, of such Underwritten Offering shall advise the Company in writing (with
a copy to Purchaser on or before fifteen (15) days prior to the date then
scheduled for such offering that, in its opinion, the amount of securities
(including Registrable Securities) requested to be included in such registration
exceeds the amount which can be sold in (or during the time of) such offering
without adversely affecting the distribution of the securities being offered,
then the Company shall include in such registration first, (x) in the case of a
-----
sale for the account of the Company, all the securities to be sold by the
Company pursuant to such Incidental Registration Statement without reference to
the incidental registration rights of Purchaser, and (y) in the case of a sale
other than for the account of the Company, all of the securities requested to be
sold pursuant to such registration statement by any Seller exercising a demand
registration right, and then by Purchaser; second, (x) in the case of a sale for
------
the account of the Company, the amount of other securities (including
Registrable Securities) requested by Purchaser to be included in such
registration that the Company is so advised can be sold in (or during the time
of) such offering, and (y) in the case of a sale other than for the account of
the Company, the amount of other securities requested to be included by the
Company for its own account in such registration that the Company is so advised
can be sold in (or during the time of) such offering; and third, in all cases,
-----
the amount of other securities requested to be included in such registration
that the Company is so advised can be sold in (or during the time of) such
offering.
(c) Expenses. The Company shall pay all Registration Expenses in
--------
connection with (i) each registration requested pursuant to Section 2(a) and
------------
(ii) each registration as to which Purchaser request inclusion of Registrable
Securities pursuant to Section 2(b). Purchaser shall pay all discounts and
-----------
commissions payable to underwriters, selling brokers, managers or other similar
Persons related to the sale or disposition of Purchaser's Registrable Securities
pursuant to any registration pursuant to this Section and the fees and expenses
of its legal counsel.
(d) Effective Registration Statement; Suspension. A Registration
--------------------------------------------
Statement pursuant to Section 2(a) will not be deemed to have become effective
-----------
(and
Page 6
<PAGE>
the related registration will not be deemed to have been effected) unless it has
been declared effective by the SEC; provided, however, that if, after it has
-------- -------
been declared effective, the offering of any Registrable Securities pursuant to
such Registration Statement is interfered with by any stop order, injunction or
other order or requirement of the SEC or any other governmental agency or court,
such Registration Statement will be deemed not to have become effective and the
related registration will not be deemed to have been effected.
Any period during which the Company fails to keep any Required
Registration Statement effective and usable for resale of Registrable Securities
shall be referred to as a "Suspension Period." A Suspension Period shall
commence on and include the date that the Company gives notice that any Required
Registration Statement is no longer effective or usable for resale of
Registrable Securities and shall continue until and including the date when
Purchaser either receives the copies of the supplemented or amended Prospectus
contemplated by Section 4(j) or is advised in writing by the Company that the
------------
use of the Prospectus may be resumed. In the event of one or more Suspension
Periods, the applicable time period referenced in the first paragraph of Section
-------
2(a) shall be extended by the number of days included in each such Suspension
- ----
Period, and, in the event any Suspension Period occurs sooner than thirty (30)
days after the end of the previous Suspension Period or thirty (30) days after
the initial effectiveness of any Required Registration Statement, none of the
days between such Suspension Periods or prior to such Suspension Period shall be
included in computing such applicable time period.
(e) Selection of Underwriters. At any time or from time to time,
-------------------------
Purchaser may elect to have such Registrable Securities sold in an Underwritten
Offering and may select the investment banker or investment bankers and manager
or managers that will serve as lead managing Underwriter or sole Underwriter
with respect to the offering of such Registrable Securities as long as such
Underwriter or Underwriters are reasonably acceptable to the Company. Purchaser
may not participate in any Underwritten Offering hereunder unless Purchaser (i)
agrees to sell such Purchaser's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (ii) completes and executes all questionnaires, powers of
attorney, custody agreements, indemnities, underwriting agreements and other
documents required under the terms of such Underwritten Offering.
Section 3. Holdback Arrangements.
