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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
May 30, 1996
Date of Report
(Date of Earliest Event Reported)
TOPRO, INC.
(Exact name of Registrant as specified in its charter)
Colorado 84-1042227
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(State or other jurisdiction of I.R.S. Employer I. D. Number
incorporation or organization)
2525 West Evans Avenue, Denver, Colorado 80219
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (303) 935-1221
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On May 30, 1996, Topro, Inc. ("Registrant"), through a merger
undertaken by a newly formed subsidiary, acquired all the outstanding capital
stock of Visioneering Holding Corporation ("VI") an independent Control Systems
Integrator located in Cypress, California. VI's core business parallels that
of the Registrant's, with emphasis on some different/additional markets and a
generally more technically sophisticated product offering in the food and
pharmaceutical industries. VI is focused on the following vertical markets:
food processing, pharmaceutical, and concrete manufacturing. The Registrant
acquired all of the outstanding capital stock of VI, in exchange for a maximum
of 1,600,000 restricted shares of the Registrant's Common Stock all of which
have been escrowed, to be released to the shareholders of VI upon completion of
an audit of the December 31, 1995 financial statements and a subsequent review
of the April 30, 1996 financial statements and acceptance of proposed
adjustments, if any. In addition to the acquisition the Registrant guaranteed
the bank debt of Vision Engineering Inc. to Garfield Bank of Montebello CA. in
the amount of $1,165,161.
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VI corporate headquarters operates from a modern 31,000 square foot
facility in Cypress, CA and has satellite engineering and sales offices in:
Sacramento, CA (6,700 sq ft), Phoenix, AZ(5,900 sq ft), Atlanta, GA (4,300 sq
ft), Chicago, IL(3,900 sq ft), from which it serves certain accounts. VI also
has sales offices in Boston and San Juan, Puerto Rico. VI staff currently
numbers 95, with over 85 engineers and sales personnel and 10 corporate
personnel. The Registrant intends to continue the business of VI, having
affected the transaction in order to establish a market presence for its
Control Systems Integration operations in the regions served by VI. The
Atlanta office of VI will be merged into the Registrant's Atlanta offices of
MDCS, Inc. The Phoenix office of VI will transfer reporting function to the
Registrant's Denver offices.
In connection with the Merger, the past President of VI, Mr. Michael
Taylor entered into an employment agreement with the Registrant for an initial
term of 6 months. In addition to the employment agreement a 24 month
consulting agreement was entered into commencing six months after the date of
the employment agreement. Mr. Taylor will also become a director of the
Registrant. Kathleen Taylor, the past secretary and Vice President of
Technical Support, entered into an employment agreement for an initial term of
five months. In addition to the employment agreement a 24 month consulting
agreement was entered into commencing five months after the date of the
employment agreement.
Prior to this transaction, there was no material relationship between
VI and the Registrant or any of its affiliates, any director or officer of the
registrant, or any associate of such director or officer.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) The audited financial statements for the period ending
December 31, 1995 along with the December 31, 1994 audited financial statements
will be filed in the prescribed time.
(b) Pro Forma Financial information. It is impracticable to
provide the required pro forma financial information at this time. Required
pro forma financial information will be filed as soon as practicable, and, in
any event, no later than 60 days after the date this current report on Form 8-K
must be filed.
(c) Exhibits. The following exhibits are filed with this report:
2.1 Agreement and Plan of Merger dated May 17, 1996. The
schedules to the Agreement and Plan of Merger as described on
the List of Schedule on page 26 -27 of merger agreement, are
omitted from this filing. The Registrant will furnish
supplementally to the Securities and Exchange Commission, upon
request, a copy of any omitted Schedules.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Topro, Inc.
Date: June 14, 1996 By: /s/ John Jenkins
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John P. Jenkins
President and CEO
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description Page
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<S> <C> <C>
2.1 Agreement and Plan of Merger dated May 17, 1996. The schedules to
the Agreement and Plan of Merger as described on the List of
Schedule on page 26-27 of merger agreement, are omitted from this
filing. The Registrant will furnish supplementally to the Securities
and Exchange Commission, upon request, a copy of any omitted Schedules.
</TABLE>
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AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (hereinafter called "this Agreement"),
executed as of the 17th day of May 1996, by and among Topro, Inc., a
Colorado corporation ("Topro"), on its behalf and on behalf of its wholly-owned
subsidiary, Topro V.E.C. Corp., a newly formed Colorado corporation ("Newco"),
and Visioneering Holding Corporation, a California corporation ("VI").
The Boards of Directors of Topro, Newco and VI: deem it advisable for
the mutual benefit of Topro, Newco and VI, and their respective stockholders,
that Topro acquire VI by the merger of Newco into VI under the terms and
conditions hereinafter set forth, in a transaction intended to qualify as a
tax-free reorganization under Section 368(a)(2)(D) or (E) of the Internal
Revenue Code of 1986, as amended (the "Code"); expect that this transaction
will further certain of their business objectives; and have adopted resolutions
authorizing the transactions contemplated by this Agreement.
In consideration of the premises and of the mutual agreements,
representations, warranties and covenants contained herein, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 Actions to be Taken. Subject to the terms and conditions
of this Agreement, including the fulfillment (or waiver) of all conditions to
the obligations of the parties contained herein, at the Effective Time (as
hereinafter defined) and pursuant to the California Corporation Act (the
"California Statute"), the following shall occur:
(a) Newco shall be merged with and into VI (such transaction
hereafter referred to as the "Merger"), and VI shall be the surviving
corporation (the "Surviving Corporation"). The separate existence and
corporate organization of Newco shall cease upon filing of the
Articles of Merger with the California Secretary of State, and
thereupon VI and Newco shall be a single corporation.
(b) The Articles of Incorporation of VI attached as Exhibit 1.1(b)
hereto shall constitute the articles of incorporation of the Surviving
Corporation.
(c) The By-Laws of VI in the form attached as Exhibit 1.1(c)
shall constitute the by-laws of the Surviving Corporation.
(d) The officers and directors of VI shall resign on the Closing
Date and the persons set forth on Schedule 1.1(d) shall be the
officers and directors, respectively, of the Surviving Corporation
until their successors shall have been elected and qualified.
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(e) As soon as practicable after the terms and conditions of this
Agreement have been satisfied, the parties shall meet on a date
mutually agreed to (the "Closing Date") in order to execute the
Exhibits and approve the Schedules to this Agreement. On the Closing
Date, Articles of Merger (the "Articles of Merger"), shall be executed
and forwarded for filing to the Secretary of State of the State of
California. However, the effective date of the Merger for accounting
purposes shall be May 1, 1996, which shall be referred to herein as
the "Effective Time."
SECTION 1.2 Conversion of VI Securities.
(a) As of the Effective Time, by virtue of the Merger and without
any action on the part of any holder thereof, all of the shares of VI
Common Stock issued and outstanding immediately prior to the Effective
Time shall be converted into 1,600,000 restricted shares of the common
stock, par value $.0001 per share, of Topro ("Topro Common Stock"),
subject to the following adjustments:
(i) the number of shares of Topro Common Stock issuable in
the Merger shall be increased by one share of Topro Common
Stock for each $2.50 by which VI's net worth as of the
Effective Time exceeds $0; and
(ii) the number of shares of Topro Common Stock issuable in
the Merger shall be reduced by one share of Topro Common Stock
for each $2.50 by which VI's net worth as of the Effective
Time is less than $0 and greater than negative $300,000; and
(iii) the number of shares of Topro Common Stock issuable in
the Merger shall be reduced by one share of Topro Common Stock
for each $1.00 by which VI's net worth as of the Effective
Time is less than negative $300,000.
