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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of November 14,
2000, (this "Agreement"), among Nematron Corporation., a company organized under
the laws of Michigan ("Parent"), Nematron Acquisition Corp., a New York
corporation and a wholly owned subsidiary of Parent ("Sub"), Optimation
Technology, Inc., a New York corporation (the "Company"), William Pollock
("Pollock"), Timothy Lasch ("Lasch") (individually, Pollock and Lasch are each
referred to as a "Shareholder" and collectively as "Shareholders") and Pollock
and Lasch as Trustees of the Optimation Technology, Inc. Employee Stock
Ownership Trust, which has been established in connection with the Optimation
Technology, Inc. Employee Stock Ownership Plan ("OTI ESOP") (collectively, the
"Trustees").
RECITALS
Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of New York. As of the date hereof,
the authorized capital stock of Sub consists of 200 shares of Common Stock of
which 100 shares are issued and outstanding and owned by Parent.
The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of New York. As of the date
hereof, the authorized capital stock of the Company consists of 27,500 shares of
Common Stock (the "Shares"); and as of the date hereof 12,500 Shares were issued
and outstanding.
Shareholders are officers and directors of the Company and the
Shareholders and the OTI ESOP are the sole shareholders of the Company.
The respective Boards of Directors of the Company, Parent and
Sub deem it advisable and in the best interests of the Company and Sub and in
the best interests of the respective shareholders of said corporations that Sub
be merged with and into the Company (the "Merger") on the terms and conditions
hereinafter set forth in accordance with the provisions of the New York Business
Corporation Law (the "New York Law").
The Company, the Parent and the Sub intend that the Merger shall
qualify as a reorganization within the meaning of ss. ss. 368(a)(1)(A) and
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Code"), and
the rules and regulations promulgated thereunder, and this Agreement is intended
to be and is adopted as a "plan of reorganization" within the meaning of ss. 368
of the Code.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereto agree as follows:
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ARTICLE I
THE MERGER
SECTION 1.01 The Merger. Upon the terms and subject to the
conditions set forth in Article VI, and in accordance with the New York Law, at
the Effective Time (as hereinafter defined), Sub shall be merged with and into
the Company. As a result of the Merger, the separate corporate existence of Sub
shall cease and the Company shall continue as the surviving corporation of the
Merger (the "Surviving Corporation"), and shall continue to be governed by the
laws of the State of New York.
SECTION 1.02 Effective Time; Closing. As promptly as
practicable, but within five (5) business days after the satisfaction or, if
permissible, waiver of the last of the conditions set forth in Article VI, the
parties hereto shall cause the Merger to be consummated by filing a certificate
of merger (the "Certificate of Merger") with the New York Department of State,
in such form as is required by, and executed in accordance with the relevant
provisions of, the New York Law (the date and time of such filing being the
"Effective Time"). Simultaneous with such filing, a closing (the "Closing")
shall be held at the offices of Dickinson Wright PLLC, 101 N. Main, Suite 430,
Ann Arbor, MI 48104, or such other place as the parties shall agree, for the
purpose of confirming the satisfaction or waiver, as the case may be, of the
conditions set forth in Article VI and the delivery of all documents provided
herein.
SECTION 1.03 Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of the
New York Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the property, rights, privileges, powers and
franchises of the Company and Sub shall vest in the Surviving Corporation, and
all debts, liabilities, obligations, restrictions, disabilities and duties of
the Company and Sub shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
SECTION 1.04 Certificate of Incorporation; Bylaws. (a) From and
after the Effective Time, the Certificate of Incorporation of the Company shall
be the Certificate of Incorporation of the Surviving Corporation.
(b) The Bylaws of the Surviving Corporation shall be the same as
the Bylaws of the Company, as in effect immediately prior to the Effective Time.
SECTION 1.05 Directors and Officers. At the Closing, Pollock,
Lasch, Diane Trentini, Anthony Jovenitti and Paul Kelly (the "Company-Designated
Directors") and Matthew S. Galvez and James R. Thomas (the "Nematron-Designated
Directors") shall be appointed to the Board of Directors of the Company. For a
period of three (3) years following the Closing, (a) in the event there is a
vacancy among the Company-Designated Directors, whether due to the expiration of
a term or otherwise, it shall be filled by designation of the remaining
Company-Designated Directors, (b) the Parent, as sole shareholder of the
Surviving Corporation, shall cause such designated person to be elected to the
Company's Board of Directors, and (c) Parent, as the sole shareholder of the
Surviving Corporation, will not, without the consent of the Company-Designated
Directors, increase the number of directors on the Board of Directors of the
Company to more than seven (7).
SECTION 1.06 Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Parent, Sub, the
Company or the holders of any of the Shares:
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(a) Each share of Common Stock of Sub issued and
outstanding immediately prior to the Effective Time shall be converted
into and exchanged for one validly issued, fully paid and
non-assessable share of Common Stock of the Surviving Corporation.
(b) Each Share, if any, owned by Sub, Parent or any
direct or indirect wholly owned subsidiary of Parent or by the Company
immediately prior to the Effective Time shall be cancelled and retired
without any conversion thereof and no payment or distribution shall be
made with respect thereto.
(c) Each Share issued and outstanding immediately prior
to the Effective Time (other than any Shares to be cancelled pursuant
to Section 1.06(b)) shall be cancelled and shall be converted
automatically into and exchanged for 249 validly issued, fully paid and
non-assessable unregistered shares of voting Common Stock of Parent
(the "Merger Consideration"), upon surrender, in the manner provided in
Section 1.07, of the certificate that formerly evidenced such Share.
SECTION 1.07 Surrender of Shares; Stock Transfer Books. (a) At
the Closing the Shareholders and the Trustees will deliver to the Surviving
Corporation duly executed certificates in valid form evidencing all of the
Shares of such Shareholders and the OTI ESOP, duly endorsed in blank or
accompanied by duly executed stock powers. Upon surrender to the Surviving
Corporation of a certificate, duly completed and validly executed, the holder of
such certificate shall be entitled to receive in exchange therefor the Merger
Consideration for each Share formerly evidenced by such certificate, and such
certificate shall then be cancelled.
(b) At the close of business on the day of the Effective Time,
the stock transfer books of the Company shall be closed and, thereafter, there
shall be no further registration of transfers of Shares on the records of the
Company. From and after the Effective Time, the holders of Shares outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares except as otherwise provided herein or by applicable law.
SECTION 1.08 Legend on Certificates Evidencing the Merger
Consideration. The Company, the Shareholders and the Trustees understand that
the Merger Consideration has not been registered under the Securities Act or any
state securities laws, and that each of them must therefore bear the economic
risk of such investment indefinitely, unless a subsequent disposition thereof is
registered under the Securities Act or is exempt from registration, and that the
certificates representing the Merger Consideration will bear the following
legend:
"The shares represented by this certificate are 'Restricted
Securities'. As such they may not be transferred unless (i) such
transfer is effected pursuant to a registration statement which has been
filed under the Securities Act of 1933 (the "1933 Act") and declared
effective by the Securities and Exchange Commission, or (ii) in the
written opinion of counsel, which opinion and counsel are acceptable to
the issuer of these shares, such transfer may be effected under and is
in compliance with Rule 144 under the 1933 Act, as in effect on the date
of such transfer, or is otherwise exempt from the registration
requirements of the 1933 Act."
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY, THE SHAREHOLDERS AND
THE TRUSTEES
The Company, the Shareholders and the Trustees hereby represent
and warrant to Parent and Sub that:
SECTION 2.01 Organization and Qualification: Subsidiaries. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of New York and has the requisite corporate power
and authority and all necessary governmental approvals to own, lease and operate
its properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or in
the aggregate, have a Material Adverse Effect (as defined below). The Company is
duly qualified or licensed as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary. For purposes of this Agreement, (a) the term "Material
Adverse Effect" means when used with respect to the Company any event or
condition that is or is reasonably likely to be materially adverse to the
business, operations, prospects, properties, condition (financial or otherwise),
assets or liabilities (including, without limitation, contingent liabilities) of
the Company, and (b) "Subsidiary" means any corporation, partnership, joint
venture or other business association or legal entity of which the Company
(either alone or through or together with any other Subsidiary), owns, directly
or indirectly, 50% or more of the stock or other equity interests the holders of
which are generally entitled to vote for the election of the Board of Directors
or other governing body of such corporation or other legal entity. The Company
does not have any Subsidiaries. Except as disclosed in Section 2.01 of the
Company Disclosure Schedule, which has been delivered prior to the date of this
Agreement by the Company to Parent (the "Company Disclosure Schedule"), the
Company does not directly or indirectly own any equity or similar interest in,
or any interest convertible into or exchangeable or exercisable for any equity
or similar interest in, any corporation, partnership, joint venture or other
business association or other legal entity.
SECTION 2.02 Certificate of Incorporation and Bylaws. The
Company has heretofore furnished to Parent a complete and correct copy of its
Certificate of Incorporation and Bylaws, each as amended to date. Such
Certificate of Incorporation and Bylaws are in full force and effect. The
Company is not in violation of any provision of its Certificate of Incorporation
or Bylaws.
SECTION 2.03 Capitalization. The authorized and outstanding
capital stock of the Company is as set forth in the Recitals to this Agreement.
Except as set forth in Section 2.03 of the Company Disclosure Schedule, there
are no options, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock of
the Company or obligating the Company to issue or sell any shares of capital
stock of, or other equity interests in, the Company. Except as set forth in
Section 2.03 of the Company Disclosure Schedule, there are no outstanding
contractual obligations of the Company to repurchase, redeem or otherwise
acquire any Shares or to provide funds to, or make any investment (in the form
of a loan, capital contribution or otherwise) in any person.
SECTION 2.04 Share Ownership and Authority. Each of the
Shareholders and the Trustees is the lawful owner of the Shares, free and clear
of all liens, encumbrances, restrictions and claims of every kind, which Shares
constitute all of the issued and outstanding shares of capital stock of
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the Company. Each of the Shareholders and the Trustees has full legal right,
power and authority to sell, assign, transfer and convey the Shares in
accordance with the terms and subject to the conditions of this Agreement. The
delivery to the Parent of the Shares pursuant to the provisions of this
Agreement will transfer to the Parent valid title thereto, free and clear of any
claim, lien, encumbrance or agreement with respect thereto. Each of the
Shareholders and the Trustees has the full and unrestricted power to effect the
Merger, free and clear of any liens, security interests, encumbrances, pledges,
charges, claims, voting trusts and restrictions on transfer of any nature
whatsoever and without the consent of any third parties, except for restrictions
on transfer imposed by or pursuant to the securities laws of the United States.
Each of the Shareholders and the Trustees has all necessary power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly executed by each of the
Shareholders and the Trustees. This Agreement constitutes the valid and binding
obligation of the each of the Shareholders and the Trustees, enforceable against
each of the Shareholders and the Trustees in accordance with its terms.
SECTION 2.05 Authority Relative to this Agreement. Except as
set forth in Section 2.05 of the Company Disclosure Schedule, the Company has
all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and subject to approval by the
Company's shareholders of the Merger and satisfaction of the other conditions
set forth herein, to consummate the Merger contemplated hereby. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the Merger have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the Merger (other
than the approval and adoption of this Agreement by the affirmative vote of the
shareholders of the Company, and the filing and recordation of appropriate
merger documents as required by the New York Law). This Agreement has been duly
and validly executed and delivered by the Company and, subject to the foregoing
and assuming the due authorization, execution and delivery by Parent and Sub,
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, subject as to enforceability
to bankruptcy, insolvency, reorganization, fraudulent conveyance and similar
laws relating to creditors' rights and to general principles of equity.
SECTION 2.06 No Conflict; Required Filings and Consents.
Except as set forth in Section 2.06 of the Company Disclosure Schedule, (a) the
execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, (i) conflict with or
violate the Certificate of Incorporation or Bylaws of the Company, (ii) conflict
with or violate any law, rule, regulation, written order, judgment or decree
applicable to the Company or by which any property or asset of the Company is
bound or subject, or (iii) result in any breach of or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance of any
nature on any property or asset of the Company pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company is a party or by which the
Company or any property or asset of the Company is bound or subject, except for
any such conflicts, violations, breaches, defaults or other occurrences which
would not, individually or in the aggregate, have a Material Adverse Effect.