---------------------
(a) Restrictions on Public Sale by Purchaser. (i) Purchaser agrees,
----------------------------------------
if the applicable offering is a primary Underwritten Offering of Common Shares
for cash for the account of the Company as to which Purchaser is eligible to
participate pursuant to Section 2(b), the requirements of the immediately
-----------
following sentence are satisfied, and
Page 7
<PAGE>
the sole Underwriter or lead managing Underwriter in such Offering so requests,
not to effect any public sale or distribution of Registrable Securities
(including any sales pursuant to Rule under the Securities Act) during the
period commencing on date Purchaser receives the Company Notice pursuant to
Section 2(b) and continuing until ninety (90) days after the effective date of
- -----------
the Registration Statement or any shorter period which the sole or lead managing
Underwriter shall request (except to the extent permitted for sales of
Purchaser's Registrable Securities pursuant to the Registration Statement).
Purchaser shall not be obligated to agree to the restrictions set forth in this
Section 3(a)(i) (A) unless the registration statement for the offering by the
- ------------------
Company is filed with the SEC within twenty (20) days after giving the Company
Notice and relates to a primary offering for cash of Common Shares for net
proceeds of at least ten million dollars ($10,000,000) for the account of the
Company or a Company subsidiary or a newly formed holding company (based upon
the closing price of the Common Shares in the principal trading market therefor
as of the close of trading on the trading date immediately preceding the date of
the Company Notice with respect to such offering), the Company uses all good
faith reasonable efforts to have such registration statement declared effective
by the SEC as soon as practicable after filing and such registration statement
is declared effective no later than the ninetieth (90th) day after giving the
Company Notice, and (B) unless at least one hundred eighty (180) days have
elapsed since the expiration or termination of Purchaser's agreement pursuant to
this Section 2(a) with respect to any prior Company registration to which the
-----------
restrictions of this Section 3(a)(i) apply (except in the case of the initial
--------------
such Company registration).
(b) Restrictions on Public Sale by the Company. The Company shall
------------------------------------------
not effect any public sale or distribution (other than public sales or
distributions solely by and for the account of the Company of securities issued
pursuant to any employee benefit or similar plan or any dividend reinvestment
plan) of any securities during the period commencing on the date the Company
receives a Request from Purchaser and continuing until one hundred twenty (120)
days after the commencement of an Underwritten Offering, if requested by the
sole Underwriter or lead managing Underwriter in such Underwritten Offering, or
for such shorter period as the sole or lead managing Underwriter shall request.
Section 4. Registration Procedures.
-----------------------
In connection with the obligations of the Company pursuant to Section
-------
2, the Company shall use all good faith reasonable efforts to effect or cause to
- -
be effected the registration of the Registrable Securities under the Securities
Act to permit the sale of such Registrable Securities by Purchaser in accordance
with their intended method or methods of distribution, and the Company shall:
(a) (i) prepare and file a Registration Statement with the SEC which:
(A) shall be on Form S-3 (or any successor to such form), if available, or a
form
Page 8
<PAGE>
selected by Purchaser for which the Company qualifies and which the Company
approves (such approval not to be unreasonably withheld), (B) shall be available
for the sale or exchange of the Registrable Securities in accordance with the
intended method or methods of distribution by Purchaser thereof, and (C) shall
comply as to form with the requirements of the applicable form and include all
financial statements required by the SEC to be filed therewith and all other
information reasonably requested by the lead managing Underwriter or sole
Underwriter, if applicable, to be included therein: (ii) use all good faith
reasonable efforts to cause such Registration Statement to become effective and
remain effective in accordance with Section 2; (iii) use all good faith
---------
reasonable efforts to not take any action that would cause a Registration
Statement to contain a material misstatement or omission or to be not effective
and usable for resale of Registrable Securities during the period that such
Registration Statement is required to be effective and usable; and (iv) cause
each Registration Statement and the related Prospectus and any amendment or
supplement thereto, as of the effective date of such Registration Statement,
amendment or supplement (A) to comply with any requirements of the Securities
Act and the rules and regulations of the SEC and (B) not to contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
(b) subject to paragraph (j) of this Section 4, prepare and file with
------------ ---------
the SEC such amendments and post-effective amendments to each such Registration
Statement, as may be necessary to keep such Registration Statement effective for
