SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported) October 14, 1998
ADVANCED MACHINE VISION CORPORATION
(Exact name of registrant as specified in its charter)
California
(State or other jurisdiction of incorporation)
0-20097 33-0256103
(Commission File Number) (IRS Employer Identification No.)
3709 Citation Way #102
Medford, Oregon 97504
(Address of principal executive offices) (Zip Code)
541-776-7700
(Registrant's telephone number, including area code)
Total Number of Pages: 98
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Item 5. Other Events
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On October 14, 1998, Advanced Machine Vision Corporation ("AMV")
sold 119,106 shares of its Series B Preferred Stock ("the Shares")
to FMC Corporation ("FMC") for $2,620,332. Contracts related to the
transaction provide, among other things, for the following:
1. The Shares are initially convertible into AMV Class A Common
Stock on the basis of ten common shares for each Share.
2. In matters placed before common shareholders, the Shares have
a number of votes equal to the number of common shares into
which the Shares are convertible. The Shares vote as a
separate class in the election of one director of AMV, which
expands the size of AMV's board from seven to eight directors.
Pursuant to this provision, Marc T. Giles, General Manager of
FMC FoodTech's Food Systems and Handling Division, was elected
to AMV's Board of Directors
3. The Shares have a liquidation preference of $22 per share.
4. Upon a change in control of AMV, excluding any change that
involves FMC or its affiliates, FMC may "put" the Shares back
to AMV for a price equal to the greater of the original
purchase price or the average closing bid price of the
equivalent common shares for 45 days prior to the transaction.
5. FMC was granted a security interest in SRC VISION, Inc.'s (a
wholly-owned subsidiary of AMV) intellectual property.
6. FMC can demand registration of the common stock underlying the
Shares.
7. FMC received a five-year option to purchase 15% of AMV's
common shares outstanding on the date of exercise for a price
equal to the greater of $2.20 per share or the average closing
bid price for 45 days immediately preceding the exercise date.
If and when the option is exercised, FMC shall have the right
to designate one additional director.
8. AMV has a right of first refusal to purchase back the Shares
if FMC elects to sell the Shares.
9. While the Shares are outstanding and owned by FMC, FMC's
consent is required for AMV to:
* Change the rights, preferences or privileges with respect to
the Shares.
* Issue any new shares having rights senior or equal to the
Shares.
* Redeem or repurchase any shares of capital stock.
* Transact a merger, reorganization, sale of control and sale
of intellectual property.
* Purchase, lease, license or acquire assets or property of
another person or entity, other than in the ordinary
course of business, in excess of $500,000 individually or
$2,000,000 in the aggregate.
* Issue common stock or other equity securities except
pursuant to existing option or other stock plans.
* Amend or waive any provision of AMV's Articles of
Incorporation or By-Laws.
10. FMC will act as AMV's exclusive or nonexclusive sales
representative in many world markets.
Item 7. Financial Statements and Exhibits
---------------------------------
* Certificate of Determination for Series B Preferred Stock.
* Series B Preferred Stock Purchase Agreement dated October 14,
1998.
* Intellectual Property Security Agreement between SRC VISION, Inc.
and FMC Corporation dated October 14, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ADVANCED MACHINE VISION CORPORATION
Date: October 16, 1998 By: /s/ Alan R. Steel
--------------------------------
Vice President, Finance and
Chief Financial Officer
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EXHIBIT INDEX
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4 Certificate of Determination for Series B Preferred Stock.
10.1 Series B Preferred Stock Purchase Agreement dated October 14, 1998.
10.2 Intellectual Property Security Agreement between SRC VISION, Inc.
and FMC Corporation dated October 14, 1998.
Exhibit 4
---------
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 President and Secretary,
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") by
reason of their ownership thereof, the amount 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 payment in full of the Liquidation Preference of the Series B
Preferred Stock as set forth in Section 3(a) above, the entire remaining assets
and funds of the Corporation legally available for distribution, if any, shall
be distributed among the holders of the Common Stock in proportion to the shares
of Common Stock then held by them.
(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 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).
(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
(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 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).
(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:
(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
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 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
(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.
(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. The authorized number of
shares of that series shall be automatically reduced by the number of shares
reacquired, and the Board of Directors of the Corporation shall return those
shares to the status of authorized but undesignated shares of Preferred Stock.
The Corporation may from time to time take such appropriate corporate action as
may be necessary to reduce the authorized number of shares of Preferred Stock
accordingly.
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
Exhibit 10.1
------------
Series B Preferred Stock Purchase Agreement dated October 14, 1998
------------------------------------------------------------------
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.
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.
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 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 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 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;
(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 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).