(b) The execution and delivery of this Agreement by
the Company do not, and the performance of this Agreement by the Company will
not, require any consent, approval, authorization or permit of, or filing with,
or notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for filing and recordation of appropriate merger documents
as required by the New York Law, and (ii) where failure to obtain such consents,
approvals, authorizations or permits, or to
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make such filings or notifications, would not prevent or delay consummation of
the Merger, or otherwise prevent the Company from performing its obligations
under this Agreement, and would not, individually or in the aggregate, have a
Material Adverse Effect.
SECTION 2.07 Compliance. Except as set forth in Section 2.07
of the Company Disclosure Schedule, the Company is not in default or violation
of, (i) any law, rule, regulation, written order, judgment or decree applicable
to the Company or by which any property or asset of the Company is bound or
subject or (ii) any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company is a party or by which the Company or any property or asset of the
Company is bound or subject.
SECTION 2.08 Financial Statements. The Company has delivered
or will deliver to Parent copies of the following financial statements:
(i) The balance sheet of the Company as at December
31, 1999 and the statements of income, changes in capital accounts and cash
flows for the fiscal years ended December 31, 1999, as audited by Mengel,
Metzger, Barr & Co., LLP, independent auditors ("MMB") and the balance sheets as
of December 31, 1998 and 1997 and the statements of income, changes in capital
accounts and cash flows for the three fiscal years prior thereto as reviewed by
MMB; and
(ii) Each of its monthly financial statements prepared
from January 1, 2000, until the Effective Time.
Each of the financial statements (including, in each
case, any notes thereto) was prepared in accordance with generally accepted
accounting principles applied on a consistent basis ("GAAP") throughout the
periods indicated (except as may be indicated in the notes thereto and except
that the unaudited financial statements do not contain notes and are subject to
normal year-end adjustments) and each fairly presents the financial position,
results of operations and changes in shareholders' equity and cash flows of the
Company as at the respective dates thereof and for the respective periods
indicated therein (subject, in the case of unaudited financial statements, to
normal year-end adjustments).
Except as and to the extent set forth on the balance
sheet of the Company dated as of December 31, 1999 (the "1999 Company Balance
Sheet"), or in Section 2.08 of the Company Disclosure Schedule, the Company has
no liability or obligation of any nature (whether accrued, absolute, contingent
or otherwise) which would be required to be reflected on a balance sheet, or in
the notes thereto, prepared in accordance with GAAP, except for liabilities and
obligations incurred in the ordinary course of business since December 31, 1999.
SECTION 2.09 Absence of Certain Changes or Events. Since
December 31, 1999, except as set forth in Section 2.09 of the Company Disclosure
Schedule or as contemplated by this Agreement, the Company has conducted its
business only in the ordinary course and, since December 31, 1999, there has not
been (i) any change in the business, operations, properties, condition, assets
or liabilities (including, without limitation, contingent liabilities) of the
Company having, individually or in the aggregate, a Material Adverse Effect,
(ii) any damage, destruction or loss (whether or not covered by insurance) with
respect to any property or asset of the Company, (iii) any change by the Company
in its accounting methods, principles or practices, (iv) any revaluation by the
Company of any asset (including, without limitation, any writing down of the
value of inventory or writing off of notes or accounts receivable), other than
in the ordinary course of business consistent with past practice, (v) any
failure by
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the Company to revalue any asset in accordance with GAAP consistent with past
practice, (vi) any declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of the Company or any redemption,
purchase or other acquisition of any of its securities, (vii) other than
pursuant to the contracts referred to in Section 2.11, any increase in or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards), stock purchase or other employee
benefit plan, or any other increase in the compensation payable or to become
payable to any officers or key employees of the Company, except in the ordinary
course of business consistent with past practice, or (viii) any entering into,
renewal, modification or extension of, any contract, arrangement or agreement
with any other party except for contracts, arrangements or agreements in the
ordinary course of business.
SECTION 2.10 Absence of Litigation. Except as set forth in
Section 2.10 of the Company Disclosure Schedule, as of the date hereof, there is
no claim, action, proceeding or investigation pending or, to the knowledge of
the Company, threatened against the Company or any officer or director of the
Company, or any property or asset of the Company, before any court, arbitrator
or administrative, governmental or regulatory authority or body, domestic or
foreign. Except as set forth in Section 2.10 of the Company Disclosure Schedule,
neither the Company nor any property or asset of the Company is subject to any
order, writ, judgment, injunction, decree, determination or award.
SECTION 2.11 Contracts. Except as set forth in Section 2.11 of
the Company Disclosure Schedule, the Company is not a party to any written or
oral (i) contract with any labor union or similar entity, (ii) bonus, deferred
compensation, stock purchase, stock option or other plan or agreement providing
benefits for officers, directors of employees, (iii) employment, agency,
consulting or similar contract, (iv) license agreement, (v) lease or other
contract extending for more than one year beyond the Effective Time and
involving more than $10,000 on an annual basis, whether as lessor or lessee,
(vi) contract or agreement with any vendor or supplier of the Company extending
for more than one year beyond the Effective Time and involving more than $15,000
on an annual basis, (vii) contract with any shareholder, director, officer or
employee of the Company or (viii) other material contract not described in
(i)-(vii) above. The Company has made available to Parent a correct and complete
copy of each contract, agreement, and other written arrangement listed in the
Company Disclosure Schedule.
SECTION 2.12 Employee Benefit Plans. (a) Section 2.12 of the
Company Disclosure Schedule contains a true and complete list (i) of all
employee benefit plans (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) and all bonus,
stock option, stock purchase, restricted stock, incentive, deferred
compensation, retiree medical or life insurance, supplemental retirement,
severance or other benefit plans, programs or arrangements, and all employment,
termination, severance or other contracts or agreements to which the Company is
a party, with respect to which the Company has any obligation or which are
maintained, contributed to or sponsored by the Company for the benefit of any
current or former employee, officer or director of the Company, and (ii) each
employee benefit plan for which the Company could incur liability under Section
4069 of ERISA, in the event such plan were terminated, or under Section 4212(c)
of ERISA, or in respect of which the Company remains secondarily liable under
Section 4204 of ERISA (collectively, the "Plans"). No plan is a "defined benefit
plan" within the meaning of Section 3(35) of ERISA and no Plan is subject to
Part IV of ERISA. Each Plan that is required to be in writing under ERISA is in
writing. For each Plan that is in writing, the Company has previously furnished
Parent with a true and complete copy of each Plan and for each Plan that is not
in writing, the Company has previously furnished Parent with a complete
description of such Plan, and the Company has furnished to Parent a true and
complete copy of each material document prepared in connection with each such
Plan,
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including, where applicable, a copy of (i) each trust or other funding
arrangement, (ii) each summary plan description and summary of material
modifications, (iii) the three most recently filed Internal Revenue Service
("IRS") Forms 5500, (iv) the most recently received IRS determination letter for
each such Plan, (v) the most recently prepared actuarial report and financial
statement in connection with each such Plan and (vi) any written communication
to employees. Except as set forth in Section 2.12 of the Company Disclosure
Schedule, the Company has no express or implied commitment (i) to create, incur
liability with respect to or cause to exist any other employee benefit plan,
program or arrangement, (ii) to enter into any contract or agreement to provide
compensation or benefits to any individual or (iii) to modify, change or
terminate any Plan, other than with respect to a modification, change or
termination required by ERISA or the Code.
(b) Except as set forth in Section 2.12 of the Company
Disclosure Schedule, none of the Plans is a multiemployer plan, within the
meaning of Section 3(37) or 4001(a)(3) of ERISA (a "Multiemployer Plan"), or a
single employer pension plan, within the meaning of Section 4001(a)(15) of
ERISA, for which the Company could incur liability under Section 4063 or 4064 of
ERISA (a "Multiple Employer Plan"). Except as disclosed in Section 2.12 of the
Company Disclosure Schedule, none of the Plans (i) provides for the payment of
separation, severance, termination or similar-type benefits to any person (ii)
obligates the Company to pay separation, severance, termination or other
benefits as a result of the Merger or (iii) obligates the Company to make any
payment or provide any benefit that could be subject to a tax under Section 4999
of the Code. Except as disclosed in Section 2.12 of the Company Disclosure
Schedule, none of the Plans provides for or promises retiree medical, disability
or life insurance benefits to any current or former employee, officer or
director of the Company.
(c) Except as set forth in Section 2.12 of the Company
Disclosure Schedule, each Plan which is intended to be qualified under Section
401(a) or 401(k) of the Code has received or has applied for a favorable
determination letter from the IRS that such Plan is so qualified, and each trust
established in connection with any Plan which is intended to be exempt from
federal income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that such trust is so exempt. To the knowledge
of the Company no material fact or event has occurred since the date of any such
determination letter from the IRS that could adversely affect the qualified
status of any such Plan or the exempt status of any such trust. Each trust
maintained or contributed to by the Company which is intended to be qualified as
a voluntary employees' beneficiary association exempt from federal income
taxation under Sections 501(a) and 501(c)(9) of the Code has received a
favorable determination letter from the IRS that it is so qualified and so
exempt, and to the knowledge of the Company no fact or event has occurred since
the date of such determination by the IRS that could adversely affect such
qualified or exempt status.
(d) To the knowledge of the Company, there has been no
prohibited transaction (within the meaning of Section 406 of ERISA or Section
4975 of the Code) with respect to any Plan. The Company is not currently liable
and has not previously incurred any liability for any tax or penalty arising
under Section 4971, 4972, 4979, 4980 of the Code or Section 502(c) of ERISA or
any material tax or penalty under Section 4980B of the Code, and to the
knowledge of the Company, no fact or event exists which could give rise to any
such liability. The Company has not incurred any liability under, arising out of
or by operation of Title IV of ERISA, including, without limitation, any
liability in connection with (i) the termination or reorganization of any
employee pension benefit plan subject to Title IV of ERISA or (ii) the
withdrawal from any Multiemployer Plan or Multiple Employer Plan, and to the
knowledge of the Company no fact or event exists which could give rise to any
such liability. No complete or partial termination has occurred within the five
years preceding the date hereof with respect
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to any Plan. No reportable event (within the meaning of Section 40943 of ERISA)
has occurred or is expected to occur with respect to any Plan subject to Title
IV of ERISA. No asset of the Company is the subject of any lien arising under
Section 302(f) of ERISA or Section 412(N) of the Code; the Company has not been
required to post any security under Section 307 of ERISA or Section 401(a)(29)
of the Code; and to the knowledge of the Company no fact or event exists which
could give rise to any such lien or requirement to post any such security.
(e) Each Plan is now and has been operated in all
material respects in accordance with the requirements of all applicable laws,
including, without limitation, ERISA, the Code and applicable state and federal
law, and the Company has performed all material obligations required to be
performed by it under, is not in any respect in material default under or in
material violation of, and has no knowledge of any default or violation by any
party to, any Plan. To the knowledge of the Company, all contributions, premiums
or payments required to be made with respect to any Plan are fully deductible
for income tax purposes and no such deduction previously claimed has been
challenged by any government entity. The 1999 Company Balance Sheet reflects an
accrual of all amounts of employer contributions and premiums accrued but unpaid
with respect to the Plans. All contributions required to have been paid under
any Plan to the date hereof have been timely made.
(f) The Company has not incurred any material liability
under, and has complied in all material respects with, the Worker Adjustment
Retraining Notification Act and the regulations promulgated thereunder and does
not reasonably expect to incur any such liability as a result of actions taken
or not taken prior to the Effective Time. No litigation or legal or
administrative proceeding has been asserted or commenced or, to the Company's
knowledge, threatened, against any Plan, the assets of any such plan or the
Company with respect to any Plan, or the plan administrator or fiduciary of any
Plan with respect to the operation of any such plan (other than routine,
uncontested benefit claims), and to the knowledge of the Company there are no
facts or circumstances which would reasonably be expected to form the basis for
any such legal proceeding except to the extent that any such litigation or
proceeding would not reasonably be expected to result in a material liability to
the Company.