the applicable period; cause each such Prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Securities Act and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by each
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by Purchaser thereof, as set forth in
such registration statement;
(c) furnish to Purchaser and to each Underwriter of an Underwritten
Offering of Registrable Securities, if any, without charge, as many copies of
each Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as Purchaser or Underwriter may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Securities. The Company hereby consents to the use of the
Prospectus, including each preliminary Prospectus, by Purchaser and each
Underwriter of an Underwritten Offering of Registrable Securities, if any, in
connection with the offering and sale of the Registrable Securities covered by
the Prospectus or the preliminary Prospectus (Purchaser hereby agreeing not to
make a broad public dissemination of a form of preliminary Prospectus which is
designed to be a "quiet filing" without the Company's consent, such consent not
to be withheld unreasonably);
(d) (i) use all good faith reasonable efforts to register or qualify
the
Page 9
<PAGE>
Registrable Securities, no later than the time the applicable Registration
Statement is declared effective by the SEC, under all applicable state
securities or blue sky laws of such jurisdictions as each Underwriter, if any,
or if Purchaser covered by a Registration Statement, reasonably requests; (ii)
use all good faith reasonable efforts to keep each such registration or
qualification effective during the period such Registration Statement is
required to be kept effective; and (iii) do any and all other acts and things
which may be reasonably necessary or advisable to enable each such Underwriter,
if any, and Purchaser to consummate the disposition in each such jurisdiction of
Registrable Securities owned by Purchaser; provided, however, that the Company
-------- -------
shall not be obligated to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to consent to
be subject to general service of process (other than service of process in
connection with such registration or qualification or any sale of Registrable
Securities in connection therewith) in any such jurisdiction;
(e) notify Purchaser promptly, and, if requested by Purchaser, confirm
such advice in writing: (i) when a Registration Statement has become effective
and when any post-effective amendments and supplements thereto become effective;
(ii) of the issuance by the SEC or any state securities authority of any stop
order, injunction or other order or requirement suspending the effectiveness of
a Registration Statement or the initiation of any proceedings for that purpose;
(iii) if, between the effective date of a Registration Statement and the closing
of any sale of securities covered thereby pursuant to any agreement to which the
Company is a party, the representations and warranties of the Company contained
in such agreement cease to be true and correct in all material respects or if
the Company receives any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the
initiation of any proceeding for such purpose; and (iv) of the happening of any
event during the period a Registration Statement is effective as a result of
which such Registration Statement or the related Prospectus contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading;
(f) furnish counsel for each such Underwriter, if any, and for
Purchaser copies of any comments received from or any request by the SEC or any
state securities authority for amendments or supplements to a Registration
Statement and Prospectus or for additional information;
(g) use all good faith reasonable efforts to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement at the
earliest possible time;
(h) upon request, furnish to the sole Underwriter or lead managing
Underwriter of an Underwritten Offering of Registrable Securities, if any,
without charge,
Page 10
<PAGE>
at least one signed copy of each Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits; and furnish to Purchaser,
without charge, at least one conformed copy of each Registration Statement and
any post-effective amendment thereto (without documents incorporated therein by
reference or exhibits thereto, unless requested);
(i) cooperate with Purchaser and the sole Underwriter or lead managing
Underwriter of an Underwritten Offering of Registrable Securities, if any, to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends; and
enable such Registrable Securities to be in such denominations (consistent with
the provisions of the governing documents thereof) and registered in such names
as Purchaser or the sole Underwriter or lead managing Underwriter of an
Underwritten Offering of Registrable Securities, if any, may reasonably request
at least three business days prior to any sale of Registrable Securities;
(j) upon the occurrence of any event contemplated by paragraph (e)(iv)
----------------
of this Section, use all good faith reasonable efforts to prepare a supplement
or post-effective amendment to a Registration Statement or the related
Prospectus, or any document incorporated therein by reference, or file any other
required document so that, as thereafter delivered to Purchaser, such Prospectus
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(k) enter into customary agreements (including, in the case of an