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 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.
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 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 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 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.
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.
(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.
(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 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 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 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.
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.
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.
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
- - - - ---------------------------- ------------------------------
Chairman and Chief Vice President
Executive Officer
The undersigned acknowledge and agree to Sections 5.1 and 5.2 above.
SRC VISION, INC. VENTEK, INC.
By: /s/ Alan R. Steel By: /s/ Alan R. Steel
- - - - ---------------------------- ------------------------------
Its: Chief Financial Officer Its: Chief Financial Officer
<PAGE>
Schedule 3.2
------------
Subsidiaries and equity investments of the Company:
SRC Vision, Inc.*
Ventek, Inc.*
Applied Laser Systems, Inc. (inactive)*
ARC Netherlands B.V. (inactive)*
SourceNet, Inc.**
* Wholly-owned by the Company
** 15% owned by the Company
<PAGE>
Schedule 3.7(c)(iii)
--------------------
Loans to directors:
* $250,000 loan dated June 5, 1998 from Rodger A. Van Voorhis, due July 23,
1999
* $100,000 loan dated February 27, 1997 to James Ewan, due February 20,
2002
<PAGE>
Schedule 3.13
-------------
Litigation
----------
Ford vs. Applied Laser Systems (now Advanced Machine Vision Corporation)
(the "Company"), et al:
- - - - -----------------------
In March 1993, Wilson Ford, Robert Paul and Maxwell Cohn (together
"Claimants") brought various claims against the Company and William Patridge,
Asif Ahmad and Nagaraj Murthy, past or then-current directors or employees of
the Company, in lawsuits in the Superior Courts for Los Angeles County and
Orange County, California. The lawsuits were consolidated in February 1994, and
were litigated in Superior Court for Los Angeles County in September and October
1995.
Ford, a consultant to the Company, claims that the Company breached an
agreement dated September 17, 1987, and subsequently amended on August 16, 1988,
by which he was to receive 25,000 shares of stock of CNVS, Inc., predecessor to
the Company, at no cost and an option to purchase 25,000 additional shares in
the future upon the occurrence of specified events. Ford claims that he was
promised that this total of 50,000 shares in the Company would amount to 5% of
the outstanding shares. Ford also claims that the Company owes him royalties
under a royalty agreement for certain low light video camera technology. The
Company contends that Ford was never promised that his interest would amount to
5% of the outstanding shares, that Ford failed to fulfill his obligations under
the royalty agreement and that Ford's claims are barred under various legal
theories. Based on these allegations, Ford made claims for breach of contract
and breach of the covenant of good faith and fair dealing.
The Claimants contend that statements allegedly made by William Patridge to
United States Alcohol Testing of America, Inc. ("USAT") caused USAT to rescind
an Asset Purchase Agreement with the Claimants. The Claimants allege that the
statements concerning outstanding lawsuits and disputes between the Company and
the Claimants were false and were meant to disrupt the business relationship
between Prime Lasertech and USAT. The Claimants allegedly would have benefited
from the Asset Purchase Agreement as shareholders and/or licensees. Based on
these allegations, the Claimants made claims for intentional and negligent
interference with prospective advantage, intentional and negligent infliction of
emotional distress and civil conspiracy.
On October 2, 1995, a jury awarded $375,000 to the Claimants, which
included $281,000 of punitive damages for the beach of contract claim. The
Company has filed motions with the court to eliminate the punitive portion of
the award. The Company believes such damages are improper because (i) the
Claimants did not ask for punitive damages in the contract claim, and (ii) such
damages cannot be awarded for breach of contract under applicable state laws.
The Company is also attempting to overturn the balance of the breach of contract
award based on the fact that the claim was made after the statute of limitations
had expired. The Company has made an appeal to overturn the verdict based on
these factors and certain other irregularities that occurred during the trial,
which the Company believes unfairly affected the jury's decision. Due to the
fact that a verdict was rendered, a $93,000 loss on the breach of contract claim
was recorded as a liability in the fourth quarter of 1995.
Advanced Machine Vision Corporation vs. William Patridge:
---------------------------------------------------------
Arbitration of our complaint against Patridge should take place by year-end
1998. Our position is that Patridge return the 515,000 stock options to the
Company because he violated his separation agreement in which he promised not to
make defamatory or untruthful statements about the Company or its management.
Patridge circulated Asif Ahmad's and Nagaraj Murthy's defamatory and untruthful
resignation letter to European stockholders in an attempt to gain support for a
takeover of the Company. As a counterpoint to our claim against him, Patridge
has asserted that William Young told a Credit Suisse representative that
Patridge was a "crook." Patridge is asking for $150,000 in addition to dismissal
of AMV's complaint.