SECTION 1.3 Net Worth Calculation; Escrow of Shares.
(a) The net worth calculation required under Section 1.2 shall be
based upon a balance sheet of VI as of and at May 1, 1996 which has
been reviewed by Hein + Associates, Certified Public Accountants for
Topro, and which meets the minimum requirements necessary for Topro's
filings under the Securities Act of 1933 (the "1933 Act") and the
Securities Exchange Act of 1934 (the "1934 Act").
(b) 1,600,000 shares of Topro Common Stock issuable in the Merger
shall be deposited to escrow and subject to the Escrow Agreement
attached hereto as Exhibit 1.3(b). Such shares shall be released to
the shareholders of VI in accordance with the formula set forth in
Section 1.2, unless a share adjustment is necessary due to a material
breach, as discussed in Section 1.3(c), below, upon the later to
occur of: (i) such time as the reviewed balance sheet as of May 1,
1996 is available; and (ii) such time, not to exceed six months
following the
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Closing Date, that Topro has reasonable assurance that (A) any
adjustments to contracts in progress as of the Closing Date and any
contingent and/or undisclosed liabilities have been identified,
quantified and reflected on the reviewed balance sheet or otherwise
accounted for in the determination of VI's net worth; and (B) there
has been no material breach of any VI representation or warranty under
this Agreement.
(c) In the event of a material breach by either party under this
Agreement, the number of Topro shares of Common Stock shall be
adjusted to compensate the non-breaching party. Such adjustment shall
be mutually agreed upon by the parties. If the parties cannot agree on
the amount of the share adjustment, each party shall designate one
arbitrator. The two arbitrators as so designated shall attempt to
establish the amount of the share adjustment by their mutual
agreement, and if they do not succeed in reaching such agreement
within 20 days of the designation of the latter of them, they shall
name a third arbitrator and a decision of the majority of the
arbitrators shall be final. The arbitration shall be conducted in
accordance with the rules of the American Arbitration Association and
the cost of such arbitration shall be borne by Topro unless a majority
of the arbitrators agree otherwise, in which case the respective
parties agree to pay their share of such costs as directed by the
majority of the arbitrators.
SECTION 1.4 Issuance and Delivery of Topro Common Stock. Topro shall
cause the issuance of the Topro Common Stock upon surrender of certificates
representing shares of VI Common Stock. All shares of Topro Common Stock
(collectively, the "Merger Shares") into which shares of VI Common Stock are
converted at the Closing Date pursuant to Section 1.3 shall be deemed, for all
corporate purposes, to have been issued by Topro at the Closing Date. The
Merger Shares shall be held in escrow, as described above.
SECTION 1.5 VI Stock Transfer Books. At the Closing Date, the stock
transfer books of VI shall be closed and no transfer of VI Common Stock shall
thereafter be made on such stock transfer books until after the Effective Time.
SECTION 1.6 Filing of Merger Documents. As soon as practicable after
the Closing Date, VI and Newco shall, in accordance with Section 1.1(e), cause
the Articles of Merger to be filed with the Secretary of State of the State of
California and VI, Newco and Topro will take such other and further actions as
may be required by the California Statute in connection with such filing and in
order to complete the Merger.
SECTION 1.7 Registration Rights.
(a) During the two year period commencing at the Effective Time,
the Merger Shares shall be subject to "piggyback" registration rights
in accordance with the terms and limitations set forth in Section 7.3.
These rights shall be subject to the conditions imposed under the
lock-up agreement required by Section 8.11.
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(b) At any time commencing January 1, 1997, the Merger Shares
shall be subject to demand registration rights in accordance with the
terms and limitations set forth in Section 7.3. These rights shall be
subject to the conditions imposed under the lock-up agreement required
by Section 8.11.
SECTION 1.8 Undertaking by Topro to Remove Liens. Topro shall
undertake no later than two years from the Closing Date to remove the liens set
forth on Schedule 1.8 secured by the personal residence of Michael and Kathleen
Taylor, which liens were encumbered in connection with the business of VI.
SECTION 1.9 Employment Agreements. Topro and Michael and Kathleen
Taylor shall enter into employment agreements in the forms attached hereto as
Exhibits 1.9(a) and (b).
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF TOPRO AND NEWCO
Topro and Newco represent, warrant to, and agree with, VI as follows:
SECTION 2.1 Corporate Organization. Topro and each of its
subsidiaries (hereafter in this Article II, Topro and its subsidiaries other
than Newco are collectively referred to as "Topro") are corporations duly
organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation and each has all requisite corporate
power and authority to own, operate and lease its properties and to conduct its
business as it is now being conducted. Topro is duly qualified or licensed as
a foreign corporation in each other jurisdiction where it owns or leases
substantial properties, except where the failure to be so qualified or licensed
would not have a material adverse effect on the financial condition, properties
or businesses of Topro taken as a whole. Topro and Newco have each delivered
to VI a true and complete copy of their Articles of Incorporation and By-Laws.
SECTION 2.2 Capitalization.
(a) The authorized capital stock of Topro consists of 10,000,000
shares of Preferred Stock, par value $.0001 per share, and 200,000,000
shares of Common Stock, par value $.0001 per share, of which 6,734,806
shares of Common Stock were outstanding on May 1, 1996. All of the
outstanding shares of Topro Common Stock have been validly issued and
are fully paid and nonassessable. As of May 1, 1996, Topro had
reserved authorized shares of Topro Common Stock for issuance pursuant
to outstanding common stock purchase warrants, options and other
rights as set forth on Schedule 2.2 of this Agreement. As detailed on
Schedule 2.2, Topro has granted to the holders of certain of its
outstanding securities certain rights to have such securities
registered for public sale pursuant to the 1933 Act.
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(b) Except as set forth above, Topro does not have any shares of
its capital stock issued or outstanding. Except as set forth above
and on Schedule 2.2 hereof, Topro does not have any outstanding
subscriptions, options, warrants, rights or other agreements or
commitments obligating Topro to issue shares of its capital stock.
(c) The authorized capital stock of Newco consists of 1,000 shares
of Common Stock, par value $.01 per share, of which 100 shares are
issued and outstanding, all of which are owned of record and
beneficially by Topro.
(d) To the best knowledge of Topro management, Topro's outstanding
securities have been issued in compliance with all applicable federal
and state securities laws.
SECTION 2.3 Authorization, Execution and Delivery. Topro and Newco
each has the corporate power to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement by Topro
and Newco and the consummation of the transactions contemplated hereby have
been duly authorized by all requisite corporate action; no other corporate
proceedings on the part of Topro are necessary to authorize this Agreement and
the transactions contemplated hereby.
SECTION 2.4 Reports; Accuracy of Information. Topro has previously
furnished to VI true and complete copies of: its amended Annual Report on Form
10-K/A No. 1 for its fiscal year ended June 30, 1995, including audited
financial statements; its Quarterly Reports on Forms 10-QSB/A No.1 for the
periods ended September 30, 1995 and December 31, 1995, including unaudited
financial statements; and its Current Reports on Forms 8-K dated November 8,
1995, January 30, 1996, and February 21, 1996 (each as amended), (collectively
the "Topro Reports"). Each of the balance sheets included in the Topro Reports
(including any related notes and schedules) fairly presents the consolidated
financial position of Topro as of its date, and the other financial statements
included in the Topro Reports (including any related notes and schedules),
fairly present the consolidated results of operations or other information
included therein of Topro for the periods or as of the dates therein set forth,
and, with respect to the unaudited financial statements, all adjustments
necessary for a fair presentation of results for such periods have been made.