Underwritten Offering, underwriting agreements in customary form, and including
provisions with respect to indemnification and contribution in customary form
and consistent with the provisions relating to indemnification and contribution
contained herein) and take all other customary and appropriate actions in order
to expedite or facilitate the disposition of such Registrable Securities and in
connection therewith:
(i) make such representations and warranties to Purchaser and the
Underwriters, if any, in form, substance and scope as are customarily made
by issuers to underwriters in similar underwritten offerings;
(ii) obtain opinions of counsel to the Company and updates thereof
(which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the lead managing Underwriter, if any, and
Purchaser) addressed to Purchaser and the Underwriters, if any, covering
the matters customarily covered in opinions requested in sales of
securities or underwritten offerings and such other matters as may be
reasonably requested by Purchaser and
Page 11
<PAGE>
Underwriters;
(iii) use best efforts to obtain "cold comfort" letters and updates
thereof from the Company's independent certified public accountants
addressed to Purchaser, if permissible, and the Underwriters, if any, which
letters shall be customary in form and shall cover matters of the type
customarily covered in "cold comfort" letters to underwriters in connection
with primary underwritten offerings;
(iv) to the extent requested and customary for the relevant
transaction, enter into a securities sales agreement with Purchaser covered
by any Registration Statement relating to the Registration and providing
for, among other things, the appointment of such representative as agent
for Purchaser for the purpose of soliciting purchases of Registrable
Securities, which agreement shall be customary in form, substance and scope
and shall contain customary representations, warranties and covenants; and
(v) deliver such customary documents and certificates as may be
reasonably requested by Purchaser being sold or by the managing
Underwriters, if any.
The above shall be done (A) at the effectiveness of such Registration Statement
(and each post-effective amendment thereto) in connection with any registration,
and (B) at each closing under any underwriting or similar agreement as and to
the extent required thereunder;
(l) make available for inspection by representatives of Purchaser and
any Underwriters participating in any disposition pursuant to a Registration
Statement and any counsel or accountant retained by Purchaser or Underwriters
(subject to the terms of customary confidentiality agreements, if any), all
relevant financial and other records, pertinent corporate documents and
properties of the Company and cause the respective officers, directors and
employees of the Company to supply all information reasonably requested by any
such representative, Underwriter, counsel or accountant in connection with a
Registration Statement;
(m) (i) within a reasonable time prior to the filing of any
Registration Statement, any Prospectus, any amendment to a Registration
Statement or amendment or supplement to a Prospectus: provide copies of such
document to Purchaser and to counsel to such Purchaser and to the Underwriter or
Underwriters of an Underwritten Offering of Registrable Securities, if any; (B)
fairly consider such reasonable changes in any such document prior to or after
the filing thereof as the counsel to Purchaser or the Underwriter or the
Underwriters may request; and (C) not file any such document in a form to which
Purchaser or any Underwriter shall
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reasonably object; and make such of the representatives of the Company as shall
be reasonably requested by Purchaser being registered or any Underwriter
available for discussion of such document;
(ii) within a reasonable time prior to the filing of any document
that is to be incorporated by reference into a Registration Statement or a
Prospectus: (A) provide copies of such document to counsel for Purchaser;
(B) fairly consider such reasonable changes in such document prior to or
after the filing thereof as counsel for Purchaser or such Underwriter shall
request; and (C) make such of the representatives of the Company as shall
be reasonably requested by such counsel available for discussion of such
document;
(n) cause all Registrable Securities to be qualified for inclusion in
or listed on the NASDAQ;
(o) otherwise use all good faith reasonable efforts to comply with all
applicable rules and regulations of the SEC, including making available to
Purchaser an earnings statement covering at least twelve (12) months which shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder;
(p) cooperate and assist in any filings required to be made with the
NASDAQ, NASD or any other exchange and in the performance of any due diligence
investigation by any Underwriter in an Underwritten Offering and Purchaser; and
(q) use all good faith reasonable efforts to facilitate the
distribution and sale of any Registrable Securities to be offered pursuant to
this Agreement, including, without limitation, by making road show
presentations, holding meetings with potential investors and taking such other
actions as shall be reasonably requested by Purchaser or the lead managing
Underwriter of an Underwritten Offering.