<PAGE>
Schedule 3.15
-------------
Employees
---------
All Company employees execute confidentiality and non-compete agreements
when hired. Additionally, the following employees have entered employment
contracts with the Company:
William J. Young (B)
Alan R. Steel (B)
James Ewan (B)
Rodger A. Van Voorhis (A)
Douglas Hickman (A)
Kenneth Winder (A)
Thomas Thompson (A)
Additionally, the majority of Company employees have entered into stock
option agreements.
(A) Former owners of Ventek, Inc.
(B) Each of these individuals has also entered a restricted stock agreement
with the Company which, along with other compensation arrangements, are
described in the Company's Proxy Statement for the May 7, 1998 annual meeting.
<PAGE>
Exhibit A
---------
Certificate of Determination for Series B Preferred Stock
---------------------------------------------------------
Filed separately as Exhibit 4 to this Form 8-K
This page intentionally left blank.
<PAGE>
Exhibit B
---------
Option Agreement
----------------
Option for the Purchase of Class A Common Stock of
Advanced Machine Vision Corporation
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:
Section 1. Exercise of Option.
(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 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 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 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 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
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 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
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:
(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.
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 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,
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
<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___________________________________________
<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.
<PAGE>
Exhibit C
---------
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.
"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 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 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.
(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 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 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 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 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 Seurities, 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 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, 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 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 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 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 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 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 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
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 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/ William J. Young By: /s/ John
- - - - ----------------------------------- -----------------------------------
Chairman and Chief Title
Executive Officer
<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 3,500,000
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.
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 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
---------
Opinion of Counsel
------------------
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<PAGE>
Exhibit G
---------
Representative Agreement
------------------------
REPRESENTATIVE AGREEMENT
THIS AGREEMENT, effective the 14th day of October, 1998 is between SRC
VISION, Inc., an Oregon corporation, having its principal office located at 2067
Commerce Drive, Medford, Oregon 97504, or, in the case of representation outside
the United States, SRC VISION BV, a wholly-owned subsidiary of SRC VISION, Inc.,
having its principal office located at Luchthavenweg 47 A, 5657 EA Eindhoven,
The Netherlands (individually, "SRC"), and Food Systems and Handling Division of
FMC Corporation ("FMC"), a Delaware corporation, having its principal office at
200 West Madison, Suite 2100, Chicago, Illinois 60606.
WHEREAS:
A. SRC is the manufacturer of SRC equipment and accessories (Products).
B. SRC desires to appoint FMC as its exclusive sales representative in
order to facilitate the sale of certain SRC equipment and accessories, and FMC
accepts such appointment, on the terms and conditions included herein.
C. Customer is herein described as the end user and purchaser of the
Products.
AGREEMENT:
1. ESTABLISHMENT OF RELATIONSHIP
1.1 Appointment. SRC hereby appoints FMC as its exclusive
Representative, except as provided in Appendix II, for the sale of such
products as included on Appendix I to this Agreement ("the Products"), as
amended from time to time by SRC at its discretion, for the territory as
specified in Appendix II ("the Territory"), and FMC hereby accepts such
appointment.
1.2 Sub-agents. FMC shall be allowed to appoint sub-agents in the
Territory.
1.3 Exclusivity. SRC will not use, deal with, or appoint other sales
representatives for the Products in the Territory during the term of this
Agreement, except for those parts of the Territory, if any, that are
identified in Appendix II as permitting other sales representatives.
1.4 Amendments. No amendment or waiver of any provision of this
Agreement shall in any event be effective, unless the same shall be in
writing and signed by the parties hereto, and then such amendment, waiver
or consent shall be effective only in a specific instance and for the
specific purpose for which it is given.
1.5 Entire agreement. This Agreement and the documents referred to
herein contain the entire understanding between the parties with respect to
the relationship hereby established and supersedes all prior agreements and
understandings whether oral or written, including the April 16, 1998
Representative Agreement between the parties, relating to the subject
matter of this Agreement.
1.6 Independent contractors. The parties are entering into this
Agreement as independent contractors, and this Agreement shall not be
construed as to create a joint venture or employment contract between
parties.
1.7 Excuses for Nonperformance. No liability shall result from the
delay in performance or nonperformance beyond the reasonable control of the
party affected, including but not limited to Acts of God, fire, flood, war,
embargo, accident, labor trouble, or shortage of material, equipment or
transport, or applicable law.