(g) The Company has no obligations under any of the
Plans to provide health or life insurance benefits to its current or prior
employees (or their beneficiaries or dependents) for periods after termination
of employment, except as specifically required by Section 4980B of the Code or
subtitle B, part 6, of Title I of ERISA or similar state continuation coverage
law. Each Plan which is a "welfare benefit plan" under ERISA ss. 3(1) is
terminable in accordance with its terms by the Company at any time without any
further obligation thereunder other than to make payments and/or contributions
in respect of benefits theretofore accrued in accordance with its terms.
SECTION 2.13 Labor Matters. Except as set forth in Section
2.13 of the Company Disclosure Schedule, (i) there are no controversies pending
or, to the knowledge of the Company, threatened between the Company and any of
its employees; (ii) the Company is not a party to any collective bargaining
agreement or other labor union contract applicable to persons employed by the
Company, nor, to the knowledge of the Company, are there any activities or
proceedings of any labor union to organize any such employees; (iii) the Company
has not breached or otherwise failed to comply with any provision of any such
agreement or contract and there are no grievances outstanding against the
Company under any such agreement or contract; (iv) there are no unfair labor
practice complaints pending against the Company before the National Labor
Relations Board or any current union representation questions involving
employees of the Company which could have a Material Adverse
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Effect; and (v) there is no strike, slowdown, work stoppage or lockout, or, to
the knowledge of the Company, threat thereof, by or with respect to any
employees of the Company.
SECTION 2.14 Tangible Property; Real Property and Leases. (a)
The Company has sufficient title to all its tangible properties and assets to
conduct its business currently conducted or as contemplated to be conducted.
(b) Each parcel of real property owned or leased by the
Company (i) is owned or leased free and clear of all mortgages, pledges, liens,
security interests, conditional and installment sale agreements, encumbrances,
charges or other claims of third parties of any kind (collectively, "Liens"),
other than (A) Liens for current taxes and assessments not yet past due, (B)
inchoate mechanics' and materialmen's Liens for construction in progress, (C)
workmen's, repairmen's, warehousemen's and carriers' Liens arising in the
ordinary course of business of the Company consistent with past practice, and
(D) all matters of record, Liens and other imperfections of title and
encumbrances which, individually or in the aggregate, would not have a Material
Adverse Effect (collectively, "Permitted Liens"), and (ii) is neither subject to
any governmental decree or order to be sold nor is being condemned, expropriated
or otherwise taken by any public authority with or without payment of
compensation therefor, nor, to the knowledge of the Company, has any such
condemnation, expropriation or taking been proposed.
(c) Section 2.14 of the Company Disclosure Schedule
lists all leases of real or personal property to which the Company is a party.
All such leases and all amendments and modifications thereto are in full force
and effect and have not been modified or amended, and there exists no default
under any such lease by the Company, nor any event which with notice or lapse of
time or both would constitute a default thereunder by the Company. Except as set
forth in Section 2.14 of the Company Disclosure Schedule, none of such leases
contain a prohibition against assignment by the Company or any other provision
which would preclude the Surviving Corporation from occupying and using the
leased premises for the same purposes and upon the same rental and other terms
as are applicable to the occupation and use by the Company.
SECTION 2.15 Intellectual Property. Set forth on Section 2.15
of the Company Disclosure Schedule is a list of the domestic and foreign
patents, patent applications, patent licenses, software licenses, trade names,
trademarks, domain names, service marks, trademark registrations and
applications, service mark registrations and applications and copyright
registrations and applications owned by the Company and which are used in the
operation of the business of Company (collectively, the "Intellectual
Property"). Unless otherwise indicated on Section 2.15 of the Company Disclosure
Schedule, the Company owns the entire right, title and interest in and to the
Intellectual Property (including, without limitation, the exclusive right to use
and license the same) and each item constituting part of the Intellectual
Property has been, to the extent indicated on Section 2.15 of the Company
Disclosure Schedule, duly registered with, filed in or issued by, as the case
may be, the United States Patent and Trademark Office or such other government
entity, domestic or foreign, as is indicated on Section 2.15 of the Company
Disclosure Schedule and, to the knowledge of the Shareholders and the Trustees,
such registrations, filings and issuances remain in full force and effect. To
the knowledge of the Shareholders and the Trustees, except as stated in Section
2.15 of the Company Disclosure Schedule, there are no pending proceedings or
litigation or other adverse claims made in writing affecting or with respect to
the Intellectual Property. To the knowledge of the Shareholders and the
Trustees, the Company has not received any notice that it is infringing any
Intellectual Property of any other person in connection with the conduct of the
business of the Company and to the knowledge of the Shareholders and the
Trustees, no claim is pending or has been made to such effect that has not been
resolved and, to
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the knowledge of the Shareholders and the Trustees the Company is not infringing
any Intellectual Property of any other Person. The Company has not granted to
any Person any licenses, sublicenses or other rights under any Intellectual
Property owned by it.
SECTION 2.16 Tax Matters. Except as set forth in Section 2.16 of the
Company Disclosure Schedule:
(a) Returns, Payments, and Reserves. The Company has duly and
timely filed (taking into account all available extensions) all Tax Returns
concerning Taxes applicable to the Company (or such Tax Returns have been filed
on behalf of the Company) required to be filed by applicable law and has paid
(or set up reserves in accordance with GAAP), all amounts due in respect of
Taxes (whether or not actually shown on such Tax Returns); all such Tax Returns
are true, correct and complete in all material respects and accurately set forth
all items to the extent required to be reflected or included in such Tax Returns
by applicable federal, state, local or foreign Tax laws.
The Company is not delinquent in the payment of any Taxes
claimed to be due by any federal, state or local or foreign taxing authority.
The Company has established a tax reserve or account payable in an amount
sufficient for all accrued and unpaid federal, state, county and local and
foreign taxes of the Company, whether or not disputed, including any penalties,
interest and related charges and fees in connection therewith, for all complete
fiscal periods of the Company which reserve is set forth in the Company's 1999
Balance Sheet and constitutes an adequate reserve under GAAP and F.A.S.B. No.
15. There is no proposed liability for any Tax to be imposed upon the Company
for the current or any prior year not foreclosed by the statute of limitations
for which there is not an adequate reserve.
(b) Extensions; Certain Tax Adjustments. With respect to any
Tax to which it is subject the Company (i) has not requested any extension of
time within which to file any Tax Return, which Tax Return has not since been
filed; (ii) is not a party to any agreement providing for the allocation or
sharing of, or indemnification for Taxes; (iii) is not required to include in
income any adjustment pursuant to Code ss. 481(a) (nor does the Company have any
knowledge that the Internal Revenue Service has proposed or is likely to propose
any such adjustment or change of accounting method); or (iv) has not filed a
consent pursuant to Code ss. 341(f) or agreed to have Code ss. 341(f)(2) apply.
The Company does not have an application pending with any taxing authority
requesting permission for any change in accounting method.
(c) Federal Income Tax Returns and Examinations. The Company
has disclosed on its United States federal income Tax Returns all positions
taken therein that could give rise to a substantial understatement of United
States federal income Tax within the meaning of Code ss. 6662. No examination or
audit by the Internal Revenue Service is in progress, and no issue has been
raised in any such examination or audit that, by application of similar
principles, could reasonably be expected to result in the assertion of a
deficiency for any other year not so examined or audited.
(d) State Income Tax Returns and Examinations. The Company
files state income Tax Returns in the states of New York and North Carolina. No
examination or audit by the State of New York is in progress, and no issue has
been raised in any such examination or audit that, by application of similar
principles, could reasonably be expected to result in the assertion of a
deficiency for any other year not so examined or audited. No other state income
Tax Returns have been examined.
(e) Other Proceedings. There are no audits or other
administrative or court proceedings or any dispute or claim concerning any Tax
for which the Company may be liable either (i)
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claimed by any governmental entity in writing sent to the Company or (ii) as to
which the Company has knowledge. No such audit or examination is in progress.
There is no refund claim proposed or pending with respect to any Tax Returns
filed by or on behalf of the Company. The Company has received no notice of any
pending or threatened audit by the Internal Revenue Service, the state of New
York or any other state, local or foreign taxing authority related to the
Company's Tax Returns or Tax liability for any period and no claim for
assessment or collection of Taxes has been asserted against the Company.
(f) Claims by Certain Jurisdictions. No claim has ever been
made by any authority in a jurisdiction where the Company does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction.
(g) Waivers. As of the date hereof, the Company has not
executed any outstanding waivers or comparable consents regarding the
application of the statute of limitations with respect to any Taxes or Tax
Returns which waivers or consents could result in the assessment of any
additional taxes against or for the account of the Company and which waivers or
consents remain outstanding as of the date hereof.
(h) Tax Liens. There are no Tax liens outstanding against any
of the assets, properties or business of the Company other than for Taxes not
yet due and payable (including without limitation, liens arising under property
and similar Taxes), the date of payment of which has not yet accrued.
(i) Tax Status of Company Property. No property of the Company
(i) is "tax-exempt use property" within the meaning of Section 168(h) of the
Code, (ii) directly or indirectly secures any debt the interest on which is
exempt under Code ss. 103(a) or (iii) is property that is required to be treated
as being owned by any person (other than the Company) pursuant to the provisions
of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended, and as in
effect immediately before the enactment of the Tax Reform Act of 1986.
Section 2.16 of the Company Disclosure Schedule sets forth the
following information with respect to the Company as of the Company's 1999
Balance Sheet and as shown on the Company's 1999 tax return: (i) the tax basis
of the Company in its respective assets and (ii) the amount of any net operating
loss, net capital loss, unused investment or other credit, unused foreign tax
credit, or excess charitable contribution available to the Company.
(j) Certain Tax Accruals. The Company will not be required to
include in a taxable period ending after the Effective Time taxable income
attributable to income that economically accrued in a taxable period ending on
or before the Effective Time as a result of the installment method of
accounting, the completed contract method of accounting, any method of reporting
revenue from contracts which are required to be reported on the percentage of
completion method (as defined in Code ss. 460(b)) but that were reported using
another method of accounting, or any other method of accounting.
(k) Certain Tax Agreements. Neither the Company nor any other
person has entered into any agreement with any taxing authority that will bind
Parent or the Company for any taxable period ending after the Effective Time.
(l) Certain Compensation Agreements. There is no contact,
agreement, plan or arrangement covering any current or former director, officer,
or employee of the Company that, individually or collectively, could give rise
to the payment of any amount that would not be deductible by reason of Code
ss.ss. 162(a)(1), 162(m) or 280G.
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(m) Tax Records. The Company has maintained the books and
records required to be maintained pursuant to Code ss. 6001 and the Regulations
thereunder, and comparable laws of the state of New York, other states, cities,
counties, localities and other countries and political divisions wherein it is
required to file Tax Returns or any other reports relating to Taxes.
(n) Tax Definitions. For purposes of this agreement the
following terms shall have the meaning set forth below:
"Tax or Taxes" shall mean all taxes, charges, fees, levies, or
other assessments, domestic or foreign, including, without limitation, all net
income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment (including
withholding, payroll and employment taxes required to be withheld with respect
to income paid to employees), excise, estimated, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code ss. 59A),
capital stock, social security (or similar), unemployment, disability,
registration, value added, alternative or add-on minimum, real property,
personal property or other taxes, customs, duties, fees, assessments or charges
of any kind whatsoever, together with any interest and any penalties, additions
to tax or additional amounts imposed by any taxing authority (domestic or
foreign).
"Tax Returns" shall mean all returns, declarations, reports,
claims for refund, statements and other documents required or permitted to be
filed with any governmental entity or authority with power to impose any tax in
respect of any Tax and "Tax Return" shall mean one of the foregoing Tax Returns
SECTION 2.17 Environmental Matters. Except as set forth in
Section 2.17 of the Company Disclosure Schedule, to the knowledge of the
Company, there are no present or past conditions relating to the Company's or
any of its former direct or indirect Subsidiaries' owned or leased properties,
involving or resulting from a past or present storage, spill, discharge, leak,
emission, injection, escape, dumping or release by the Company of any kind
whatsoever of any Hazardous Materials (as defined below) or exposure of any type
to any workplace or to any medium, including, but not limited to, air, land,
surface waters or underground waters, or from any generation, transportation,
treatment, storage, disposal, use or handling by the Company of any Hazardous
Materials.