Purchaser shall, as a condition to the registration obligations with
respect to such Purchaser provided herein, furnish to the Company such
information regarding Purchaser required to be included in the Registration
Statement, the ownership of Registrable Securities by Purchaser and the proposed
distribution by Purchaser of such Registrable Securities as the Company may from
time to time reasonably request in writing.
Purchaser shall, upon receipt of any notice from the Company of the
happening of any event of the kind described in paragraph (e)(iv) of this
-----------------
Section, discontinue disposition of Registrable Securities pursuant to the
affected Registration Statement until Purchaser's receipt of the copies of the
supplemented or amended Prospectus contemplated by paragraph (j) of this
------------
Section, and, if so directed by the Company, Purchaser shall deliver to the
Company (at the expense of the Company), all
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<PAGE>
copies in its possession, other than permanent file copies then in Purchaser's
possession, of the Prospectus covering such Registrable Securities which was
current at the time of receipt of such notice.
Section 5. Indemnification; Contribution.
-----------------------------
(a) Indemnification by the Company. The Company shall indemnify and
------------------------------
hold harmless each Person who participates as an underwriter (any such Person
being an "Underwriter"), Purchaser and their respective directors, officers and
employees and each Person, if any, who controls or is controlled by Purchaser or
Underwriter within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act as follows:
(i) against any and all losses, liabilities, claims, damages,
judgments and reasonable expenses whatsoever, as incurred, arising out of
any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement pursuant to which Registrable
Securities were registered under the Securities Act, including, without
limitation, all documents incorporated therein by reference, or the
omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading
or arising out of any untrue statement or alleged untrue statement of a
material fact contained in any Prospectus, including all documents
incorporated therein by reference, or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(ii) against any and all losses, liabilities, claims, damages,
judgments and reasonable expenses whatsoever, as incurred, to the extent of
the aggregate amount paid in settlement of any litigation, investigation or
proceeding by any governmental agency or body, commenced or threatened, or
of any other claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, if such
settlement is effected with the written consent of the Company; and
(iii) against any and all reasonable expense whatsoever, as incurred
(including fees and disbursements of counsel), incurred in investigating,
preparing or defending against any litigation, investigation or proceeding
by any governmental agency or body, commenced or threatened, in each case
whether or not such Person is a party, or any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue statement
or omission, to the extent that any such expense is not paid under
paragraph (i) or (ii) above;
------------- ---
provided, however, that this indemnity agreement does not apply to Purchaser or
- -------- -------
any
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<PAGE>
Underwriter with respect to any loss, liability, claim, damage, judgment or
expense to the extent arising out of any untrue statement or alleged untrue
statement of a material fact contained in any Prospectus, or the omission or
alleged omission therefrom of a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, in any such case made in reliance upon and in conformity with
written information furnished to the Company by Purchaser or such Underwriter
expressly for use in a Registration Statement (or any amendment thereto) or any
Prospectus (or any amendment or supplement thereto).
(b) Indemnification by Purchaser. (i) Purchaser shall indemnify and
----------------------------
hold harmless the Company and each Underwriter, and each of their respective
partners, directors, officers and employees (including each officer of the
Company who signed the Registration Statement), and each Person, if any, who
controls the Company or any Underwriter within the meaning of Section 15 of the
Securities Act, against any and all losses, liabilities, claims, damages,
judgments and expenses described in the indemnity contained in paragraph (a) of
------------
this Section as incurred, but only with respect to untrue statements or alleged
untrue statements of a material fact contained in any Prospectus or the
omissions, or alleged omissions therefrom of a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, in any such case made in reliance upon and in conformity
with written information furnished to the Company by Purchaser expressly for use
in such Registration Statement (or any amendment thereto) or such Prospectus (or
any amendment or supplement thereto).