The audited statements have been prepared in accordance with generally accepted
accounting principles consistently applied (except and unless otherwise stated
therein). None of the Topro Reports contained, as of its date, any untrue
statement of a material fact or any omission to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
SECTION 2.5 Absence of Changes. Except as described in the Topro
Reports, since December 31, 1995, there has not been any material adverse
change in the financial condition, properties or business of Topro taken as a
whole.
SECTION 2.6 Compliance with Laws. To the best knowledge of Topro
management, the business of Topro is not being conducted in violation of any
applicable law, ordinance, regulation,
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decree or order of any governmental entity, except for violations which either
singly or in the aggregate do not and are not expected to have a material
adverse effect on the financial condition, properties or businesses of Topro
taken as a whole.
SECTION 2.7 Legal Proceedings. Except for matters, if any, referred
to in the Topro Reports or on Schedule 2.7 hereto, (i) no material
investigation or review by any governmental entity with respect to Topro is
pending or, to the best of Topro's knowledge, threatened, nor has any
governmental entity indicated to Topro an intention to conduct the same, and
(ii) there is no action, suit or proceeding pending or, to the best of Topro'
knowledge, threatened against or affecting Topro at law or in equity, or before
any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, which either singly or in the
aggregate is likely to result in any material adverse change in the financial
condition, properties or businesses of Topro taken as a whole.
SECTION 2.8 Validity of Merger Shares. All of the Merger Shares to
be issued in the Merger pursuant to Section 1.2 will, upon such issuance, be
validly issued and outstanding, fully paid and nonassessable. The Merger
Shares shall be issued in compliance with all applicable state and federal
securities laws.
SECTION 2.9 Continuity of Business Enterprise. Topro will continue
at least one significant historic business line of VI, or use at least a
significant portion of VI's historic business assets in a business, in each
case within the meaning of Treasury Reg. Section 1.368-1(d).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF VI
VI represents, warrants to, and agrees with, Topro and Newco as
follows:
SECTION 3.1 Corporate Organization. VI and each of its subsidiaries,
which are listed on Schedule 3.1 hereto, are corporations duly organized,
validly existing and in good standing under the laws of their respective
jurisdictions of incorporation and each is duly qualified or licensed as a
foreign corporation in each other jurisdiction where it owns or leases
substantial properties. Except as set forth on Schedule 3.1, VI has no
subsidiaries. Each such corporation has the requisite corporate power and
authority to own, operate and lease its properties and to conduct its business
as it is now being conducted. VI has previously delivered to Topro a true and
complete copy of its Articles of Incorporation and Bylaws and those of each of
its subsidiaries.
SECTION 3.2 Capitalization. The authorized capital stock of VI
consists of 10,000,000 shares of Common Stock ("VI Common Stock"). As of the
date of this Agreement there are 1,000,000 shares of VI Common Stock issued and
outstanding. All of the outstanding shares of VI Common Stock have been
validly issued and are fully paid and nonassessable. As of the date hereof, VI
has reserved no shares of VI Common Stock for issuance. Except as set forth
above VI does not have any shares of its capital stock issued or outstanding.
VI does not have any outstanding
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subscriptions, options, warrants, rights or other agreements or commitments
obligating VI to issue shares of its capital stock.
SECTION 3.3 Authorization, Execution and Delivery. VI has the
corporate power to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by its Board
of Directors and shareholders, and no other corporate proceedings on the part
of VI or its subsidiaries are necessary to authorize this Agreement and the
transactions contemplated hereby. Neither VI nor any of its subsidiaries is
subject to or obligated under any charter, by-law or contract provision or any
note, mortgage, lease, agreement, bond, indenture, instrument, license,
franchise or permit, or subject to any order, judgment, injunction, writ or
decree, which would be breached or violated by the execution or consummation of
this Agreement. Other than in connection with or in compliance with the
provisions and requirements of the California Statute, the 1933 Act , and the
securities or blue sky laws of the various states, no authorization, consent or
approval of, or filing with, any public body or authority is necessary for the
completion by VI of the transactions contemplated by this Agreement, except for
such authorizations, consents, approvals or filings, the failure to obtain or
make which would not have a material adverse effect on VI's business.
SECTION 3.4 Accuracy of Information. VI has previously furnished to
Topro true and complete copies of audited consolidated financial statements
("VI audited statements") for the fiscal year ended December 31, 1994 and the
unaudited, consolidated financial statements as of and for the fiscal year
ended December 31, 1995 and for the quarter ended March 31, 1996 ("VI unaudited
statements"). The VI audited statements and the VI unaudited statements are
at times collectively referred to as the "VI Reports." Each of the balance
sheets included in the VI audited statements and the VI unaudited statements
(including any related notes and schedules) fairly presents the financial
position of VI as of its date and the other financial statements included in
the VI Reports (including any related notes and schedules) fairly present the
results of operations or other information included therein of VI for the
periods or as of the dates therein set forth and, with respect to the VI
unaudited statements, all adjustments necessary for a fair presentation of
results for such periods have been made. The VI audited statements have been
prepared in accordance with generally accepted accounting principles
consistently applied (except and unless otherwise stated therein). Neither the
VI audited statements nor the VI unaudited statements contains any untrue
statement of a material fact or any omission to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
SECTION 3.5 Absence of Changes. Except as set forth on Schedule 3.5
hereof, since March 31, 1996, there has not been any material adverse change in
the working capital, financial condition, assets, liabilities, reserves,
business, operations or prospectus of VI or any of its subsidiaries, and
neither VI nor any of its subsidiaries has:
(a) waived or surrendered any right of material value;
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(b) discharged or satisfied or paid any material lien or
encumbrance or debt or obligation other than current liabilities in
the ordinary course of business;
(c) authorized or made any capital expenditures or commitments for
capital expenditures exceeding in the aggregate $25,000;
(d) assumed, guaranteed, or agreed to assume or guarantee, any
material debt, liability or other obligation of any person, firm or
corporation;
(e) made, declared or authorized any dividends or other
distribution on any shares of the capital stock;
(f) engaged in any material transaction outside the ordinary
course of business;
(g) entered into or extended any employment contract with any
officer or employee for a term extending beyond the Effective Date;
(h) paid, loaned or advanced (other than the payment of salaries
or reimbursement of expenses in the ordinary course of business) any
amounts to, or sold, transferred or leased any properties or assets
to, any of its officers or directors or any "affiliate" or "associate"
of any of its officers or directors (as such terms are defined in the
rules and regulations under the 1933 Act);
(i) made any material change in any method of accounting or
accounting practice;
(j) made any material change in any pension, retirement,
profit-sharing or other employee benefit plan or arrangement;
(k) incurred any material indebtedness or leasehold expense except
in the ordinary course of business;
(l) agreed, whether in writing or otherwise, to do any of the
foregoing; or
(m) suffered any damages, destruction or loss, whether or not
covered by insurance, materially adversely affecting the business or
properties of VI and its subsidiaries taken as a whole.
SECTION 3.6 Compliance with Laws. To the best knowledge of VI's
management, the business of VI and each of its subsidiaries is not being
conducted in violation of any applicable law, ordinance, regulation, decree or
order of any governmental entity, including, but not limited to laws,
ordinances or regulations relating to environmental protection, except for
violations which either singly or in the aggregate do not and are not expected
to have a material adverse effect on VI's business taken as a whole. There is
no past or present violation known to VI of any law, ordinance
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or regulation relating to environmental protection, whether or not such
violation is expected to have a material adverse effect on VI's business.
SECTION 3.7 Legal Matters. To the best knowledge of VI's management:
(i) there is no material investigation or review by any governmental entity
with respect to VI or any of its subsidiaries threatened or pending, nor has
any governmental entity indicated an intention to conduct the same, and (ii)
there is no action, suit or proceeding threatened or pending against or
affecting VI or any of its subsidiaries at law or in equity, or before any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, which either singly or in the aggregate is
likely to result in any material change in VI's business.