The Company is in compliance in all material respects with all
applicable federal, state or municipal statutes, laws, regulations or permits
relating to the environment or occupational health and safety. Except as set
forth in Section 2.17 of the Company Disclosure Schedule, the Company has not
received notice of, nor are there outstanding, any claims, citations, penalties,
unsatisfied abatement obligations or written notices or written orders of
noncompliance by any federal, state or local agency relating to the environment
or occupational health and safety, nor to the knowledge of the Company are any
such matters pending or threatened. None of the Company's facilities whether
owned or leased are currently undergoing hazardous waste remediation, removal or
clean-up activities.
No material expenditures, other than expenses incurred in the
ordinary course of business, are required in order for the Company to comply
with any such existing statute, law or regulation in connection with the
operation of the business after the Merger, including, without limitation,
expenditures relating to the clean-up or removal of any Hazardous Materials
which may have been discharged or released prior to the Effective Time.
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The Company has all governmental permits, licenses,
certificates of inspection and other authorizations relating to the environment
or occupational health and safety necessary to conduct its present business.
"Hazardous Materials" means any material or substance: (i)
which is defined as a "hazardous substance", "pollutant" or "contaminant"
pursuant to the Comprehensive Environmental Response Compensation and Liability
Act (42 U.S.C. Section 9601 et seq) and amendments thereto and regulations
promulgated thereunder; (ii) containing gasoline, oil, diesel fuel or other
petroleum products; (iii) which is defined as a "hazardous waste" pursuant to
the Federal Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq) and amendments thereto and regulations promulgated thereunder; (iv)
containing polychlorinated byphenyls (PCBs); (v) containing asbestos; (vi) which
is radioactive; (vii) the presence of which requires investigation or
remediation under any federal, state or local statute, regulation, ordinance or
policy; or (viii) which is defined as a "hazardous waste", "hazardous
substance", "pollutant" or "contaminant" or other such term used to define a
substance having an adverse effect on the environment under any federal, state
or local statute, regulation or ordinance applicable to the Company.
SECTION 2.18 Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the Merger based upon arrangements made by or on behalf of the Company.
SECTION 2.19 Transactions with Management. Except as set forth
in Section 2.19 of the Company Disclosure Schedule, no officer, director or
Shareholder has, since December 31, 1999, engaged in any material business with
the Company. To the knowledge of the Company, no officer or director of the
Company (except in his or her capacity as such) has any direct or indirect
material interest in (i) any property or assets of the Company (except as a
shareholder), (ii) any competitor, customer, supplier or agent of the Company,
or (iii) any person which is a party to any material contract or agreement with
the Company.
SECTION 2.20 Books and Records. The books and records of the
Company are in all material respects complete and correct. All proceedings of
the Board of Directors and shareholders of the Company to date have been
recorded in its corporate minute books. All documents and copies thereof of the
Company (whether or not specifically referred to in this Agreement) delivered to
Parent, its attorneys or accountants, in connection with Parent's examination of
the financial condition, books and records of the Company are and will be true,
complete and correct in all material respects.
SECTION 2.21 Disclosure. No representation, warranty or
statement made by the Company in this Agreement (including the Company
Disclosure Schedule), when taken together with this Agreement, contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the statements or facts contained herein not misleading in
light of the circumstances under which they were made.
SECTION 2.22 Investment Representations. Each of the
Shareholders and the Trustees is acquiring the Merger Consideration for its own
account and not with a view to distribution or resale thereof in any transaction
which would be in violation of the Securities Act of 1933, as amended (the
"Securities Act") and rules promulgated thereunder, or any state securities
statute, and agrees not to sell, hypothecate or otherwise dispose of all or any
part of the Merger Consideration unless such Merger Consideration has been
registered under the Securities Act and applicable state or other securities
laws or in the opinion of counsel for the Shareholders and the Trustees, which
counsel and which opinion are
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reasonably satisfactory to the Parent, an exemption from the registration
requirements of the Securities Act and such state or other laws is available.
Each of the Shareholders and the Trustees is an "accredited investor" as defined
in Rule 501 under Regulation D promulgated under the Securities Act. Each of the
Shareholders and the Trustees can bear the economic risk of losing its
investment in the Merger Consideration and is presently able to afford the
complete loss of such investment. Each of the Shareholders and the Trustees has
such knowledge and experience in financial and business matters so as to be
capable of evaluating the merits and risks of an investment in the Merger
Consideration. Each of the Shareholders and the Trustees has been furnished with
the Parent's Form 10KSB for the year ended December 31, 1999, Form 10QSB for the
quarter ended March 31, 2000, Form 10QSB for the quarter ended June 30, 2000,
Form 10QSB for the quarter ended September 30, 2000 and the proxy statement for
the Parent's annual meeting of shareholders held on May 23, 3000 (collectively,
the "SEC Reports") and acknowledges that it has been afforded the opportunity
(i) to ask such questions as it has deemed necessary of, and to receive answers
from, representatives of the Parent concerning the merits and risks of investing
in the Merger Consideration and (ii) to obtain such additional information which
the Parent possesses or can acquire without unreasonable effort or expense that
is necessary to verify the accuracy and completeness of the information
contained in the SEC Reports. Each of the Shareholders and the Trustees
acknowledges that the Parent has answered all questions and responded to all
inquiries and requests for information to each of the Shareholder's and the
Trustee's satisfaction. Each of the Shareholders and the Trustees acknowledges
that it has made, independently and without reliance upon the Parent (other than
the representations and warranties of the Parent set forth in Article III
hereof) or any agent or representative of the Parent and based on its own
independent analysis of the Parent and such other documents and information as
it has deemed appropriate, its own investment analysis and its own business
decision to enter into and consummate this Agreement and the transactions
contemplated hereby.
SECTION 2.23 Trustees' Authorization. The Trustees have
followed the provisions of the OTI ESOP and the Trust Agreement with respect to
obtaining voting direction from the OTI ESOP participants including, but not
limited to, providing to all OTI ESOP participants all relevant information with
respect to the Merger. The Trustees have full authority to execute and deliver
this Agreement and have determined that the consummation of the Merger is in
accordance with the Trustees' fiduciary obligations.
SECTION 2.24 Employees. Section 2.24 of the Company Disclosure
Schedule sets forth the following information for each of the officers and
employees of the Company: name and job title; current annualized rate of
compensation as of the date of this Agreement (identifying any guaranteed
bonuses separately); and the number of vacation days such person is entitled to
take in each calendar year.
SECTION 2.25 Vehicles. Section 2.25 of the Company Disclosure
Schedule contains a list of all motor vehicles owned or leased by the Company.
SECTION 2.26 Customers. None of the customers which accounted
for one percent or more of the dollar volume of purchases from the Company for
the fiscal year ended December 31, 1999 and for the eight (8) months ended
August 31, 2000 has discontinued its relationship with the Company or notified
it in writing that it intends to discontinue its relationship with the Company.
SECTION 2.27 Bank Accounts. Section 2.27 of the Company
Disclosure Schedule contains the names and locations of all banks or other
financial institutions which are depositories of funds of the Company, the names
of all persons authorized to draw or sign checks or drafts upon such
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accounts and the names and locations of any institutions in which the Company
has safe deposit boxes and the names of the persons having access thereto.
SECTION 2.28 Accounts Receivable. All of the accounts
receivable of the Company on the 1999 Company Balance Sheet and created since
the date of the 1999 Company Balance Sheet and prior to the Effective Date are
the result of a bona fide sales or other transactions.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub hereby represent and warrant to the Company
that:
SECTION 3.01 Organization and Qualification. Each of Parent
and Sub is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has the requisite
corporate power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as it is now being
conducted.
SECTION 3.02 Authority Relative to this Agreement. Except for
the approval of the Parent's shareholders to be obtained following the Closing
pursuant to Section 5.01 hereof, each of Parent and Sub have all necessary
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the Merger. Except for the approval
of the Parent's shareholders to be obtained following the Closing pursuant to
Section 5.01 hereof, the execution and delivery of this Agreement by Parent and
Sub and the consummation by Parent and Sub of the Merger have been duly and
validly authorized by all necessary corporate action and no other corporate
proceedings on the part of Parent or Sub are necessary to authorize this
Agreement or to consummate the Merger (other than the filing and recordation of
appropriate merger documents as required by the New York Law). This Agreement
has been duly and validly executed and delivered by Parent and Sub and assuming
the due authorization, execution and delivery by the Company, constitutes a
legal, valid and binding obligation of Parent and Sub enforceable against Parent
and Sub in accordance with its terms, subject as to enforceability to
bankruptcy, insolvency, reorganization, fraudulent conveyance and similar laws
relating to creditors' rights and to general principles of equity.
SECTION 3.03 No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by Parent and Sub do not, and the
performance of this Agreement by Parent and Sub will not, (i) conflict with or
violate the articles or certificate of incorporation and by-laws of Parent or
Sub, (ii) conflict with or violate any law, rule, regulation, written order,
judgment or decree applicable to Parent or Sub or by which any property or asset
of Parent or Sub is bound or subject or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance of any nature on any property or asset of Parent or Sub
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Parent or
Sub is a party or by which Parent or Sub or any property or asset of Parent or
Sub is bound or subject, except for any such conflicts, violations, breaches,
defaults or other occurrences which would not, individually or in the aggregate,
have a Material Adverse Effect.
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(b) Except as set forth in Schedule 3.03, the execution
and delivery of this Agreement by Parent and Sub do not, and the performance of
this Agreement by Parent and Sub will not, require any consent, approval,
authorization or permit of, or filing with, or notification to, any governmental
or regulatory authority, domestic or foreign, except (i) for filing and
recordation of appropriate merger documents as required by the New York Law, and
(ii) where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or delay
consummation of the Merger, or otherwise prevent Parent or Sub from performing
their obligations under this Agreement, and would not, individually or in the
aggregate, have a Material Adverse Effect.