(c) Conduct of Indemnification Proceedings. Each indemnified party or
--------------------------------------
parties shall give reasonably prompt notice to each indemnifying party or
parties of any action or proceeding commenced against it in respect of which
indemnity may be sought hereunder, but failure so to notify an indemnifying
party or parties shall not relieve it or them from any liability which it or
they may have under this indemnity agreement, except to the extent that the
indemnifying party is materially prejudiced by such failure to give notice. If
the indemnifying party or parties so elects within a reasonable time after
receipt of such notice, the indemnifying party or parties may assume the defense
of such action or proceeding at such indemnifying party's or parties' expense
with counsel chosen by the indemnifying party or parties and approved by the
indemnified party defendant in such action or proceeding, which approval shall
not be unreasonably withheld; provided, however, that, if such indemnified party
-------- -------
or parties determine in good faith that a conflict of interest exists and that
therefore it is advisable for such indemnified party or parties to be
represented by separate counsel or that, upon advice of counsel, there may be
legal defenses available to it or them which are different from or in addition
to those available to the indemnifying party, then the indemnifying party or
parties shall not be entitled to assume such defense and the indemnified party
or parties shall be entitled to separate counsel (limited in each jurisdiction
to one counsel for all Underwriters and another counsel for all other
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<PAGE>
indemnified parties under this Agreement) at the indemnifying party's or
parties' expense. If an indemnifying party or parties is not so entitled to
assume the defense of such action or does not assume such defense, after having
received the notice referred to in the first sentence of this paragraph, the
indemnifying party or parties will pay the reasonable fees and expenses of
counsel for the indemnified party or parties (limited in each jurisdiction to
one counsel for all Underwriters and another counsel for all other indemnified
parties under this Agreement). No indemnifying party or parties will be liable
for any settlement effected without the written consent of such indemnifying
party or parties, which consent shall not be unreasonably withheld. If an
indemnifying party is entitled to assume, and assumes, the defense of such
action or proceeding in accordance with this paragraph, such indemnifying party
or parties shall not, except as otherwise provided in this subsection (c), be
liable for any fees and expenses of counsel for the indemnified parties incurred
thereafter in connection with such action or proceeding.
(d) Contribution. (i) In order to provide for just and equitable
------------
contribution in circumstances in which the indemnity agreement provided for in
this Section is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms in respect of any
losses, liabilities, claims, damages, judgments and expenses suffered by an
indemnified party referred to therein, each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, liabilities,
claims, damages, judgments and expenses in such proportion as is appropriate to
reflect the relative fault of the Company on the one hand and Purchaser
(including, in each case, that of its officers, directors, employees and agents)
on the other in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages, judgments or expenses, as well as any
other relevant equitable considerations. The relative fault of the Company on
the one hand and Purchaser on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company, on the one hand, or by or on behalf of
Purchaser, on the other, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, liabilities,
claims, damages, judgments and expenses referred to above shall be deemed to
include, subject to the limitations set forth in paragraph (c) of this Section,
------------
any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim.
(ii) The Company and Purchaser agree that it would not be just and
equitable if contribution pursuant to this paragraph (d) were determined by pro
------------ ---
rata allocation or by any other method of allocation which does not take account
- ----
of the equitable considerations referred to in sub-paragraph (i) above.
Notwithstanding the
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<PAGE>
provisions of this paragraph (d), in the case of distributions to the public,
-------------
Purchaser shall not be required to contribute any amount in excess of the amount
by which (A) the total price at which the Registrable Securities sold by
Purchaser and its Affiliates and distributed to the public were offered to the
public exceeds (B) the amount of any damages which such indemnifying Purchaser
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
Section 6. Miscellaneous.
-------------
(a) No Inconsistent Agreements. The Company will not on or after the
--------------------------
date of this Agreement enter into any agreement that conflicts with the
provisions of this Agreement or which grants registration or similar rights
without the consent of the Purchaser. The Company represents and warrants that
there are no other holders of registration rights relating to the Company`s
securities other than those certain Stock Option Agreements, dated as of August
5, 1998, between the Company and Lyon Securities, Inc. and SRG & Associates,
Ltd.
(b) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of
Purchaser.