2. PROMOTION AND SALES OF THE PRODUCTS
2.1 Promotion and Sales.
(a) FMC agrees to use its best efforts to promote and sell the
Products in the Territory and shall continually work to increase the
market for the Products where appropriate by direct mail, placement of
editorials in technical journals, advertising, promotional literature,
correspondence, personal visits and any other commercial means, with
the expenses for those actions to be shared by the parties as they
agree on a case-by-case basis. FMC will maintain a current and working
knowledge of the applicable industries as outlined in Appendix III.
(b) FMC shall promptly forward to SRC full details of all
inquiries and orders received for the Products for the Territory
including the names and addresses of clients or potential clients.
(c) FMC shall keep SRC informed about the activities of
competitors in the Territory about which FMC learns in the course of
its lawful business.
(d) SRC will furnish FMC with such technical bulletins and sales
data relative to the Products from time to time. SRC will cooperate in
reasonable ways to assist FMC in effectively promoting the sale of the
Products.
2.2 Performance Criteria. The relationship established hereby is
intended by the parties to be mutually beneficial. In this regard, FMC will
attain an adequate level of performance. Such level of performance shall be
evaluated monthly by SRC, based on reasonable objectives to be established
by FMC and SRC, including but not limited to:
(a) the compliance with all of the terms and conditions of this
Agreement.
2.3 Supply of Products. SRC shall supply the Products in accordance
with accepted orders.
2.4 Trademark. SRC permits FMC to identify itself as an authorized SRC
Representative for the Products and to use the trademarks of SRC in
connection with FMC's efforts to sell and promote the Products; provided,
however, that such use, including the use of signs, shall be subject to the
control of SRC and be in a manner consistent with the high quality image of
the Products. FMC shall not use the name "SRC VISION(R)", SRC VISION, Inc.,
or other trademarks as part of its corporate name or in any manner
inconsistent with the instructions of SRC.
2.5 Reports and Records. In order to provide SRC with information
regarding sales and market trends, FMC shall periodically provide to SRC
data regarding Customer (as defined herein) contacts, including names and
addresses and such other reasonable information when requested by SRC.
2.6 Compliance with Laws. FMC shall conduct and maintain at all times
its sales and service operations in strict compliance with all applicable
laws and regulations. FMC agrees not to engage in any unfair trade
practices. FMC shall indemnify and hold SRC harmless from any costs and
liability that may result from a violation of this paragraph.
2.7 Insurance. SRC agrees to furnish at no charge to FMC a certificate
of insurance naming FMC and its agents as "additional insured" on SRC's
liability policy, including Product liability.
2.8 Non-competition.
(a) Without the prior written approval of SRC, which shall not be
unreasonably withheld, FMC shall not, during the term of this
Agreement and for a period of twenty-four (24) months after the
termination of this Agreement by FMC or twelve (12) months after
termination by SRC, establish, operate, operate jointly with others,
cause the operation of any form of business, either by itself or
through or in conjunction with a third party, which manufactures or
has a third party manufacture, sells or distributes any goods which
compete with the Products provided, however, that it shall not be a
violation of this Section 2.8(a) for FMC to distribute the harvester
sorter products of Protec or other companies.
(b) Without the prior written approval of SRC, FMC shall not,
during the term of this Agreement and for a period of twelve (12)
months after termination of this Agreement, directly or indirectly
solicit clients or representatives of SRC, in order to persuade them
into terminating their relationship with SRC.
3. SALE OF THE PRODUCTS
3.1 General Terms and Conditions. SRC shall sell the Products to the
end users and purchasers of the Products ("Customers") and FMC shall
represent the Products in accordance with the terms and conditions set
forth herein.
3.2 Quotations. FMC will be selective in selling only to companies
known to have established credit. Quotations shall be provided to FMC by
SRC, unless or until SRC expressly authorizes FMC to provide quotations.
FMC shall at all times quote in accordance with the then current SRC price
list and quotation and ordering procedures of SRC. All quotations other
than pursuant to the then current SRC price list shall be reviewed by SRC
before they are submitted to the Customer unless approved by SRC. All
orders are subject to acceptance by SRC based on the availability of the
Products and FMC's compliance with the terms and conditions hereof.
3.3 Price. FMC shall represent to the Customer the SRC sales price and
any other charges for the Products in US dollars or Dutch Guilders, as the
case may be, as set forth on SRC's price schedules.
3.4 Orders. FMC shall forward in writing any and all orders it
receives to SRC immediately upon receipt of such orders by FMC. FMC shall
not be authorized to accept orders for Products in the name and on behalf
of SRC without SRC's prior written approval.
3.5 Acceptance. Orders may be accepted subject to confirmation in
writing by SRC. SRC shall be at liberty to reject orders for any reason,
including non-fulfillment by the Customer of outstanding obligations,
questionable reputation or financial status of the Customer or shortage of
Products. SRC shall promptly communicate the confirmation or rejection to
FMC.