SECTION 3.04 Disclosure. No representation, warranty or
statement by Parent or Sub in this Agreement when taken together with this
Agreement, contains any untrue statement of a material fact or omits to state
any material fact necessary to make the statements or facts contained herein not
misleading in light of the circumstances under which they were made.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.01 Conduct of Business by the Company Pending the
Merger. The Company covenants and agrees that, between the date of this
Agreement and the Effective Time, unless Parent shall otherwise agree in
writing, the business of the Company shall be conducted only in, and the Company
shall not take any action except in, the ordinary course of business; and the
Company shall use its reasonable efforts to preserve substantially intact the
business organization of the Company, to keep available the services of the
current officers, employees and consultants of the Company and to preserve the
current relationships of the Company with customers, suppliers and other persons
with which the Company has significant business relations. By way of
amplification and not limitation, except as contemplated by this Agreement or by
Section 4.01 of the Company Disclosure Schedule, the Company shall not, between
the date of this Agreement and the Effective Time, directly or indirectly do,
any of the following without the prior written consent of Parent:
(a) amend or otherwise change its Certificate of
Incorporation or Bylaws;
(b) issue, sell, pledge, dispose of, grant, encumber,
or authorize the issuance, sale, pledge, disposition, grant or
encumbrance of (i) any shares of capital stock of any class of the
Company, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock, or any
other ownership interest (including, without limitation, any phantom
interest), of the Company or (ii) any assets of the Company, except for
sales in the ordinary course of business;
(c) declare, set aside, make or pay any dividend or
other distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock other than a dividend to the
shareholders of the Company of the receivables from Honeywell in the
aggregate amount of $47,034.88 and the receivables from American Axle
in the aggregate amount of $359,357.28 (the "Transferred Receivables")
to be paid prior to the Effective Time, which dividend will be made by
an assignment of the Transferred Receivables without recourse;
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(d) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
(e) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets or any other business
combination) any corporation, partnership, other business organization
or any division thereof or substantially all of the assets of a
business; (ii) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, pledge in respect of
or otherwise as an accommodation become responsible for the obligations
of any person, or make any loans or advances, except in the ordinary
course of business; (iii) enter into any contract or agreement which
require aggregate payments by the Company in an aggregate amount in
excess of $5,000 other than contracts or agreements entered into in the
ordinary course of business; and (iv) terminate, cancel or request any
material change in, or agree to any material change in, any contract
which is material to the business of the Company, except in the
ordinary course of business, other than contemplated amendments of real
estate leases for the real property leased by the Company for its
operations, which amendments shall be approved by the Parent prior to
execution thereof; (v) authorize any single capital expenditure which
is in excess of $1,000 or capital expenditures which are, in the
aggregate, in excess of $5,000; or (vi) enter into or amend any
contract, agreement, commitment or arrangement with respect to any
matter set forth in this Section 4.01(e);
(f) increase the compensation payable or to become
payable to its officers or employees, or grant any severance or
termination pay to, or enter into any employment or severance agreement
with, any director, officer or other employee of the Company, or
establish, adopt, enter into or amend (except as may be required by
law) any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of
any director, officer or employee; or reimburse any officer of the
Company for aggregate expenses in excess of $1,000;
(g) take any action, other than reasonable and usual
actions in the ordinary course of business and consistent with past
practice, with respect to accounting policies or procedures (including,
without limitation, procedures with respect to the payment of accounts
payable and collection of accounts receivable);
(h) make any tax election; settle or compromise any
material federal, state, local or foreign tax liability or change any
of its methods of reporting income, deductions or other items for
federal state, local or foreign Tax purposes from those employed in the
preparation of its most recently filed returns with respect to the
applicable Tax, except only as such changes may be required by
intervening changes in applicable law or regulations;
(i) pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business, of liabilities
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reflected or reserved against in the 1999 Company Balance Sheet or
subsequently incurred in the ordinary course of business;
(j) form any subsidiary; or
(k) announce an intention, enter into any formal or
informal agreement, or otherwise make a commitment, to do any of the
foregoing.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01 Parent's Shareholders' Meeting. The Parent,
acting through its Board of Directors, shall, in accordance with applicable law
and the Parent's Amended and Restated Articles of Incorporation and Bylaws, (i)
duly call, give notice of, convene and hold a Special Meeting of Shareholders
(the "Parent's Shareholders' Meeting") as soon as practicable and (A) include in
the Proxy Statement mailed to shareholders ("Proxy Statement") the
recommendation of the Board of Directors that the shareholders of the Parent
approve the issuance of the Merger Consideration for the consummation of the
transactions contemplated by this Agreement and (B) take all lawful action to
solicit and use its reasonable efforts to obtain such approval.
SECTION 5.02 Reserved.
SECTION 5.03 Proxy Statement. Parent, Sub and the Company
shall cooperate with each other in the preparation of the Proxy Statement. If at
any time after the mailing of the Proxy Statement and prior to the Parent's
Shareholders' Meeting, any event with respect to any party, its officers,
directors or principal shareholders or any event with respect to the Merger
shall occur which is required to be described in the Proxy Statement, such party
shall immediately inform the other party of such event and all parties shall
cooperate in the preparation of a mutually satisfactory amendment or supplement
describing such event and such amendment or supplement shall be promptly
disseminated to the shareholders of the Parent.
SECTION 5.04 Access to Information; Confidentiality. (a) From
the date hereof to the Effective Time, the Company shall, and shall cause the
officers, directors, employees, accountants and agents of the Company to, afford
the officers, employees and agents of Parent and Sub complete access at all
reasonable times and upon reasonable request, and so long as it does not
interfere with the normal operations of the business of the Company, to the
officers, employees, agents, properties, offices, plants and other facilities,
books and records of the Company, and shall furnish Parent and Sub with all
financial, operating and other data and information as Parent or Sub, through
its officers, employees or agents, may reasonably request.
(b) All proprietary and confidential information
obtained by Parent or Sub pursuant to this Section 5.04 shall be kept
confidential except such information as may be appropriate to be divulged in
order to satisfy any of the conditions precedent set forth in Section 6.02
hereof.
(c) All proprietary and confidential information
obtained by Parent or Sub pursuant to this Section 5.04 shall be promptly
returned to the Company in the event of the termination of this Agreement.
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SECTION 5.05 No Solicitation. The Company shall not, directly
or indirectly, through any officer, director, agent or otherwise, solicit,
initiate or encourage the submission of any proposal or offer from any person
relating to any acquisition or purchase of all or any material portion of the
assets of, or any equity interest in, the Company or any business combination
with the Company.
SECTION 5.06 Notification of Certain Matters. The Company
shall give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
and (ii) any failure of the Company, Parent or Sub, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 5.06 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
SECTION 5.07 Further Action; Reasonable Efforts. Upon the
terms and subject to the conditions hereof (including, without limitation,
Section 5.04) each of the parties hereto shall use its reasonable efforts to
take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the Merger, including, without
limitation, using its reasonable efforts to obtain all licenses, permits
(including, without limitation, environmental permits), consents, approvals,
authorizations, qualifications and orders of governmental authorities and
parties to contracts with the Company as are necessary for the consummation of
the Merger and to fulfill the conditions to the Merger. In case at any time
after the Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and directors of each
party to this Agreement shall use their reasonable efforts to take all such
action.
SECTION 5.08 Public Announcements. Parent and the Company
shall consult with each other before issuing any press release or otherwise
making any public statements with respect to this Agreement and shall not issue
any such press release or make any such public statement prior to such
consultation.
SECTION 5.09 No-Shop. Neither the Company or any of its
officers, employees, directors, nor the Shareholders or the Trustees or any of
their representatives (including investment bankers, accountants, attorneys,
agents or consultants) will take any action to, directly or indirectly, (i)
encourage, initiate or solicit discussions or negotiations with any person,
other than Parent (and its affiliates and representatives), concerning any
purchase of any capital stock of the Company or any merger, asset sale or
similar transaction involving the Company (other than sales of assets in the
ordinary course of business consistent with past practice), or enter into any
negotiations or agreement with any third party with respect to the foregoing (an
"Alternative Transaction"), or (ii) except as may be required by law or legal
process, disclose non-public information relating to the Company or provide
access to property, books or records of the Company to any person, other than
Parent (and its affiliates and representatives), in connection with any
solicitation, offer or proposal of an Alternative Transaction. The Company, the
Shareholders and the Trustees will promptly disclose to Parent the existence or
occurrence of any proposal, contract or contact which they, the Company or any
of their representatives described above may receive after the date hereof in
respect of any Alternative Transaction. Each of the Shareholders and the
Trustees agree that they will, and will cause the Company and its officers,
employees, directors, agents and representatives to, immediately cease any
activities, discussions or negotiations existing as of the date of this
Agreement with any parties conducted heretofore with respect to any Alternative
Transaction.
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SECTION 5.10 Employee Benefits. (a) Immediately after the
Closing, the Company shall take all action necessary to permanently discontinue
employer contributions to the OTI ESOP and freeze participation in the OTI ESOP
so that no additional employees of the Company or any employees of the Parent
will be eligible to participate in the OTI ESOP. Therefore, immediately after
the Closing, all participants in the OTI ESOP will be fully vested in their
accounts.
(b) The Company and the Parent recognize that after the
completion of this transaction they will be members of a controlled group of
corporations as defined in Code Section 414(b). Both the Company and the Parent
agree that immediately after the Closing, an employee of one entity shall not be
allowed to participate in the other entity's Plans solely due to the controlled
group status, and further agree to take any action necessary to incorporate
these eligibility rules into the Plans. Nothing in this paragraph shall prohibit
the Parent or the Company from later agreeing to amend, merge, or terminate any
Plans.
SECTION 5.11 Tax Consequences. It is intended by the parties
hereto that the Merger shall constitute a reorganization within the meaning of
ss. ss. 368(a)(1)(A) and 368(a)(2)(E) of the Code. The parties hereto hereby
adopt this Agreement as a "plan of reorganization" within the meaning of
Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
SECTION 5.12 Transferred Receivables. As of the date of this
Agreement, the Company will assign new job numbers to the existing projects with
Honeywell and American Axle. All work done and all expenses incurred on such
contracts after the date of this Agreement will be charged to such new job
number. The Shareholders and the Trustees agree to reimburse the Company in
cash, within thirty (30) days after the date of any invoice from the Company,
for all costs and expenses incurred with respect to the projects after the date
of this Agreement. The agreement set forth in this Section 5.12 shall survive
the Effective Time.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01 Conditions Precedent to Obligations of the
Shareholders and the Trustees. The obligations of the Shareholders and the
Trustees to effect the Merger shall be subject to the satisfaction at or prior
to the Effective Time, of each of the following conditions unless waived by the
Shareholders and the Trustees:
(a) Shareholder Approval. The issuance of the Merger
Consideration in connection therewith shall have been approved and
adopted by the affirmative vote of at least a majority of the
shareholders of the Parent voting on such issuance.
(b) Accuracy of Representations and Warranties. All
representations and warranties of Parent and Sub contained herein shall
be true and correct in all material respects as of the date hereof and
at and as of the Effective Time, with the same force and effect as
though made on and as of the Effective Time.
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(c) Performance. Parent and Sub shall have performed in
all material respects all obligations and agreements, and complied in
all material respects with all covenants and conditions, contained in
this Agreement to be performed or complied with by each of them prior
to the Effective Time.
(d) Approvals. All consents, approvals, permits and
authorizations required to be obtained prior to the Effective Time by
Parent and Sub, shall have been made or obtained.
(e) Employment Agreements. At the Effective Time,
each of the Shareholders shall have entered into an Employment
Agreement with the Surviving Corporation in the form attached to this
Agreement as Exhibit A.
(f) Reserved.
(g) Board of Directors of Parent. At the
Effective Time, William K. Pollock shall have been elected to the
Board of Directors of the Parent.
(h) Opinion of Counsel. The Company shall have been
provided an opinion of counsel for the Parent, in form and substance
reasonably acceptable to the Company and its counsel.
(i) Merger Consideration. At Closing, the Shareholders
and the OTI ESOP shall have received the Merger Consideration in the
form and manner specified in Sections 1.06 and 1.07 of this Agreement.
(j) Incumbency Certificate. At Closing, the Company
shall have received an incumbency certificate, executed by the
Secretary or Assistant Secretary of the Parent, which shall identify by
name and title and bear the signatures of the officers of the Parent
authorized to sign this Agreement and the documents executed in
connection therewith, upon which certificate the Company shall be
entitled to rely until informed of any change in writing by the Parent.
The Parent shall attach to such incumbency certificate (i) copies of
its Amended and Restated Articles of Incorporation, together with all
amendments and (ii) a certificate of good standing, each certified by
the Michigan Department of Consumer and Industry Services, (iii) copies
of its Bylaws and (iv) copies of its Board of Directors' resolutions
and resolutions or actions of any other body authorizing the execution
of this Agreement and any documents executed in connection therewith,
each certified by the Secretary or Assistant Secretary of the Parent.
(k) Closing Certificate. At Closing, the Company shall
have received a certificate signed by the Parent and dated the date of
the Closing to the effect that the conditions precedent provided in
Section 6.01(a) through (j) hereof have been satisfied. The delivery of
such certificate shall in no way diminish, supercede or enlarge the
representations and warranties of the Parent made in this Agreement or
its liability in respect thereof pursuant to Article VII hereof.
(l) Registration Rights Agreement. At closing, Parent
shall have entered into a Registration Rights Agreement in the form
attached hereto as Exhibit B.
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SECTION 6.02 Conditions Precedent to Obligations of Parent and
Sub. The obligations of Parent and Sub to effect the Merger shall be subject to
the satisfaction, at or prior to the Effective Time, of each of the following
conditions unless waived by Parent and Sub:
(a) Shareholder Approval. The Merger and the issuance
of the Merger Consideration in connection therewith shall have been
approved and adopted by the affirmative vote of at least a majority of
the shareholders of the Parent voting on the Merger.
(b) Accuracy of Representations and Warranties. All
representations and warranties of the Company contained herein shall be
true and correct in all material respects as of the date hereof and at
and as of the Effective Time, with the same force and effect as though
made on and as of the Effective Time, and at Closing the Shareholders
and Trustees shall have delivered a "bring down" certificate with
respect to such representations and warranties.