SECTION 3.8 Material Agreements and Plans; ERISA. VI has heretofore
delivered to Topro an accurate and complete list, attached as Schedule 3.8
hereto, setting forth all material leases, contracts, mortgages, deeds of
trust, loans, commitments, undertakings and other agreements and plans,
including any open contracts and purchase orders, bonus, deferred compensation,
pension, profit-sharing, retirement or other benefit plan, to which VI on any
of its subsidiaries is a party or is subject, and VI does not know of any
material default or defaults under any of such agreements or plans on the part
of any party subject thereto. Except as set forth on Schedule 3.8 hereto,
neither VI nor any of its subsidiaries now has or ever has had in effect any
"Plan" as such term is defined in the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") nor incurred any liability under, nor been in
violation of, ERISA.
SECTION 3.9 Continuation of Business. There are no events that, to
the best knowledge of VI, threaten to materially disrupt, prevent or impair the
conduct of the business of VI and its subsidiaries or which would disrupt the
ability of the Surviving Corporation, as a subsidiary of Topro, to continue to
conduct the business currently being conducted by VI and its subsidiaries.
SECTION 3.10 Tax Returns. VI and each of its subsidiaries have duly
filed all tax reports and returns which have been required to be filed by them
and have duly paid or adequately reserved for all taxes and other charges shown
on such reports and returns to be due or claimed to be due from them by
federal, state or other taxing authorities. There are no outstanding agreements
or waivers extending the statutory period of limitation applicable to any such
federal, state, local or other income tax returns for any period.
SECTION 3.11 Absence of Undisclosed Liabilities. Neither VI nor any
of its subsidiaries has any material liabilities or obligations of any nature
(absolute, accrued, contingent or otherwise) which are not disclosed on the VI
unaudited financial statements. To the best knowledge of VI's management, VI
and each of its subsidiaries is in substantial compliance with all laws and
regulations applicable to operation of its business and all contracts and
agreements by which it is bound.
SECTION 3.12 Accounts Receivable. All accounts receivable reflected
on the books of VI are bona fide, good and collectible and without set-off or
counterclaim except as set forth on
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Schedule 3.12. Attached hereto as Exhibit 3.12 is a listing of VI's accounts
payable and accounts receivable as of May 15, 1996.
SECTION 3.13 Ownership of VI Common Stock. All of the issued and
outstanding shares of VI Common Stock are owned of record and beneficially by
the VI Shareholders as set forth on Schedule 3.13.
SECTION 3.14 Project Contracts and Job Orders. All project contracts
and job orders reflected on the books of VI are bona fide and without set-off
except as set forth on Schedule 3.14.
SECTION 3.15 Employment Practices. VI and each of its subsidiaries
is in compliance in all material respects with all federal, state and local
laws and regulations respecting the employment of its employees and employment
practices, terms and conditions of employment and wages and hours relating
thereto. To the best knowledge of VI's management there are no actual or
threatened claims of employees or former employees of VI or any of its
subsidiaries. To VI's knowledge, there are no pending investigations involving
VI or any of its subsidiaries by the U.S. Department of Labor, or any other
governmental agency responsible for the enforcement of such federal, state or
local laws and regulations. To the best of VI's knowledge there is no unfair
labor practice charge or complaint against VI or any of its subsidiaries
pending before the National Labor Relations Board or any strike, picketing,
boycott, dispute, slowdown or stoppage pending or, to the best knowledge of VI,
threatened against or involving VI or any of its subsidiaries or any
predecessor entity, and none has ever occurred. To the best knowledge of VI,
there is no union organization activity with respect to the employees of VI or
any of its subsidiaries. No collective bargaining agreement or modification
thereof is currently being negotiated by VI or any of its subsidiaries. No
grievance or arbitration is pending under any expired or existing collective
bargaining agreements of VI or any of its subsidiaries.
ARTICLE IV
COVENANTS OF VI
SECTION 4.1 Regular Course of Business. Except as otherwise
consented to in writing by Topro, prior to the Effective Time, VI and each of
its subsidiaries will carry on its business in the ordinary course only, and,
without limiting the generality of the foregoing, VI and each of its
subsidiaries will use its best efforts to preserve its present business
organization intact, keep available the services of its present officers and
employees, and preserve its present relationships with customers, suppliers and
other persons having business dealings with it.
SECTION 4.2 Restricted Activities and Transactions. Except as
otherwise consented to in writing by Topro, or contemplated by Section 8.11
hereof, prior to the Closing Date, neither VI nor any of its subsidiaries will:
(a) amend its certificate or articles of incorporation or bylaws;
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(b) issue, sell or deliver, or agree to issue, sell or deliver,
any shares of any class of capital stock or any securities convertible
into any such shares or convertible into securities in turn so
convertible, or any options, warrants or other rights calling for the
issuance, sale or delivery of any such shares or convertible
securities, declare or pay any dividend or make any distribution on
its capital stock in cash, stock or property, subdivide shares of
capital stock into a greater number of shares, or redeem, repurchase
or otherwise acquire any shares of capital stock;
(c) discharge or satisfy or pay any lien, encumbrance, debt or
obligation other than in the ordinary course of business;
(d) sell, transfer or otherwise dispose of any of its assets
otherwise than in the normal course of business;
(e) incur or assume or authorize or commit to any expenditure(s)
in excess of $25,000 in the aggregate other than in the ordinary
course of business;
(f) assume or guarantee, or agree to assume or guarantee, any
debt, liability or other obligation of any person, firm or
corporation; or
(g) acquire control of any other corporation, association, joint
venture, partnership, business trust or other business entity, or
acquire control or ownership of all or a substantial portion of the
assets of any of the foregoing or merge, consolidate or otherwise
combine with any other corporation (except as provided for in this
Agreement), or enter into any agreement providing for any of the
foregoing.
SECTION 4.3 Advice of Changes. Until the Closing Date, VI will
promptly advise Topro in writing (i) after acquiring knowledge thereof, of any
event occurring subsequent to the date of this Agreement which would render any
representation or warranty of VI contained in this Agreement, if made on or as
of the date of such event or the Effective Time, untrue or inaccurate in any
material respect and (ii) of any material adverse change in VI's business.
SECTION 4.4 Access to Records and Properties. Topro may, prior to
the Closing Date, through its employees, agents and representatives, make or
cause to be made a detailed review of the business and financial condition of
VI, and make or cause to be made such investigation as it deems necessary or
advisable of the properties, assets, businesses, books and records of VI. VI
agrees to furnish such assistance as Topro reasonably may request in conducting
such review and investigation and will provide, and will cause its independent
public accountants to provide, Topro and its employees, agents and
representatives full access to all books, records (including tax returns filed
or in preparation), personnel and premises of VI and the work papers and other
records of its independent public accountants and shall provide to Topro such
other information concerning the business of VI as Topro reasonably may
request. Any such review described in this section shall be undertaken during
normal business hours following reasonable notice to VI.
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SECTION 4.5 Brokerage. VI has retained no broker or finder to assist
it in the transactions contemplated hereby, and owes no person a commission,
brokerage fee, or finders' fee as a result hereof. VI will indemnify and hold
Topro harmless from any claim for brokerage or finder's or investment advisor's
fees or commissions arising out of the transactions contemplated hereby by any
person claiming to have been engaged by VI.
ARTICLE V
COVENANTS OF TOPRO
SECTION 5.1 Advice of Changes. Topro will promptly advise VI in
writing after acquiring knowledge thereof, (i) of any event occurring
subsequent to the date of this Agreement which would render any representation
or warranty of Topro contained in this Agreement, if made on or as of the date
of such event or at the Effective Time, untrue or inaccurate in any material
respect and (ii) of any material adverse change in the business of Topro and
its significant subsidiaries taken as a whole.