3.6 Billing/Payment. All billings to and payments from the Customer
will be made to or received by SRC. FMC is not permitted to invoice or
collect accounts on behalf of SRC. SRC shall be responsible for invoicing
each Customer when a sale occurs. A copy of each invoice which is subject
to commission shall be forwarded to FMC. Should a customer fail to complete
the payment schedules as contracted, FMC will assist SRC in collection.
4. TERMINATION
4.1 Effectiveness. This Agreement shall be effective upon the date
hereof for a period of one year unless sooner terminated as hereinafter
provided.
4.2 Termination for Cause (Immediate Effect). Unless otherwise
prescribed by law, either party may terminate this Agreement with immediate
effect on the giving of written notice to the other party should any of the
following events occur, such events being of such a nature so as to
constitute good cause for immediate termination:
(a) any misrepresentation by the other party in entering into
this Agreement or the submission by the other party of any false or
fraudulent application, claim or report in connection with performance
under this Agreement;
(b) any act by the other party or any person involved in the
ownership or operating management or affiliates of the other party
which violates any law and affects adversely the terminating party's
operations or any conduct or unfair business practice by the other
party or any person involved in the ownership or operating management
of the other party or affiliates which affects adversely the
terminating party's operations or the goodwill and the reputation of
either party or their Products;
(c) any property of the other party is attached or a court grants
the other party a moratorium of payments or if the other party is
declared bankrupt, or if comparable procedures under any applicable
law are started;
(d) the other party defaults in complying with one or more of his
obligations under this Agreement, which failure, provided such failure
may be remedied, is not remedied within two weeks of being sent
written notification;
(e) more than fifty percent (50%) of the assets or share capital
of the other party is transferred to a natural person or legal entity
that did not own at least twenty-five percent (25%) of the other
party's share capital at the effective date of this Agreement, or any
part of the assets or share capital is transferred to a natural person
or legal entity that manufactures or markets products that are
competitive to the other party's products.
4.3 Termination without cause. Either party may terminate this
Agreement upon written notice of at least sixty (60) days. Neither party,
by reason of the termination of this Agreement, shall be liable to the
other because of the loss of anticipated sales, commissions or prospective
profits.
4.4 Commission following termination. In the event of termination of
the Agreement, SRC will pay FMC full commissions on all valid and accepted
orders received before termination according to the standard compensation
schedule. In addition, SRC will pay to FMC full commissions according to
the standard compensation schedule on all job prospects where quotations
were issued and are currently valid at the time of termination which FMC
has submitted to SRC before termination, provided said projects result in a
booking within the period of 60 days after termination.
4.5 Supplied materials. Upon the termination of this Agreement, FMC
shall forthwith and on SRC's first written demand return to SRC all price
lists, catalogs, operating and service manuals, advertising literature and
display material relating to the Products.
5. TRAINING
As part of this Agreement, SRC requires that selected sales people of FMC
attend a five day training class at the SRC facility of SRC's choice (FMC to
cover expenses and wages for the trainee; SRC will provide training and
facilities at no charge). Sales people should attend periodic updates whenever
deemed necessary by the advancement of new equipment. A training schedule will
be determined by FMC and the SRC training coordinator. FMC will use reasonable
effort to ensure its sales people area trained to assist Customers in the
selection, plant layout, set-up and maintenance of the Products, and shall
provide all such information to SRC as may be required by SRC.
6. CONFIDENTIALITY
6.1 Confidential Information. Each party acknowledges that in
performing under this Agreement, it will have access and/or gain access to
or be informed of information whose ownership and confidential nature are
of paramount importance to the other party, including but not limited to
know-how and trade secrets relating to the business of the other party, the
Products and any developments therein, or other products or services of the
other party, whether or not communicated orally, in writing or in any other
recorded or tangible form ("Confidential Information"). Data and
information shall be considered to be Confidential Information (i) if a
party has marked them as such, or (ii) if a party, in writing, has advised
the other party of their confidential nature, or (iii) if, due to their
character or nature, a reasonable person in a like position and under like
circumstances as the parties would treat them as secret and confidential.
Each party hereby undertakes, without prejudice to the specific provisions
of this Agreement to protect the Confidential Information. Each party
acknowledges that all Confidential Information of the other party will
remain the exclusive property of the other Party.
6.2 Prohibition to disclose. It is forbidden for either party, both
during the term of this Agreement and after its termination, to communicate
Confidential Information directly or indirectly, under any circumstance and
in any manner whatsoever, to a third party or make such information public,
distribute it or use it for its own benefit and/or the benefit of third
parties, to copy, transfer, reproduce, summarize, quote and/or use
Confidential Information otherwise for business purposes, unless the other
party has given its prior approval in writing.