(c) Performance. The Company shall have performed in
all material respects all obligations and agreements, and complied in
all material respects with all covenants and conditions, contained in
this Agreement to be performed or complied with by it prior to the
Effective Time.
(d) Approvals. All consents, approvals, permits and
authorizations required to be obtained prior to the Effective Time by
the Parent, shall have been made or obtained, including without
limitation the consent of La Salle Business Credit to the Merger.
(e) No Litigation. No litigation shall be pending which
seeks to prevent or prohibit consummation of the Merger.
(f) Employment Agreements. At the Effective Time, each
of the Shareholders shall have entered into an Employment Agreement
with the Surviving Corporation in the form attached to this Agreement
as Exhibit A.
(g) Due Diligence. Parent shall be satisfied with the
results of its due diligence investigation of the Company.
(h) Company Financing Arrangements. Parent shall have
obtained amendments to the Company's existing financing arrangements or
obtained substitute financing acceptable to Parent.
(i) Consents. Parent shall have obtained all consents
from the Company's employee stock ownership plan, customers, suppliers,
landlords, and others, and shall have made all modifications to
existing agreements with any of them, as it deems necessary or
appropriate.
(j) Reserved.
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(k) Compliance with Securities Laws. At the Effective
Time, the Company, the Sub, the Parent, the Shareholders and the
Trustees shall have complied with all applicable state and federal
securities laws and exchange requirements.
(l) Delivery of Certificates. At the Closing, the
Shareholders and the Trustees shall deliver to the Parent certificates
representing all of the Shares, endorsed in blank or with accompanying
stock powers duly signed. The Shareholders and the Trustees shall also
deliver such other instruments or documents as shall, in the opinion of
the Parent's counsel, be reasonably required to vest good and
marketable title in the Parent to the Shares.
(m) Opinion of Counsel. The Parent shall have been
provided an opinion of counsel for the Company, the Shareholders and
the Trustees, in form and substance reasonably acceptable to the Parent
and its counsel.
(n) Noncompetition Agreement. Pollock and Lasch shall
each have entered into an agreement not to compete with the Company and
the Parent in the form attached hereto as Exhibit C.
(o) Tax Representation and Continuity Certificates. At
Closing, the Parent shall have received in support of the intended
federal income Tax treatment of the transaction: (i) the Tax
Representation Certificate duly executed by the Company in the Form
attached hereto as Exhibit D , and (ii) a Continuity of Interest
Certificate from each Shareholder duly executed by such Shareholder.
(p) Incumbency Certificate. At Closing, the Parent
shall have received an incumbency certificate, executed by the
Secretary of the Company, which shall identify by name and title and
bear the signatures of the officers of the Company authorized to sign
this Agreement and the documents executed in connection therewith, upon
which certificate the Parent shall be entitled to rely until informed
of any change in writing by the Company. The Company shall attach to
such incumbency certificate (i) copies of its Certificate of
Incorporation, together with all amendments and (ii) a certificate of
good standing, each certified by the New York Department of State,
(iii) copies of its Bylaws and (iv) copies of its Board of Directors'
resolutions and resolutions or actions of any other body authorizing
the execution of this Agreement and any documents executed in
connection therewith, each certified by the Secretary of the Company.
(q) Closing Certificate. At Closing, the Parent shall
have received a certificate signed by the Company and dated the date of
the Closing to the effect that the conditions precedent provided in
Section 6.02(a) through (p) hereof have been satisfied. The delivery of
such certificate shall in no way diminish, supercede or enlarge the
representations and warranties of the Company made in this Agreement or
its liability in respect thereof pursuant to Article VII hereof.
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ARTICLE VII
TERMINATION. AMENDMENT, WAIVER AND EXPENSES
SECTION 7.01 Termination. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time,
notwithstanding the requisite approval and adoption of this Agreement and the
Merger contemplated hereby by the shareholders of each of the Parent and the
Company:
(a) By mutual written consent duly authorized by the
Boards of Directors of Parent, Sub, the Company and by the Shareholders
and the Trustees;
(b) By Parent if (i) the Company shall have failed to
comply in any material respect with any of its covenants or agreements
contained in this Agreement required to be compiled with by the Company
prior to the date of such termination and such failure shall not have
been cured within fifteen (15) business days following receipt by the
Company from Parent of written notice of such failure and demand for
cure, or (ii) if shareholders of the Parent shall have failed to
approve the issuance of the Merger Consideration by the requisite vote
at the Parent's Shareholders' Meeting;
(c) By the Company if Parent or Sub shall have failed
to comply in any material respect with any of its covenants or
agreements contained in this Agreement required to be complied with by
Parent or Sub prior to the date of such termination, and such failure
to comply shall not have been cured within fifteen (15) business days
following receipt by Parent from the Company of written notice of such
failure and demand for cure, or (ii) if shareholders of the Parent
shall have failed to approve the issuance of the Merger Consideration
by the requisite vote at the Parent's Shareholders' Meeting;
(d) By Parent if (i) an action as set forth in Section
6.02(e) is instituted, or (ii) it is unable to satisfy any of the
conditions precedent set forth in Section 6.02(g) through 6.02(q)
hereof; and
(e) By the Company or Parent if the Merger is not
consummated within sixty (60) business days from the date of this
Agreement; provided that if Parent is unable to satisfy any of the
conditions set forth in Section 6.02 hereof by such date, it shall have
the right to extend such date for two (2) thirty (30) business day
periods each in order to give Parent additional time to satisfy such
conditions.
SECTION 7.02 Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 7.01 hereof by Parent or Sub,
on the one hand, or the Company, on the other hand, written notice thereof shall
forthwith be given to the other party or parties specifying the provision
pursuant to which such termination is made, and this Agreement shall become void
and have no effect, and there shall be no liability hereunder on the part of
Parent, Sub or the Company, except that Section 7.06 hereof shall survive any
termination of this Agreement. Nothing in this Section 7.02 shall relieve any
party to this Agreement of liability for breach of this Agreement.
SECTION 7.03 Legal Fees. Without the written consent of Parent,
the Company will not incur Company legal fees in connection with the Merger in
excess of $25,000.
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SECTION 7.04 Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors (as applicable) at any time prior to the Effective Time; provided,
however, that, after the approval and adoption of this Agreement and the Merger
by the shareholders of the Parent, no amendment may be made which would as a
matter of law require further shareholder approval of such amendment. This
Agreement may not be amended except by an instrument in writing signed by the
parties hereto.
SECTION 7.05 Waiver. At any time prior to the Effective Time any
party hereto may (i) extend the time for the performance of any obligation or
other act of any other party hereto, (ii) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any agreement or condition
contained herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby.
SECTION 7.06 Fee. If at any time while this Agreement is in
effect the Company shall have consummated, or entered into an agreement
providing for, a merger or consolidation of the Company with, sale of all or a
substantial part of the assets of the Company to, or any other business
combination involving the Company with, any person (other than Parent or Sub),
then, Company shall, within two days after the first of such events has
occurred, pay Parent an amount equal to all out of pocket expenses incurred by
Parent in connection with this Agreement. This provision shall be in addition to
any other rights and remedies Parent and Sub may have under this Agreement.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01 Indemnification by the Shareholders and the
Trustees. The Shareholders and the Trustees shall jointly and severally
indemnify, defend and hold harmless the Parent, its affiliates, and their
respective officers, directors, employees, members, partners and shareholders in
their capacities as such (including the successors of any of the foregoing)
from, against and with respect to any claim, liability, obligation, loss,
damage, assessment, judgment, cost or expense (including, without limitation,
reasonable attorneys', environmental consultants' and accountants' fees and
costs) of any kind or character ("Damages"), (subject to Section 8.05), arising
out of or in any manner incident, relating or attributable to (a) any
misrepresentation or breach of warranty by any of the Shareholders or the
Trustees contained in this Agreement (subject to Section 9.01), (b) any failure
by the Shareholders or the Trustees to perform, cause to be performed or observe
any covenant to be performed or observed by the Company, the Shareholders or the
Trustees under this Agreement, (c) any guaranty to which the Company is a party
and which guarantees amounts payable by, or obligations of, the Shareholders,
the Trustees or any of their affiliates or related parties, (d) any liability of
the Company under any agreements, contracts, negotiations and other dealings by
the Shareholders or the Trustees with any third party concerning the sale of the
capital stock or business of the Company, (e) any liability for federal income
or state or local income or franchise taxes of the Company, the Shareholders or
the Trustees that is based upon or measured with respect to the income of the
Company, the Shareholders or the Trustees for any period up through and
including the Effective Time, (f) any liability for federal income or state or
local income or franchise taxes of the Shareholders or the Trustees based on
income for any post-Closing period, (g) any liability of the Company, the
Shareholders or the Trustees for taxes resulting from the transactions
contemplated by this Agreement, including, without limitation, any taxes
resulting from the disposition, deemed or actual, of assets or stock
contemplated by this Agreement.
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SECTION 8.02 Limitations. Notwithstanding the provisions of
Section 8.01:
(a) The right of indemnification provided in Section 8.01 is solely for
the benefit of the parties referred to therein, and such right will not be
extended, either directly or indirectly, to any other person except as consented
to by the Shareholders and the Trustees. Except as provided in Article VII
hereof and Exhibit C, the right of indemnification in Section 8.01 is the sole
remedy which the Parent has against the Shareholders and the Trustees for any
breach of a representation or warranty hereunder or for any other claim with
respect to, or arising in any matter from, the transactions contemplated
hereunder.
(b) If a condition precedent stated in Section 6.02(b) is not
satisfied, the Company's Closing Certificate specifies the representation or
warranty which is not correct in all material respects and identifies the reason
and underlying facts therefor in reasonable details (such facts, the "Down-Date
Facts"), and the Parent at any time thereafter proceeds with the Closing
notwithstanding such unsatisfied condition or incorrectness, then the
Shareholders and the Trustees shall have no liability to the Parent or any other
party indemnified pursuant to Section 8.01 with respect to the Down-Date Facts
to the extent so described.
SECTION 8.03 Procedure. The party requesting indemnification
under this Article VIII (the "indemnified party") shall give the party from whom
indemnification is requested (the "indemnifying party") prompt notice of, and
shall reasonably cooperate with the indemnifying party (including, without
limitation, by making relevant personnel and records available to the
indemnifying party at all reasonable times free of charge) in connection with
any claim for which the indemnified party may seek indemnification from the
indemnifying party under Article VIII, but the failure to give such notice will
not affect the indemnifying party's liability hereunder, except and to the
extent it is actually prejudiced thereby. The indemnifying party shall at its
own expense and with counsel of its choice assume the defense of all third party
claims for which it is obligated to indemnify the indemnified party. The
indemnified party may also at its own expense employ its own counsel to
participate in the defense of any such third party claim. The indemnifying party
shall have the absolute right to settle at its expense any such third party
claim; provided, however, that such settlement shall also require the prior
written consent of the indemnified party where criminal liability is admitted or
where any action other than the payment of money is required or which does not
include an unconditional release of all indemnified parties.
SECTION 8.04 Parent's Indemnification. (a) Subject to clause (b)
below, the Parent agrees to indemnify, defend, and hold harmless the
Shareholders and the Trustees from, against, and with respect to any Damages
(subject to Section 8.05) arising out of or in any manner incident, relating, or
attributable to (1) any misrepresentation or breach of warranty by the Parent
contained in this Agreement, and (2) any failure by the Parent to perform or
observe any covenant to be performed or observed by the Parent under this
Agreement.
(b) The right of indemnification provided in Section 8.04 is solely for
the benefit of the parties referred to therein, and such right will not be
extended, either directly or indirectly, to any other person. The right of
indemnification in Section 8.04 is the sole remedy which the Shareholders and
the Trustees have against the Parent for any breach of a representation or
warranty hereunder or for any other claim with respect to, or arising in any
manner from, the transactions contemplated hereunder.