SECTION 5.2 Brokerage. Topro has utilized the services of Bathgate
McColley & Associates LLC in connection with this transaction, and Topro shall
be solely responsible for payment of fees due to Bathgate McColley & Associates
LLC. Other than Bathgate McColley & Associates LLC, Topro has retained no
broker or finder to assist it in the transactions contemplated hereby, and owes
no person a commission, brokerage fee, or finders' fee as a result hereof.
Topro will indemnify and hold VI harmless from any claim for brokerage or
finder's or investment advisor's fees or commissions arising out of the
transactions contemplated hereby by any person claiming to have been engaged by
Topro.
SECTION 5.3 Conduct of Business of Newco. From the date of this
Agreement to the Closing Date, Newco shall not engage in any activities of any
nature except as contemplated by this Agreement.
SECTION 5.4 Guarantee of Newco Obligations. Topro shall cause Newco
to perform in a timely manner all its obligations, and to comply with all its
agreements, in this Agreement and in the Articles of Merger.
SECTION 5.5 Employment and Compensation of Certain Persons.
(a) On or prior to the Closing Date, Topro and VI will determine
which of the current employees of VI will become employees of the
Surviving Corporation and the compensation and benefits to be paid to
such employees, to be listed on Schedule 5.5.
(b) No later than the Closing Date, Topro's Board of Directors
shall, subject to shareholder approval at the next meeting of
shareholders, amend its existing Incentive Stock Option Plan to
increase the number of shares reserved thereunder by at least 100,000.
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SECTION 5.6 Access to Records and Properties. VI may, prior to the
Closing Date, through its employees, agents and representatives, make or cause
to be made a detailed review of the business and financial condition of Topro,
and make or cause to be made such investigation as it deems necessary or
advisable of the properties, assets, businesses, books and records of Topro.
Topro agrees to furnish such assistance as VI may reasonably request in
conducting such review and investigation and will provide, and will cause its
independent public accountants to provide, VI and its employees, agents and
representatives full access to all books, records (including tax returns filed
or in preparation), personnel and premises of Topro and the audit work papers
and other records of its independent public accountants and shall provide to VI
such other information concerning Topro's business as VI may reasonably
request.
SECTION 5.7 Regular Course of Business. Prior to the Closing Date,
Topro will use its best efforts to preserve its present business organization
intact, keep available the services of its present officers and employees, and
preserve its present relationships with customers, suppliers and other persons
having business dealings with it.
SECTION 5.8 Restricted Activities and Transactions. Except as set
forth on Schedule 5.8 hereof, prior to the Closing Date, Topro will not:
(a) amend its certificate or articles of incorporation or bylaws;
(b) issue, sell or deliver, or agree to issue, sell or deliver,
any shares of any class of capital stock of Topro or any securities
convertible into any such shares or convertible into securities in
turn so convertible, or any options, warrants or other rights calling
for the issuance, sale or delivery of any such shares or convertible
securities, declare or pay any dividend or make any distribution on
its capital stock in cash, stock or property, subdivide shares of
Topro Common Stock into a greater number of shares, or redeem,
repurchase or otherwise acquire any shares of Topro Common Stock;
(c) discharge or satisfy or pay any lien, encumbrance, debt or
obligation other than in the ordinary course of business;
(d) sell, transfer or otherwise dispose of any of its assets
otherwise than in the normal course of business;
(e) assume or guarantee, or agree to assume or guarantee, any
debt, liability or other obligation of any person, firm or
corporation; or
(f) acquire control of any other corporation, association, joint
venture, partnership, business trust or other business entity, or
acquire control or ownership of all or a substantial portion of the
assets of any of the foregoing or merge, consolidate or otherwise
combine with any other corporation (except as provided for in this
Agreement), or enter into any agreement providing for any of the
foregoing.
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ARTICLE VI
MUTUAL COVENANTS
SECTION 6.1 Confidentiality. Topro and VI will use their best
efforts to keep confidential any and all information furnished to one of them
by the other or such other's representatives or independent public accountants
in connection with the transactions contemplated by this Agreement, and the
business and financial review and investigation referred to in Section 4.4 and
Section 5.6, except to the extent any such information may be generally
available to the public, and Topro and VI have instructed their respective
officers, employees and other representatives having access to such information
to comply with the obligation of confidentiality. In the event of termination
of this Agreement, each of Topro and VI will promptly deliver to the other all
originals and copies of documents, work papers and other material containing
information concerning the other that was obtained from the other or its
agents, employees or representatives in connection with such transactions or
business and financial review and investigation, whether so obtained before or
after the execution hereof, will not use any information so obtained, will not
disclose or divulge such information to any other person and will keep
confidential any information so obtained; provided, however, that (after
reasonable measures have been taken to maintain confidentiality and after
giving reasonable notice to the other parties to this Agreement specifying the
information involved and the manner and extent of the proposed use of
disclosure thereof) (i) any disclosure of such information may be made by a
party hereto to the extent required by applicable law or regulation or judicial
or regulatory process and (ii) such information may be used by such party as
evidence in or in connection with any pending or threatened litigation relating
to this Agreement or any transaction contemplated hereby. The obligations
arising under this Section 6.1 shall survive any termination or abandonment of
this Agreement.
SECTION 6.2 Expenses. Whether or not the Merger is consummated, each
party shall bear its own costs and expenses in connection with this Agreement.
SECTION 6.3 Public Announcements. VI and Topro agree, recognizing
that Topro has an obligation to disseminate material information to the public
and to its shareholders, that they will, to the maximum extent feasible, advise
and confer with each other prior to the issuance of any reports, statements or
releases (including reports, statements or releases to their respective
employees) pertaining to this Agreement and any transaction contemplated by
this Agreement.
SECTION 6.4 Agreement with Respect to Accounting Treatment. Neither
Topro nor VI knowingly will take any action that could prevent the Merger from
being accounted for as a purchase or on a basis substantially similar thereto.
SECTION 6.5 Further Assurances. Each party hereto agrees to execute
and deliver such instruments and take such other actions as any other party may
reasonably require in order to carry out the intent of this Agreement.
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ARTICLE VII
PRIVATE PLACEMENT; REGISTRATION RIGHTS
SECTION 7.1 Investment Representations. At or prior to the Effective
Time, the VI Shareholders listed on Schedule 3.13 hereto, as the record and
beneficial owners of all of the issued and outstanding shares of VI Common
Stock (the "VI Shareholders"), will execute and deliver to Topro subscription
agreements and investment letters in the form attached hereto as Exhibit 7.1.
SECTION 7.2 Blue Sky. Topro will distribute the Shares to the VI
Shareholders in accordance with the provisions of this Agreement and pursuant
to an exemption from registration under the California "Blue Sky" law and other
applicable "Blue Sky" laws.
SECTION 7.3 Registration Rights.