6.3 Protection of Confidential Information. FMC and SRC undertake to
take the utmost care to prevent Confidential Information from being lost,
stolen or otherwise made public and generally undertake to take all
measures that may be reasonably necessary or may be requested by the other
party to ensure that the Confidential Information remains confidential.
7. COMPENSATION
7.1 Commissions. Commissions earned for all sales made by FMC in the
Territory will be paid at the following rates:
United States Rest of World
(a) New Products manufactured by SRC: 10% 10%
(b) Used equipment supplied by SRC: As Negotiated by both parties
(c) System Upgrades: 10% 10%
For orders from Customers within the Territory yet shipped to a
geographical location outside the Territory, SRC may decide, in its sole
discretion, that the total commission should be apportioned between the
parties involved in a particular transaction. In deciding upon split
commission, SRC will take reasonable account of the machine destination,
the location where the order is placed, work credit (including warranty and
follow-up activities), and sales efforts with the particular customer.
7.2 Calculation of commissions. The commission shall be calculated on
the net invoice value charged to the Customer, i.e. exclusive of any taxes
(including VAT) and charges, as well as costs, if any, relating to
transportation, insurance and similar costs.
7.3 Payment of commissions. Commissions shall be paid on the 25th of
the month following receipt at SRC of final payment by the Customer. In the
case of a returned Product by the Customer where a refund is required, the
return of any and all commissions is required. Any payment made pursuant to
this section shall be deemed to include any VAT and other taxes and charges
with respect to such payment. All commissions shall be paid to FMC. FMC is
solely responsible for paying any commissions, compensation or other costs
of its sub-agents, if any.
7.4 Expenses. Except as otherwise provided herein, expenses incurred
by each party shall be borne by that party. The parties shall discuss the
costs of advertising activities for the sale of the Products.
8. GOVERNING LAW AND DISPUTES
8.1 United States.
(a) Unless otherwise agreed in writing, any dispute arising out
of or relating to the Agreement shall be decided by arbitration in
Medford, Oregon, under the Northwest Region Expedited Arbitration
Commercial Arbitration Rules of the American Arbitration Association.
The arbitrators shall not have power to award punitive damages. The
law of arbitration, and any litigation relating to arbitration, shall
be federal law, including the United States Arbitration Act.
(b) The exclusive venue for any judicial proceeding arising out
of or relating to this Agreement shall be the state and federal courts
of Medford, Oregon. The parties consent to personal jurisdiction in
those courts.
THIS AGREEMENT IS ENTERED INTO BY:
SRC VISION, Inc. FOOD SYSTEM AND HANDLING DIVISION of
FMC CORPORATION
/s/ Dr. James Ewan /s/ Charles H. Cannon
- - - - ------------------------------------ -------------------------------------
By: Dr. James Ewan, President By: Charles H. Cannon
October 14, 1998 October 14, 1998
- - - - ------------------------------------- -------------------------------------
Date Date
SRC VISION, BV
/s/ Dr. James Ewan
- - - - -------------------------------------
By: Dr. James Ewan, Managing Director
October 14, 1998
- - - - -------------------------------------
Date
<PAGE>
APPENDIX I - PRODUCTS
The Products covered under this Agreement shall be limited to those
Products listed below that carry the trade name of SRC and other products
associated with that trade name or supplied by SRC, including support products
not manufactured by SRC.
All Products for food-related applications.
<PAGE>
APPENDIX II - TERRITORY
FMC shall represent SRC on an exclusive basis in the territories listed
below except as modified herein. FMC and SRC shall mutually develop a written
marketing and sales plan for the United States by November 2, 1998 except for
the territories presently covered by Janus for which a plan should be completed
by December 31, 1998, and for other territories by December 31, 1998. The
marketing and sales plan shall include, among other things, a list of targeted
customers, expected sales by product type and training and personnel
requirements.
Alabama
Arizona
Arkansas
Colorado
Connecticut
Delaware
Florida
Georgia
Kansas
Louisiana
Maryland
Massachusetts
Mississippi
Missouri
Nebraska
Nevada New
Hampshire
New Jersey
New Mexico
New York
North Carolina
Oklahoma
Pennsylvania
Rhode Island
South Carolina
Tennessee
Texas
Vermont
Virginia
West Virginia
Janus Territory
- - - - ---------------
The following are states in which SRC is presently represented by Janus
Equipment Sales LLC:
Illinois
Indiana
Iowa
Michigan
Minnesota
North Dakota
Ohio
South Dakota
Wisconsin
With respect to the above states and except for the Cereal Industry as set
forth below, FMC shall become exclusive representative in accordance with a
transition plan to be developed and agreed upon by SRC and FMC before December
31, 1998.