SECTION 8.05 Amount. The amount of Damages for which
indemnification is provided (i) under this Article VIII will be computed net of
any insurance proceeds received by the indemnified
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party in connection with such Damages, reduced by all costs and expenses
related thereto and any premium increase or expense resulting therefrom and (ii)
by the Shareholders and the Trustees under Section 8.01(a) will be reduced to
the extent such Damages relate to and do not exceed any applicable reserve or
accrual with respect to such Damages provided for or reflected in the 1999
Company Balance Sheet.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Survival of Representations. Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall survive for three years after the Effective Time or upon the termination
of this Agreement pursuant to Section 7.01, except that the agreement set forth
in Section 7.06 shall survive termination of this Agreement.
SECTION 9.02 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
(or at such other address for a party as shall be specified in a notice given in
accordance with this Section 9.02):
if to Parent or Sub:
Nematron Corporation
5840 Interface Drive
Ann Arbor, Michigan 48103
Telephone No.: (734) 214-2000
Facsimile No.: (734) 994-8074
Attention: Matthew S. Galvez
with a copy to:
Dickinson Wright PLLC
500 Woodward Avenue
Suite 4000
Detroit, MI 48226
Telephone No.: (313) 223-3500
Facsimile No.: (313) 223-3598
Attention: Bernadette M. Dennehy
if to the Company or Shareholder:
Optimation Technology, Inc.
50 High Tech Drive
Rush, NY 14543
Telephone No.: (716) 359-0700
Fax No.: (716) 359-0701
Attention: William Pollock
with a copy to:
Saperston & Day, P.C.
800 First Federal Plaza
Rochester, NY 14614
Telephone No.: (716) 325-7570
Fax No.: (716) 325-5458
Attention: George G. MacKey
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SECTION 9.03 Shareholder Agreements. In consideration of Parent
and Sub entering into this Agreement, each Shareholder agrees (i) to vote all
Shares owned directly or indirectly by him in favor of the Merger, and (ii) to
not, without Parent's prior written consent, sell or otherwise dispose of the
Shares owned directly or indirectly by him until the Merger is consummated or
the Agreement is terminated.
SECTION 9.04 Trustee Agreements. In consideration of Parent and
Sub entering into this Agreement, each Trustee acknowledges and agrees (i) that
it has voted all Shares owned directly or indirectly by the OTI ESOP in favor of
the Merger, and (ii) that it will not, without Parent's prior written consent,
sell or otherwise dispose of the Shares owned directly or indirectly by the OTI
ESOP until the Merger is consummated or the Agreement is terminated.
SECTION 9.05 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the Merger is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Merger be consummated as originally contemplated to the fullest
extent possible.
SECTION 9.06 Entire Agreement; Assignment. This Agreement,
together with the Exhibits and Schedules hereto and the Company Disclosure
Schedule constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes all prior agreements and undertakings, both
written and oral, among the parties, their officers and representatives, or any
of them, with respect to the subject matter hereof. This Agreement shall not be
assigned by operation of law or otherwise.
SECTION 9.07 Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to or shall confer upon any
other person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
SECTION 9.08 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Michigan, regardless
of the laws that might otherwise govern under applicable principles of conflicts
of laws.
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SECTION 9.09 Headings. The descriptive headings contained in
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 9.10 Counterparts. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
[the balance of this page intentionally left blank]
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IN WITNESS WHEREOF, Parent, Sub, the Company, the Shareholders
and the Trustees have caused this Agreement to be executed as of the date first
written above by their respective officers thereunto duly authorized.
NEMATRON CORPORATION
By: /s/ David P. Gienapp
-----------------------------
Its: Corporate Secretary
NEMATRON ACQUISITION CORP.
By: /s/ David P. Gienapp
-----------------------------
Its: Vice President
OPTIMATION TECHNOLOGY, INC.
By: /s/ William K. Pollock
-----------------------------
Its: President
/s/ William K. Pollock
--------------------------------
WILLIAM K. POLLOCK
/s/ Timothy Lasch
--------------------------------
TIMOTHY LASCH
/s/ William K. Pollock
---------------------------------------
WILLIAM K. POLLOCK, TRUSTEE OF THE
OPTIMATION TECHNOLOGY, INC.
EMPLOYEE STOCK OWNERSHIP TRUST
and
/s/ Timothy Lasch
-----------------------------------------
TIMOTHY LASCH, TRUSTEE OF THE OPTIMATION
TECHNOLOGY, INC. EMPLOYEE
STOCK OWNERSHIP TRUST
31
<PAGE> 32
EXHIBIT A
<PAGE> 33
EMPLOYMENT AGREEMENT
OF WILLIAM K. POLLOCK
THIS EMPLOYMENT AGREEMENT (this "Agreement"), is made this day of
, 2000, by and between William K. Pollock ("Employee") and OPTIMATION
TECHNOLOGY, INC., a New York corporation (the "Company").
WHEREAS, pursuant to that certain Agreement and Plan of Merger (the
"Merger Agreement") dated as of November , 2000 by and among Nematron
Corporation ("Nematron"), Nematron Acquisition Corp. ("Sub"), the Employee and
the other shareholders of the Company, Nematron acquired, through a merger with
Sub in which the Company was the surviving corporation (the "Acquisition") all
of the issued and outstanding stock of the Company;
WHEREAS, as a condition precedent to the consummation of the
Acquisition, Nematron has required Employee and the Company to enter into this
Agreement to ensure the continued employment of Employee by the Company;
WHEREAS, the consummation of the transactions contemplated by the
Purchase Agreement is also a condition precedent to the effectiveness of this
Agreement;
WHEREAS, the Company is engaged in the business of providing process
and mechanical design, instrumentation and electrical design, system
integration, software programming and computer aided drafting to its customers
in various industry segments (the "Business"); and
WHEREAS, the Company desires to employ Employee, and Employee desires
to be employed by the Company upon the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
obligations contained herein, and intending to be legally bound, the parties,
subject to the terms and conditions set forth herein, agree as follows:
1. Employment and Term. The Company hereby employs Employee, and
Employee hereby accepts employment with the Company as its President (the
"Position") for a period commencing on the date hereof and continuing for a
period of three (3) years, subject to earlier termination pursuant to the
provisions of Section 10 hereof (the "Term").
2. Duties. During the Term, Employee shall serve the Company faithfully
and to the best of his ability and shall devote his full attention, skill and
efforts to the performance of the duties required by or appropriate for his
Position, shall use his best skill and abilities to promote the interest of the
Company, and shall work with other officers and employees of the Company in a
competent and professional manner. Employee agrees to assume such duties and
responsibilities as are commensurate with his Position. Employee shall report
directly to the Board of Directors of the Company. Employee shall be based in
the Company's offices in the Rochester, New York area.
3. Other Business Activities. During the Term, Employee will not,
without the prior approval of the Board of Directors, directly or indirectly
engage in any other business activities or pursuits which may interfere with the
performance of his responsibilities and obligations pursuant to this Agreement.
<PAGE> 34
4. Compensation. The Company shall pay Employee, and Employee hereby
agrees to accept, as compensation for all services rendered hereunder and for
Employee's covenant not to compete provided for in Section 9 hereof, an initial
base salary of $51.40 per hour for not less than 2,080 hours per calendar year,
less applicable withholdings, commencing upon closing of the Acquisition (the
"Base Salary"), and $77.10 per hour for each hour in excess of 2,080 hours per
calendar year, payable in a manner and at such times as is consistent with the
payroll practices of the Company or Nematron. The Employee shall also be
entitled to participate in such incentive bonus or long-term incentive programs
as may be established from time to time by the compensation committee appointed
by the Board of Directors or, if none, the Board, upon terms established by the
compensation committee or the Board of Directors, and, to the extent and upon
the terms determined by Nematron's board of directors in its sole discretion, in
Nematron's Gainsharing Program and Long-Term Incentive Plan.
5. Other Benefits. Employee shall be entitled to those employee
benefits which the Company, as determined by the compensation committee or Board
of Directors, may from time to time generally makes available to its senior
executives ("Benefits"). The Benefits shall initially include, without
limitation, health insurance, life insurance, and disability income insurance
substantially similar to the disability income insurance policy in effect for
Employee's benefit as of November 1, 2000, and such other benefits as the
compensation committee or Board of Directors may determine from time to time.
6. Reimbursement of Expenses. Subject to such conditions as the Company
may from time to time determine, Employee shall be reimbursed for ordinary and
reasonable documented business expenses incurred by him in the performance of
his duties under this Agreement.
7. Confidentiality. Employee recognizes and acknowledges that the
Proprietary Information (as hereinafter defined) is a valuable, special and
unique asset of the Business of the Company. As a result, both during the Term
and thereafter, Employee shall not, without the prior written consent of the
Company, for any reason, either directly or indirectly divulge to any
third-party or use for his own benefit or for any purpose other than the
exclusive benefit of the Company any confidential, proprietary, business or
technical information or trade secrets of the Company or of any subsidiary or
affiliate of the Company ("Proprietary Information") revealed, obtained or
developed in the course of his employment with the Company. Such Proprietary
Information shall include, but shall not be limited to, the intangible personal
property described in Section 8(b) hereof, any information relating to methods
of production, manufacture, service, research, computer codes or instructions
(including source and object code listings, program logic algorithms,
subroutines, modules or other subparts of computer programs and related
documentation, including program notation), computer processing systems and
techniques, concepts, layouts, flowcharts, specifications, know-how any
associated user or service manuals or other like textual materials (including
any other data and materials used in performing the Employee's duties), all
computer inputs and outputs (regardless of the media on which stored or
located), hardware and software configurations, designs, architecture,
interfaces, plans, sketches, blueprints, any other materials prepared by
Employee in the course of, relating to or arising out of his employment by the
Company or prepared by any other Company employee or contractor for the Company
or its customers, costs, business studies, business procedures, finances,
marketing data, methods, plans and efforts, the identities of customers,
contractors and suppliers and prospective customers, contractors and suppliers,
the terms of contracts and agreements with customers, contractors and suppliers,
the Company's relationship with actual and prospective customers, contractors
and suppliers and the needs and requirements of, and the Company's course of
dealing with, any such actual or prospective customers, contractors and
suppliers, personnel information, customer and vendor credit information and any
other materials that have not been made available to the general public;
provided, that nothing herein contained shall restrict
<PAGE> 35
Employee's ability to make such disclosures during the course of his employment
as may be necessary or appropriate to the effective and efficient discharge of
the duties required by or appropriate for his Position or as such disclosures
may be required by law; and further provided, that nothing herein contained
shall restrict Employee from divulging or using for his own benefit or for any
other purpose any Proprietary Information that is readily available to the
general public so long as such information did not become available to the
general public as a direct or indirect result of Employee's breach of this
Section 7. Failure by the Company to mark any of the Proprietary Information as
confidential or proprietary shall not affect its status as Proprietary
Information under the terms of this Agreement.
8. Inventions and Property.
(a) All right, title and interest in and to Proprietary
Information shall be and remain the sole and exclusive property of the Company.
During the Term, Employee shall not remove from the Company's offices or
premises any documents, records, notebooks, files, correspondence, reports,
memoranda or similar materials of, or containing, Proprietary Information or
other materials or property of any kind belonging to the Company, unless
necessary or appropriate in accordance with the duties and responsibilities
required by or appropriate for his Position, and, in the event that such
materials or property are removed, all of the foregoing shall be returned to
their proper files or places of safekeeping as promptly as possible after the
removal shall serve its specific purpose. Employee shall not make, retain,
remove and/or distribute any copies of any of the foregoing for any reason
whatsoever, except as may be necessary in the discharge of his assigned duties,
and shall not divulge to any third person the nature of and/or contents of any
of the foregoing or of any other oral or written information to which he may
have access or with which for any reason he may become familiar, except as
disclosure shall be necessary in the performance of his duties. Upon the
termination of Employee's employment with the Company, he shall leave with or
return to the Company all originals and copies of the foregoing then in his
possession, whether prepared by Employee or by others.