(a) During the two year period commencing at the Effective Time,
whenever Topro files a registration statement under the 1933 Act
(including a "post-effective amendment" to a previous registration
statement) which relates to a current offering of securities of Topro
or any securityholder of Topro (except in connection with an offering
on Forms S-4 or S-8, or any other inappropriate form(s)), Topro shall
offer to the VI Shareholders the opportunity to register or qualify
the Merger Shares for public sale; provided, however, that if the
offering to which the proposed registration statement relates is an
underwritten offering and such underwriter objects to the inclusion of
the Merger Shares in such registration statement, Topro shall be under
no obligation to include the Merger Shares unless shares held by other
selling securityholders are included therein, in which case the VI
Shareholders shall be entitled to have their Merger Shares included
pro rata with all other selling securityholders whose shares are to be
included in the registration statement. The Company shall give at
least 30 days' prior written notice to the VI Shareholders of Topro's
intention to file a registration statement under the 1933 Act, which
notice shall constitute an offer to the VI Shareholders to have their
Merger Shares included in such registration statement, and the VI
Shareholders shall notify Topro in writing within ten days thereafter
if the VI Shareholders desire to accept such offer. Neither the
delivery of such notice nor the acceptance by the VI Shareholders of
such offer shall obligate Topro to file such registration statement
and, notwithstanding the actual filing of the registration statement,
Topro may at any time prior to its effectiveness elect not to pursue
the registration without liability to the VI Shareholders. In the
event of registration hereunder, Topro will pay all expenses necessary
to effect registration, including, without limitation, printing costs,
blue sky filing fees, other filing fees and fees and disbursements of
counsel and accountants for Topro; excluding, however, selling
expenses of the VI Shareholders, such as commissions or underwriting
discounts.
(b) The Merger Shares held by the VI Shareholders may be excluded
from a registration statement at the election of Topro in the event
all information reasonably necessary for Topro and its counsel to
prepare the registration statement is not furnished by the VI
Shareholders,
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after the VI Shareholders, upon written request of Topro or its
counsel, has been given a reasonable amount of time (not less than ten
business days from the date such request has been sent to the VI
Shareholders) to transmit the requested information to Topro and/or
its counsel.
(c) At any time commencing during the 1997 and 1998 calendar
years, upon request of the holders of at least 75% of the Merger
Shares, Topro shall file, during each calendar year, at its expense, a
registration statement under the 1933 Act to register or qualify the
Merger Shares for public sale on behalf of the VI Shareholders;
provided, however, that if the Merger Shares are included in a
registration statement pursuant to Section 7.3(a), then only one
demand right under this Section 7.3(c) may be made covering both
calendar years.
(d) In the event of any registration under the 1933 Act of any of
the Merger Shares, Topro will agree to indemnify and hold harmless the
VI Shareholders and each agent, underwriter, and each other affiliate
and controlling person of the VI Shareholders, within the meaning of
the 1933 Act, against any losses, claims, damages or liabilities,
joint or several, and for any legal or other expenses incurred by the
VI Shareholders to which the VI Shareholders or such underwriter or
affiliate or controlling person may become subject under the 1933 Act
or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof):
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained, at
the effective date of such registration statement, in any such
registration statement, any preliminary prospectus or final
prospectus contained therein or any amendment thereof or
supplement thereto, or any document incident to registration
or qualification of the Shares covered thereby under state
securities or blue sky laws;
(ii) or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to
be stated therein, or any violation by Topro of the 1933 Act
or state securities or blue sky laws applicable to Topro and
relating to any action or inaction required by Topro in
connection with such registration or qualification under such
state securities or blue sky laws;
provided, however, that Topro will not be liable in any such case to
any indemnified person to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission of any
material fact made in such registration statement, said preliminary
prospectus or said prospectus or said amendment or supplement, or any
document incident to registration or qualification under state
securities or blue sky laws, in reliance upon and in conformity with
any information furnished in writing to Topro or its counsel by such
indemnified person specifically for use in the preparation thereof or
if such loss, claim, damage, liability or action arose out of the
violation of any duty to which the VI Shareholders may be subject,
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including the obligation to deliver a copy of any prospectus,
supplement or amendment to a purchaser of the Merger Shares and such
prospectus, supplement or amendment was made available to the VI
Shareholders by Topro.
(e) In the event of any registration of the Merger Shares under
the 1933 Act, the VI Shareholders will agree to indemnify and hold
harmless Topro and each affiliate and controlling person, as defined
by the 1933 Act, of Topro, each officer or employee of Topro who signs
the registration statement, each director of Topro, any agent of Topro
and each underwriter, and any and all affiliates and controlling
persons, as defined by the 1933 Act, of such persons against any and
all such losses, claims, damages or liabilities as the VI Shareholders
and other selling securityholders are indemnified against by Topro and
will reimburse Topro and each of the foregoing persons for any losses,
claims, damages or liabilities (or actions in respect thereof) and for
any legal or any other expenses incurred by each such person, if the
untrue statement or alleged untrue statement or omission or alleged
omission of material fact in respect of which such loss, claim, damage
or liability is asserted was made in reliance solely upon and in
conformity with information furnished to Topro in writing by the VI
Shareholders or on its behalf specifically for use in connection with
the preparation of such registration statement or prospectus.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF TOPRO AND NEWCO
The obligations of Topro and Newco under this Agreement to consummate
the Merger shall be subject to the satisfaction, or to the waiver by them in
the manner contemplated by Section 12.2, at the Closing Date and at the
Effective Time, of the following conditions:
SECTION 8.1 Representations and Warranties True. The representations
and warranties of VI contained in this Agreement shall be in all material
respects true and accurate as of the date when made and, except for changes
expressly contemplated by this Agreement, at and as of the Closing Date and the
Effective Time as if made at such time.
SECTION 8.2 Performance of Covenants. VI shall have performed and
complied in all material respects with each and every covenant, agreement and
condition required by this Agreement to be performed or complied with by it
prior to or at the Closing Date and the Effective Time.
SECTION 8.3 No Governmental or Other Proceeding or Litigation. No
order of any court or administrative agency shall be in effect which restrains
or prohibits any transaction contemplated hereby or that would limit or affect
Topro's right to the ownership of VI; no suit, action, investigation, inquiry
or proceeding by any governmental body or other person or entity shall be
pending or threatened against Topro, Newco or VI that challenges the validity
or legality, or seeks to restrain the completion, of the transactions
contemplated hereby or that seeks damages or other relief in respect thereof or
seeks to limit or otherwise affects Topro's right to the ownership of VI; and
no written advice shall have been received by Topro, Newco, VI or their
respective counsel from
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any governmental body, and remain in effect, stating that an action or
proceeding will, if the Merger is completed or sought to be completed, be filed
seeking to invalidate or restrain the Merger or limit or otherwise affect
Topro's right to the ownership of VI.
SECTION 8.4 Approvals and Consents. The approval of the VI
shareholders required to approve the Merger and any consents or approvals of
any persons who are parties to contracts or other agreements to which VI is
also a party or to which material properties of VI are subject, the granting of
which is necessary for the completion of the Merger or for preventing the
termination of any right, privilege, license or agreement of VI that is
material to the business of VI, or to prevent any material loss or disadvantage
to the business of VI by reason of the Merger, shall have been obtained, no
such consents or approvals shall have imposed a condition to such consent or
approval that in the reasonable opinion of Topro is unduly burdensome to the
consolidated financial position or operations of Topro or to the business of
VI.
SECTION 8.5 Opinion of Counsel. VI shall have delivered to Topro and
Newco an opinion of counsel of recognized standing, dated the Closing Date and
addressed to Topro and Newco, and in form and substance reasonably satisfactory
to Topro, to the effect that based upon a review by them of the Agreement,
including all Exhibits and Schedules thereto, VI's certificate of
incorporation, bylaws, and relevant corporate proceedings and contracts, and
examination of such statutes they deem necessary and such other investigation
by such counsel as they deem necessary to express such opinion on the matters
described in Exhibit 8.5.
Counsel's opinion as to the validity and enforceability of any and all
contracts and agreements referenced herein may exclude any opinion as to the
validity or enforceability of any indemnification or contribution provisions
thereof, or as the validity or enforceability of any such contract or agreement
may be limited by bankruptcy or other laws relating to or affecting creditor's
rights generally and by equitable principles.