(c) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand delivery, telex,
telecopier, or any courier guaranteeing overnight delivery (i) if to Purchaser,
to:
FMC FoodTech,
Attn: John Hartner
Business Development Manager
200 W. Madison Street
Chicago, IL 60606
T: 312/861-6705
F: 312/861-6496
(ii) and if to the Company, to:
Advanced Machine Vision Corporation
Attn: Alan R. Steel
Vice President, Finance & CFO
2067 Commerce Drive
Medford, OR 97504
T: 541/776-7700
F: 541/779-6838
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<PAGE>
All such notices and communications shall be deemed to have been duly
given: at the time delivered, if delivered by hand, if personally delivered;
when receipt is acknowledged, if faxed; and on the next business day if timely
delivered to federal express or other courier guaranteeing overnight delivery..
(d) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors, assigns and transferees of each of the
parties. If any successor, assignee or transferee of Purchaser shall acquire
Registrable Securities in any manner, whether by operation of law or otherwise,
such Registrable Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Securities such Person
shall be conclusively deemed to have agreed to be bound by and to perform all of
the terms and provisions of this Agreement and to receive the benefits hereof.
For purposes of this Agreement, "successor" for any entity other than a natural
person shall mean a successor to such entity as a result of such entity's
merger, consolidation, liquidation, dissolution, sale of substantially all of
its assets, or similar transaction.
(e) Recapitalizations, Exchanges, etc., Affecting Registrable
---------------------------------------------------------
Securities. The provisions of this Agreement shall apply, to the full extent
- ----------
set forth herein with respect to the Registrable Securities, to any and all
securities or capital stock of the Company or any successor or assign of the
Company (whether by merger, consolidation, sale of assets or otherwise) which
may be issued in respect of, in exchange for, or in substitution of such
Registrable Securities, by reason of any dividend, split, issuance, reverse
split, combination, recapitalization, reclassification, merger, consolidation or
otherwise. Upon the occurrence of any of such events, Common Share amounts
hereunder shall be appropriately adjusted if necessary.
(f) Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which, when so executed and delivered, shall be deemed to
be an original, but all of which counterparts, taken together, shall constitute
one and the same instrument.
(g) Descriptive Headings, Etc. The headings in this Agreement are for
-------------------------
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein. Unless the context of this Agreement
otherwise requires: (1) words of any gender shall be deemed to include each
other gender; (2) words using the singular or plural number shall also include
the plural or singular number, respectively; (3) the words "hereof", "herein"
and "hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular
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<PAGE>
provision of this Agreement, and Article, Section and paragraph references are
to the Articles, Sections and paragraphs to this Agreement unless otherwise
specified; (4) the word "including" and words of similar import when used in
this Agreement shall mean "including, without limitation," unless otherwise
specified; (5) "or" is not exclusive; and (6) provisions apply to successive
events and transactions.
(h) Severability. In the event that any one or more of the
------------
provisions, paragraphs, words, clauses, phrases or sentences contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the other remaining provisions,
paragraphs, words, clauses, phrases or sentences hereof shall not be in any way
impaired, it being intended that all rights, powers and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
-------------
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS (WITHOUT GIVING EFFECT TO
THE CONFLICTS OF LAW PRINCIPLES THEREOF).
(j) Specific Performance. The parties hereto acknowledge that there
--------------------
would be no adequate remedy at law if any party fails to perform in any material
respect any of its obligations hereunder, and accordingly agree that each party,
in addition to any other remedy to which it may be entitled at law or in equity,
shall be entitled to seek to compel specific performance of the obligations of
any other party under this Agreement in accordance with the terms and conditions
of this Agreement in any court of the United States or any State thereof having
jurisdiction.
(k) Entire Agreement. This Agreement is intended by the parties as a
----------------
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the Company and the other parties to this
Agreement with respect to such subject matter.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first written above.
ADVANCED MACHINE VISION
CORPORATION FMC CORPORATION
By: /s/ Alan R. Steel By: /s/ Charles H. Cannon, Jr.
------------------------------ --------------------------------
Name: Alan R. Steel Name: Charles H. Cannon, Jr.
Title: Chief Financial Officer Title: Vice President
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