Cereal Industry
- - - - ---------------
FMC shall have exclusive SRC representation in the Cereal Industry
throughout the United States, including the current Janus Equipment territory,
with the sole exception of the General Mills project in which Janus is presently
involved.
California
- - - - ----------
FMC shall represent SRC on an exclusive basis beginning October 1, 1998
except for the following customers which shall remain SRC house accounts:
Bolthouse
Pacific Coast Producers
Tri-Valley Growers
Worldwide
- - - - ---------
The following customers shall remain SRC house accounts:
Allen Canning
Frito-Lay, Inc.
McCain Foods in North America and Europe (FMC shall have nonexclusive
representation in the rest of the world)
Pepsico Foods International
Rest of World
- - - - -------------
Western And Eastern Europe/Middle East/Africa
All countries in Africa, except South Africa
All countries in the Eastern European region
Albania Poland
Bulgaria Russia
Czech Republic Slovak
Estonia Ukraine
Latvia Yugoslavia
Moldova
The Middle East region consisting of Kazakistan, Madagascar and all countries
within the geographical area bounded by:
The Mediterranean Sea on the east.
The Red Sea and the Gulf of Aden on the south.
India on the west.
Afghanistan, Pakistan, Turkmenistan, Azerbijan, Armenia, the Caspian Sea and
Turkey on the north.
Including, without limitation, India, Pakistan and Afghanistan, but excluding
Turkmenistan, Azerbijan, Armenia and Turkey.
Belgium
Denmark
England (A) (B) (C)
Finland
France (A) (C)
Germany (D)
Greece (A)
Ireland (A) (B) (C)
Italy
Norway (A) (C)
Portugal (A) (C)
Scotland (A) (B) (C)
Spain (A) (C)
Sweden (A) (C)
Switzerland
Turkey (A) (C)
(A) FMC's representation shall not begin in these countries until SRC
notifies FMC in writing that preexisting representative agreements have
been modified to permit FMC representation. It is understood that FMC
representation after such modification will be on a nonexclusive basis.
(B) FMC's representation shall begin on the date SRC reaches agreement with
Flo Mech, SRC's existing representative in the territory, and shall
exclude the snack food industry.
(C) SRC will use its best efforts to negotiate a nonexclusive relationship
with existing representatives in these countries by December 31, 1998.
(D) FMC will represent SRC only in the snack food industry.
<PAGE>
APPENDIX III - RELEVANT INDUSTRIES
FMC shall maintain current knowledge of the following industries:
Fresh prepared and processed foods (canned, frozen or otherwise) Snack foods and
related products Seeds and grains
Exhibit 10.2
------------
Intellectual Property Security Agreement between
SRC VISION, Inc. and FMC Corporation dated October 14, 1998
-----------------------------------------------------------
INTELLECTUAL PROPERTY SECURITY AGREEMENT
This INTELLECTUAL PROPERTY SECURITY AGREEMENT ("Intellectual Property
Security Agreement") entered into and dated as of October 14, 1998 by and
between SRC VISION, INC, an Oregon corporation ("Grantor"), and FMC CORPORATION,
a Delaware corporation ("Grantee").
R E C I T A L S:
A. Grantor owns the patents and patent applications listed on Schedule 1
and the trademarks listed on Schedule 2 annexed hereto.
B. Advanced Machine Vision Corporation, a California corporation ("AMV")
and parent of Grantor, has entered into a Series B Preferred Stock Purchase
Agreement of even date herewith (as amended, supplemented or otherwise modified
from time to time, the "Purchase Agreement") with Grantee, as Lender, providing
for the payment of funds to be made to Grantor by Grantee.