SECTION 8.6 Certificate. VI shall have furnished Topro with a
certificate of VI in the form attached hereto as Exhibit 8.6, signed by its
President and its Chief Operating Officer and attested to by its Secretary or
any Assistant Secretary to the effect that VI's representations and warranties
contained in this Agreement were in all material respects true and accurate as
at the date when made and, except for changes expressly contemplated by this
Agreement, at and as of the Closing Date and the Effective Time as though such
representations and warranties were made at such time and that VI has performed
and complied in all material respects with all terms, covenants and provisions
of this Agreement required to be performed or complied with by it prior to or
at the Closing Date and the Effective Time.
SECTION 8.7 Financial Condition of VI. At the Closing Date and the
Effective Time, there shall have been no material adverse change in the
business, prospects or condition, financial or otherwise of VI, and VI's
financial condition has not adversely changed materially from that described in
the unaudited financial statements previously supplied to Topro.
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SECTION 8.8 Financial Information of VI. At the Closing Date, VI
shall have demonstrated its ability to provide financial records and
information sufficient to permit the timely preparation of financial statements
required to be filed by Topro pursuant to the 1934 Act.
SECTION 8.9 Availability of Exemptions. At the Closing Date, Topro
shall be reasonably satisfied that an exemption from the registration
requirements of the 1933 Act and applicable Blue Sky laws for the Merger
existed at the time any offer to the VI Shareholders of Topro Common Stock was
made and that an exemption continues to exist at the Closing Date.
SECTION 8.10 VI Business Plan. VI and Topro will prepare and
attach as Exhibit 8.10 hereto, a detailed business plan (six month), designed
to promote the achievement of profitable operations of VI and specific
operating cost reductions to be achieved through the Merger. This plan must be
accepted by the parties hereto.
SECTION 8.11 Lock-up Letter. Each of the VI Shareholders shall have
executed the Lock-up Letter, in the form attached to this Agreement as Exhibit
8.11, providing that, until January 1, 1997, no holder of Merger Shares shall
sell or otherwise transfer for value any of the Merger Shares, and that
thereafter, until June 30, 1998, no holder of Merger Shares shall sell or
otherwise transfer for value more than 25% of the number of Merger Shares held
by such person, that the sale or transfer of such shares shall be done pro-rata
over the period January 1, 1997 through June 30, 1998 at the rate of 1.389% per
month. The restrictions imposed by the Lock-up Letter do not preclude
restrictions on resale which apply under the 1933 Act, nor modify the two-year
holding period which will apply, absent registration of the Merger Shares,
under Rule 144 of the 1933 Act as currently in effect.
SECTION 8.12 Indemnification and Hold Harmless Agreements. Topro
shall have received Indemnification and Hold Harmless Agreements in the form
attached hereto as Exhibit 8.12 executed by each executive officer and
director of VI in their individual capacities, which agreements shall provide
in substance that Topro will be indemnified and held harmless by said persons
for a period of five years from the Effective Time for any liabilities,
penalties, claims or other obligations existing at any time from VI's date of
incorporation through the Effective Time which such persons knew of or should
have known of after due inquiry and which are not disclosed in VI's unaudited
financial statements or elsewhere herein.
SECTION 8.13 Other Actions to be Taken by VI and VI Shareholders. VI
shall have replaced the promissory notes listed in Schedule 8.13 with the
promissory notes in the form attached hereto as Exhibit 8.13. In addition, the
Marine Antiques which are listed on Schedule 8.13 shall have been purchased by
Michael Taylor for $12,000, which amount shall be deducted from payments under
the promissory note to the Michael C. Taylor Family Revocable Living Trust (the
"Trust"), as set forth in Exhibit 8.13. Any additional advances as shown on
the books of VI made to Michael or Kathleen Taylor shall be deducted from
payments under the promissory note to the Trust.
SECTION 8.14 Royalty Agreement Covering VI Patent. VI shall have
entered into a letter agreement in the form attached hereto as Exhibit 8.14
with Michael Taylor covering certain U.S.
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Patents under claims made by Mr. Taylor with the U.S. Bankruptcy Trustee in
Case No. SA95-11972.
ARTICLE IX
CONDITIONS TO VI'S OBLIGATIONS
The obligations of VI under this Agreement to complete the Merger
shall be subject to the satisfaction, or to the waiver by VI in the manner
contemplated by Section 12.2, at or before the Effective Time, of the following
conditions:
SECTION 9.1 Representations and Warranties True. The representations
and warranties of Topro and Newco contained in this Agreement shall be in all
material respects true and accurate as of the date when made and, except for
changes expressly contemplated by this Agreement, at and as of the Closing Date
and the Effective Time, as if made at such time.
SECTION 9.2 Performance of Covenants. Topro and Newco shall have
performed and complied in all material respects with each and every covenant,
agreement and condition required by this Agreement to be performed or complied
with by each prior to or at the Closing Date and the Effective Time.
SECTION 9.3 No Governmental or Other Proceeding or Litigation. No
order of any court or administrative agency shall be in effect which restrains
or prohibits the Merger, no suit, action, investigation, inquiry or proceeding
by any governmental body or other person or entity shall be pending or
threatened against Topro, Newco or VI that challenges the validity or legality,
or seeks to restrain the completion of the Merger, and no written advice shall
have been received by Topro, Newco, VI or their respective counsel from any
governmental body, and remain in effect, stating that an action or proceeding
will, if the Merger is completed or sought to be completed, be filed seeking to
invalidate or restrain the Merger.
SECTION 9.4 Approvals and Consents. The approval of the shareholder
of Newco and of the shareholders of VI required to approve the Merger and all
approvals of applications to public authorities, Federal, state, local or
foreign, the granting of which is necessary for the completion of the Merger,
shall have been obtained, and all waiting periods specified by law shall have
passed.
SECTION 9.5 Opinion of Counsel. Topro shall have delivered to VI an
opinion of Brenman Key & Bromberg, P.C., dated the Closing Date and addressed
to VI, in form and substance reasonably satisfactory to VI, to the effect that
based upon a review by them of the Agreement, including all Exhibits and
Schedules thereto, Topro's certificate of incorporation, bylaws, and relevant
corporate proceedings and contracts, and examination of such statutes they deem
necessary and such other investigation by such counsel as they deem necessary
to express such opinion on the matters described in Exhibit 9.5.
Counsel's opinion as to the validity and enforceability of any and all
contracts and agreements referenced herein may exclude any opinion as to the
validity or enforceability of any indemnification
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or contribution provisions thereof, or as the validity or enforceability of any
such contract or agreement may be limited by bankruptcy or other laws relating
to or affecting creditor's rights generally and by equitable principles.
SECTION 9.6 Certificates. Topro and Newco shall have furnished VI
with certificates of Topro and Newco, respectively, signed for Topro by its
President or any Vice President, its Controller and attested to by its
Secretary or any Assistant Secretary, and for Newco by its President or any
Vice President and its Secretary or any Assistant Secretary, to the effect that
the respective representations and warranties of such corporations contained in
this Agreement were in all material respects true and accurate as of the date
when made and, except for changes expressly contemplated by this Agreement, at
and as of the Closing Date and the Effective Time as though such
representations and warranties were made at the Closing Date and the Effective
Time, and that such corporations have respectively performed and complied in
all material respects with all terms, covenants and provisions of this
Agreement required to be performed or complied with by them prior to or at the
Closing Date and Effective Time.
SECTION 9.7 Condition of Topro. At the Closing Date, there shall
have been no material adverse change in the business, properties or condition,
financial or otherwise, of Topro.
ARTICLE X
CLOSING; CLOSING DATE
Unless this Agreement shall have been terminated and the Merger herein
contemplated shall have been abandoned pursuant to a provision of Article XI
hereof, a closing (the "Closing") will be held as soon as practicable after the
execution of this Agreement at the offices of Topro, Inc. in Denver, Colorado,
or such other place as may be mutually satisfactory to the parties. At such
time and place, the documents referred to in Articles VIII and IX will be
exchanged by the parties and, as soon as practicable thereafter, the Articles
of Merger will be filed by VI and Newco with the Secretary of State of
California. The exchange of documents at Closing may be effected through
simultaneous delivery of executed documents in counterpart.
ARTICLE XI
TERMINATION
SECTION 11.1 Termination and Abandonment. This Agreement may be
terminated and the Merger may be abandoned before the Closing Date,
notwithstanding any approval of this Agreement by the shareholders of the
parties:
(a) by the mutual consent of Topro, Newco and VI;
(b) by Topro, Newco or VI at any time after May 31, 1996 or such
later date as shall have been agreed to in writing by the parties, if
at the time notice of such termination is given the Merger for any
reason shall not have become effective;
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(c) by Topro or Newco if there has been a material
misrepresentation or material breach on the part of VI in the
representations, warranties and covenants of VI set forth herein, or
if there has been any material failure on the part of VI to comply
with its obligations hereunder,
(d) by VI if there has been a material misrepresentation or
material breach on the part of Topro or Newco in the representations,
warranties and covenants of Topro or Newco set forth herein, or if
there has been any material failure on the part of Topro or Newco to
comply with its obligations hereunder, or
(e) by Topro or VI if in the good faith judgment of the Board of
Directors of Topro or VI , respectively, it is inadvisable or
impracticable to proceed with the Merger by reason of the threat,
institution or pendency of a formal investigation or legal proceedings
to restrain or prohibit completion of the Merger or to obtain other
relief in connection with this Agreement.
The exercise of the power of termination provided for by this Section
11.1 will be effective only after written notice thereof, signed on behalf of
the party for which it is given by its duly authorized officer, shall have been
given to the other parties and such power may be exercised only by the Board of
Directors of the party on whose behalf such written notice is given. If this
Agreement is terminated in accordance with this Section 11.1, then the Merger
shall be abandoned without further action by VI and Newco, and their officers
shall not file the Articles of Merger with the Secretary of State of
California.
SECTION 11.2 Liability Upon Termination. In the event of termination
and abandonment of the Merger pursuant to Section 11.1(a), (b) or (e), no party
hereto shall have any liability or further obligation to another party except
as provided in Sections 4.5, 5.2, 6.1 and 6.2.
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.1 Amendment and Modification. To the fullest extent
provided by applicable law, this Agreement may be amended, modified and
supplemented with respect to any of the terms contained herein by mutual
consent of VI, Topro and Newco pursuant to action by their respective officers,
duly authorized by their respective Boards of Directors, by an appropriate
written instrument executed at any time prior to the Effective Time, provided,
however, that following the adoption of resolutions referred to in Section 3.3
by the shareholders of VI, this Agreement may not be amended to reduce the
consideration payable in the Merger in respect of shares of VI Common Stock
without obtaining the approval thereof of the shareholders of VI.
SECTION 12.2 Waiver of Compliance. To the fullest extent permitted
by law, each of Topro, Newco and VI may, pursuant to action by its respective
officers, duly authorized by its Board of Directors, by an instrument in
writing extend the time for or waive the performance of any of the obligations
of the others or waive compliance by the others with any of the covenants, or
waive any
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of the conditions to its obligations, contained herein; provided, however, that
the obtaining of the approval of the shareholders of VI referred to in Section
3.3 shall not be waivable. No such extension of time or waiver shall operate
as a waiver of, or estoppel with respect to, any subsequent or other failure.
SECTION 12.3 Survival of Representations and Warranties. The
respective representations and warranties of each party hereto contained in
Articles II and III shall be extinguished by and shall not survive the Closing.
The other representations contained herein shall survive the Closing for a
period of two years.
SECTION 12.4 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 12.5 Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado, without regard
to principles of conflict of laws.
SECTION 12.6 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered by hand or overnight
courier or mailed by registered or certified mail (return receipt requested) to
the parties at the following addresses (or at such other addresses for a party
as shall be specified by like notice) and shall be deemed given on the date on
which so hand-delivered, or on the business day following the day on which sent
by overnight courier or on the third business day following the date on which
so mailed:
If to Topro or Newco:
Topro, Inc.
ATTN: John Jenkins, President
2525 W. Evans Ave.
Denver, Colorado 80219
Facsimile: 303-935-8850
with a copy to:
Brenman Key & Bromberg, P.C.
ATTN: Donna A. Key, Esq.
1775 Sherman St., Suite 1001
Denver, Colorado 80203
Facsimile: 303-839-1633
If to VI:
Visioneering Holding Corporation
ATTN: Michael Taylor, President
10855 Business Center Dr.
Cypress, California 90630
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Facsimile: 714-995-2801
with a copy to:
Rutan & Tucker
ATTN: Thomas Crane, Esq.
611 Anton Blvd.
Costa Mesa, CA 92626
Facsimile: 714-546-9035
SECTION 12.8 Descriptive Headings. The descriptive headings are for
convenience of reference only and sell not control or affect the meaning or
construction of any provision of this agreement.
SECTION 12.9 Entire Agreement. This Agreement (including the
Exhibits and Schedules hereto) (a) constitutes the entire agreement, and
supersedes all other prior agreements and understandings, both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof, (b) is not intended to and shall not confer upon any person other than
the parties hereto any rights or remedies hereunder and (c) shall not be
assignable by operation of law or otherwise, without the written consent of the
parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date and year first written above.
TOPRO, INC.
Attest:
/s/ Terri Donahue By: /s/ John Jenkins
- -------------------------------- ---------------------------------
John Jenkins, President
TOPRO V.E.C. CORP.
Attest:
/s/ Terri Donahue By: /s/ John Jenkins
- -------------------------------- ---------------------------------
John Jenkins, President
VISIONEERING HOLDING CORPORATION
Attest:
/s/ Marvin Smith By: /s/ Michael Taylor
- -------------------------------- ---------------------------------
Michael Taylor, President
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LIST OF EXHIBITS
1.1(b) Articles of Incorporation of VI
1.1(c) Bylaws of VI
1.3(b) Escrow Agreement
1.9 Employment Agreements for Michael & Kathleen Taylor
3.12 VI Accounts Payable & Accounts Receivable as of 5/15/96
7.1 Subscription Agreement and Investment Representation Letter -
VI Shareholders
8.5 Matters to be included in Rutan & Tucker Opinion of Counsel
8.6 VI Closing Certificate
8.10 VI Six Month Business Plan
8.11 Form of Lock-up Letter - VI Shareholders
8.12 Form of Indemnification and Hold Harmless Agreement - VI
Executive Officers and Directors
8.13 VI Promissory Notes
8.14 VI Royalty Agreement
9.5 Matters to be included in Brenman Key & Bromberg, P.C. Opinion
of Counsel
9.6 Topro & Newco Closing Certificates
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LIST OF SCHEDULES
1.1(d) Officers and Directors of VI to be elected on the Closing
Date
1.8 Schedule of Liens on Michael Taylor Residence
2.2 Topro Outstanding Options, Warrants and Registration Rights
2.7 Topro Legal Matters
3.1 VI Subsidiaries
3.5 VI Material and Enumerated Changes
3.8 VI Material Agreements and Plans; ERISA
3.12 VI Accounts Receivable Set-Offs
3.13 VI Shareholders
3.14 VI Project Contracts and Job Order Set-Offs
5.5(a) VI Employees, Compensation and Benefits
5.8 Topro Restricted Activities and Transactions
8.13 VI Promissory Notes
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