C. Pursuant to the terms of the Purchase Agreement, AMV has agreed to grant
to Grantee a security interest in all of Grantor's "Intellectual Property" (as
defined in the Purchase Agreement), including all now owned and hereafter
acquired patents, patent applications, trademarks, and copyrights and all
proceeds thereof, in consideration of the payment of all amounts owing by
Grantor under the Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing and other benefits, (the
receipt, sufficiency and adequacy of which are hereby acknowledged), Grantor and
Grantee hereby agree as follows:
GRANT OF SECURITY INTEREST
- - - - --------------------------
For good and valuable consideration (the receipt, sufficiency and adequacy
of which is hereby acknowledged), Grantor does hereby grant to Grantee for as
long as the Grantee holds the Series B Preferred Stock acquired pursuant to the
Purchase Agreement a continuing security interest in all of Grantor's right,
title and interest in, to and under the following (all of the following items or
types of property being herein collectively referred to as the "Intellectual
Property Collateral"), whether currently existing or hereafter created or
acquired:
(1) All Letters Patent and applications for Letters Patent throughout
the world, including all patent applications in preparation for filing
anywhere in the world, including, without limitation, the patents (together
with any renewals, reissues, continuations, extensions or reexaminations
thereof) and patent applications referred to in Schedule 1 annexed hereto;
(2) All registered trademarks and trademark applications throughout
the world as well as trademarks used in the business, including, without
limitation, any trademarks referred to in Schedule 2 annexed hereto;
(3) All copyrights, whether or not registered, for works related to
Grantor's business; and
(4) All products, proceeds and benefits of, and rights associated
with, the foregoing, including, without limitation, any claim by Grantor
against third parties, and the right to sue third parties, for any past,
present or future infringements of any patent, patent application,
trademark, or copyright including, without limitation, the patents, patent
applications, and trademarks referred to in Schedules 1 and 2 annexed
hereto; provided, however, that products and proceeds shall not be deemed
to include inventory or accounts receivable of the Company.
This security interest is granted in conjunction with the Purchase
Agreement, the terms and provisions of which are incorporated by reference
herein as if fully set forth herein.
If: (a) a judgment or order shall be rendered against the Company and such
judgment or order shall remain unsatisfied or undischarged and in effect for
thirty (30) consecutive days without a stay of enforcement or execution; (b) a
notice of lien, levy or assessment (other than a lien, levy or assessment less
than $10,000 that is being contested in good faith) is filed or recorded with
respect to any of the assets of the Company the Company (including, without
limitation, the Intellectual Property Collateral), by the United States, or any
department, agency or instrumentality thereof, or by any state, county,
municipality or other governmental agency or any taxes or debts owing at any
time or times hereafter to any one or more of them become a lien, upon any of
the assets of the Company (including, without limitation, the Intellectual
Property Collateral); (c) any material portion of the Intellectual Property
Collateral is attached, seized, subjected to a writ or distress warrant, or is
levied upon, or comes within the possession of any receiver, trustee, custodian
or assignee for the benefit of creditors and, on or before the thirtieth (30th)
day thereafter, such assets are not returned to the Company and/or such writ,
distress warrant or levy is not dismissed, stayed or lifted; (d) a proceeding
under any bankruptcy, reorganization, arrangement of debt, insolvency,
readjustment of debt or receivership law or statute is filed against the Company
and such proceeding is not dismissed within forty-five (45) days of the date of
its filing, or a proceeding under any bankruptcy, reorganization, arrangement of
debt, insolvency, readjustment of debt or receivership law or statute is filed
by the Company, or the Company makes an assignment for the benefit of creditors,
or the Company takes any corporate action to authorize any of the foregoing; (e)
the Company voluntarily or involuntarily dissolves or is dissolved, or its
existence terminates or is terminated; (f) the Company becomes insolvent or
fails generally to pay its debts as they become due; (g) the Company is
enjoined, restrained, or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting all or any material part of
its business affairs; (h) a breach by the Company shall occur under any material
agreement, document or instrument (other than an agreement, document or
instrument evidencing the lending of money), whether heretofore, now or
hereafter existing between the Company and any other person or any other entity
and the effect of such breach is likely to have a material adverse effect on the
Company's assets, financial condition, results of operations or business; (i)
the Company shall fail to make any payment due on any other obligation for
borrowed money or shall be in breach of any agreement evidencing the lending of
money; (j) a Change of Control (as defined in the Purchase Agreement) shall have
occurred, Grantee shall have, in addition to any other rights and remedies
contained in the Purchase Agreement or in any agreement, instrument or document
executed in connection therewith, all of the rights and remedies of a secured
party under the Uniform Commercial Code or other applicable Federal, state or
local laws (including, without limitation, the right to foreclose upon the
Intellectual Property in accordance with all applicable laws), all of which
rights and remedies shall be cumulative, and non-exclusive, to the extent
permitted by law.
IN WITNESS WHEREOF, Grantor has caused this Intellectual Property Security
Agreement to be duly executed by its duly authorized officer thereunto as of the
dated first written above.
GRANTEE: GRANTOR:
FMC CORPORATION SRC VISION, INC.
By: /s/ Charles H. Cannon By: /s/ Alan R. Steel
- - - - ------------------------------- ------------------------------
Name: Charles H. Cannon Name: Alan R. Steel
Title: Vice President Title: Chief Financial Officer