(b) (i) Employee agrees that all right, title and interest in
and to any innovations, designs, systems, analyses, ideas for marketing
programs, customer contacts, and all copyrights, patents, trademarks and trade
names, or similar intangible personal property which have been or are developed
or created in whole or in part by Employee (A) at any time and at any place
during the Employee's employment with the Company and which, in the case of any
or all of the foregoing, are related to and used in connection with the Business
of the Company, (B) as a result of tasks assigned to Employee by the Company or
(C) from the use of premises or personal property (whether tangible or
intangible) owned, leased or contracted for by the Company (collectively, the
"Intellectual Property"), shall be and remain forever the sole and exclusive
property of the Company. The Employee shall promptly disclose to the Company all
Intellectual Property and the Employee shall have no claim for additional
compensation for the Intellectual Property.
(ii) The Employee acknowledges that all the Intellectual
Property that is copyrightable shall be considered a work made for hire under
United States Copyright Law. To the extent that any copyrightable Intellectual
Property may not be considered a work made for hire under the applicable
provisions of the United States Copyright Law, or to the extent that,
notwithstanding the foregoing provisions, the Employee may retain an interest in
any Intellectual Property that is not copyrightable, the Employee hereby
irrevocably assigns and transfers to the Company any and all right, title, or
interest that the Employee may have in the Intellectual Property under
copyright, patent, trade secret and trademark law, in perpetuity or for the
longest period otherwise permitted by law, without the necessity of further
consideration. The Company shall be entitled to obtain and hold in its own name
all copyrights, patents, trade secrets, and trademarks with respect thereto.
<PAGE> 36
(iii) Employee further agrees to reveal promptly all
information relating to the same to an appropriate officer of the Company and to
cooperate with the Company and execute such documents as may be necessary or
appropriate (A) in the event that the Company desires to seek copyright, patent
or trademark protection, or other analogous protection, thereafter relating to
the Intellectual Property, and when such protection is obtained, to renew and
restore the same, and (B) to defend any opposition proceedings in respect of
obtaining and maintaining such copyright, patent or trademark protection, or
other analogous protection.
(iv) In the event the Company is unable after reasonable
effort to secure Employee's signature on any of the documents referenced in
Section 8(b)(iii) hereof, whether because of Employee's physical or mental
incapacity or for any other reason whatsoever, Employee hereby irrevocably
designates and appoints the Company and its duly authorized officers and agents
as Employee's agent and attorney-in-fact, to act for and in his behalf and stead
to execute and file any such documents and to do all other lawfully permitted
acts to further the prosecution and issuance of any such copyright, patent or
trademark protection, or other analogous protection, with the same legal force
and effect as if executed by Employee.
9. Covenant Not to Compete. The Employee shall not, during the Term and
for a period of three (3) years thereafter (such period, the "Restricted
Period"), do any of the following directly or indirectly, within the continental
United States, without the prior written consent of the Company:
(a) engage or participate in any business activity competitive
with the Business of the Company;
(b) become interested in (as owner, stockholder, lender,
partner, co-venturer, director, officer, employee, agent, consultant or
otherwise) any person, firm, corporation, association or other entity engaged in
any business that is competitive with the Business of the Company.
Notwithstanding the foregoing, Employee may hold not more than one percent (1%)
of the outstanding securities of any class of any publicly-traded securities of
a company that is engaged in activities referenced in Section 9(a) hereof;
(c) solicit or call on, either directly or indirectly, in
connection with any business which is competitive with the Business of the
Company, any (i) customer with whom the Company shall have dealt at any time or
(ii) any distributor, supplier or other contracting party with whom the Company
shall have dealt;
(d) influence or attempt to influence any supplier,
distributor, customer or potential customer of the Company to terminate or
modify any written or oral agreement or course of dealing with the Company; or
(e) except in his capacity as an employee of the Company,
influence or attempt to influence any person to either (i) terminate or modify
his employment, consulting, agency, distributorship or other arrangement with
the Company or (ii) employ or retain, or arrange to have any other person or
entity employ or retain, any person who has been employed or retained by the
Company as an employee, consultant, agent or distributor of the Company at any
time during the two year period immediately preceding the termination of
Employee's employment hereunder.
<PAGE> 37
10. Termination. Employee's employment hereunder may be terminated
during the Term upon the occurrence of any one of the events described in this
Section 10. Upon termination, Employee shall be entitled only to such
compensation and benefits as described in this Section 10.
10.1. Termination by Death or Permanent Disability.
(a) In the event of Employee's death or Permanent Disability
(as defined below) during the Term, Employee's employment hereunder shall be
terminated thereby and the Company shall pay to Employee or Employee's
executors, legal representatives or administrators an amount equal to the vested
or accrued and unpaid portion of his Base Salary, Benefits and other forms of
compensation and benefits payable or provided in accordance with the terms of
any then existing compensation or benefit plan or arrangement ("Other
Compensation").
(b) Except as specifically set forth in this Section 10.1, the
Company shall have no liability or obligation hereunder to Employee's executors,
legal representatives, administrators, heirs or assigns or any other person
claiming under or through him by reason of Employee's death or Permanent
Disability, except that Employee's executors, legal representatives or
administrators will be entitled to receive the payment prescribed under any
death or disability benefits plan in which he is a participant as an employee of
the Company and to exercise any rights afforded under any compensation or
benefit plan then in effect. For the purposes of this Agreement, "Permanent
Disability" shall have the same meaning as such phrase is given under the long
term disability plan sponsored by the Company or, in the absence of such policy,
as determined by a physician selected by the Company and reasonably satisfactory
to Employee or his personal representative.
10.2. Termination for Cause.
(a) The Company may terminate Employee's employment
hereunder at any time for "cause" upon written notice to Employee. For purposes
of this Agreement, "cause" shall mean, in each case as determined by a majority
of the Board of Directors: (i) any breach by Employee of any of his material
obligations under this Agreement (other than as a result of incapacity due to
physical or mental illness), in each case if such breach is not cured within
thirty (30) calendar days after written notice thereof to Employee by Company,
(ii) commission of a felony or a crime involving moral turpitude or other
commission of any act or omission of Employee involving dishonesty, fraud,
embezzlement, theft, substance abuse or sexual misconduct with respect to the
Company or any of its affiliates or subsidiaries or any of their employees,
vendors, suppliers, distributors or customers, (iii) Employee's substantial
neglect of duties or failure to follow a directive of the Board of Directors,
after written notice from the Board of Directors of such neglect or failure has
not been cured within thirty (30) days after the Employee receives such notice,
(iv) the Employee's misappropriation of funds or assets of the Company or one of
its affiliates or subsidiaries for personal use, or (v) the Employee's gross
negligence or willful misconduct in the performance of his duties.
(b) In the event of a termination of Employee's
employment hereunder pursuant to Section 10.2(a), Employee shall be entitled to
receive all vested or accrued but unpaid (as of the effective date of such
termination) Base Salary, Benefits and Other Compensation. All Base Salary,
Benefits and Other Compensation shall cease at the time of such termination,
subject to the terms of any benefit or compensation plan then in force and
applicable to Employee. Except as specifically set forth in this Section 10.2,
the Company shall have no liability or obligation hereunder by reason of
Employee's termination pursuant to this Section 10.2.
<PAGE> 38
10.3. Termination Without Cause.
In the event of termination by the Company of
Employee's employment hereunder without Cause, Employee shall be entitled to
receive all accrued, but unpaid (as of the effective date of such termination)
Base Salary, Benefits and Other Compensation, plus an amount equal to One
hundred percent (100%) of the Employee's annual Base Salary (as of the date of
termination) for the remainder of the term of this Agreement or twelve months,
whichever is longer.
10.4. Termination by Employee.
(a) Employee may terminate his employment for any
reason upon ninety (90) days' written notice to Company.
(b) In the event of termination of Employee's
employment hereunder pursuant to Section 10.4(a), Employee shall be entitled to
receive all accrued but unpaid (as of the effective date of such termination)
Base Salary, Benefits and Other Compensation. All Base Salary, Benefits and
Other Compensation shall cease at the time of such termination, subject to the
terms of any benefit or compensation plan then in force and applicable to
Employee.
11. Indemnification. The Company shall indemnify Employee and shall
save and hold Employee harmless from, against, for, and in respect of, any and
all damages, losses, obligations, deficiencies, costs and expenses, including,
without limitation, reasonable attorneys' fees and other costs and expenses,
incident to, or arising out of, any threatened, pending or completed suit,
action, claim or proceeding, whether civil, criminal, administrative or
investigative, suffered, incurred or required to be paid by Employee by reason
of being a director, officer, employee or agent of the Company or by reason of
service, at the request of the Company, as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise (whether or not Employee continues to be a director, officer,
employee or agent of the Company or such corporation, partnership, joint
venture, trust or other enterprise at the time such action, suit or proceeding
is brought or threatened) if the Board of Directors determines that Employee's
act or omission was taken or made in good faith and in a manner reasonably
believed to be in, or not inconsistent with, the best interests of the Company;
provided, that such act or omission did not constitute gross negligence, willful
misconduct or fraud. The foregoing right of indemnification shall be in addition
to any rights to which Employee may otherwise be entitled and shall inure to the
benefit of Employee's heirs, executors or administrators. If authorized under
the circumstances by the Board of Directors of the Company, the Company may pay
the expenses incurred by Employee (including without limitation reasonable
attorneys' fees) in defending any action, suit or proceeding upon receipt of an
undertaking by Employee to repay such payment if there shall be a final
adjudication or determination that it is not entitled to indemnification as
provided herein.
12. Other Agreements. Employee represents and warrants to the Company
that:
(a) There are no restrictions, agreements or
understandings whatsoever to which Employee is a party which would prevent or
make unlawful Employee's execution of this Agreement or Employee's employment
hereunder, or which is or would be inconsistent or in conflict with this
Agreement or Employee's employment hereunder, or would prevent, limit or impair
in any way the performance by Employee of his obligations hereunder;
<PAGE> 39
(b) That Employee's execution of this Agreement and Employee's
employment hereunder shall not constitute a breach of any contract, agreement or
understanding, oral or written, to which Employee is a party or by which
Employee is bound;
(c) That Employee is free to execute this Agreement and to
enter into the employ of the Company pursuant to the provisions set forth
herein; and
(d) That Employee shall disclose the existence and terms of
the restrictive covenants set forth in this Agreement to any employer that the
Employee may work for during the term of this Agreement (which employment is not
hereby authorized) or after the termination of the Employee's employment at the
Company.
13. Survival of Provisions. The provisions of this Agreement set forth
in Sections 7, 8, 9 and 22 hereof shall survive the termination of Employee's
employment hereunder.
14. Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the Company and Employee and their respective successors,
executors, administrators, heirs and/or permitted assigns; provided, however,
that neither Employee nor the Company may make any assignment of this Agreement
or any interest herein, by operation of law or otherwise, without the prior
written consent of the other party hereto, except that, without such consent,
the Company may assign this Agreement to any successor to all or substantially
all of its assets and business by means of liquidation, dissolution, merger,
consolidation, transfer of assets, or otherwise, provided that such successor
entity assumes in writing all of the obligations of the Company under this
Agreement. Except as provided in this Section 14, this Agreement is not intended
to, and shall not, confer any rights upon any third parties.
15. Notice. Any notice or communication required or permitted under
this Agreement shall be made in writing and sent by certified or registered
mail, return receipt requested, addressed as follows:
If to Employee:
William K. Pollock
---------------------
---------------------
---------------------
If to the Company:
Optimation Technology, Inc.
c/o Nematron Corporation
5840 Interface Drive
Ann Arbor, MI 48103
Attn: Matthew S. Galvez
Fax: (734) 994-8074
or to such other address as either party may from time to time duly specify by
notice given to the other party in the manner specified above.
<PAGE> 40
16. Entire Agreement; Amendments. This Agreement, contains the entire
agreement and understanding of the parties hereto relating to the subject matter
hereof, and merge and supersede all prior and contemporaneous discussions,
agreements and understandings of every nature between the parties hereto
relating to the employment of Employee with the Company. This Agreement may not
be changed or modified, except by an Agreement in writing signed by each of the
parties hereto.
17. Waiver. The waiver of the breach of any term or provision of this
Agreement shall not operate as or be construed to be a waiver of any other or
subsequent breach of this Agreement.
18. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Michigan.
19. Waiver of Jury Trial. Each of the parties hereto hereby irrevocably
waives any and all right to trial by jury of any claim or cause of action in any
legal proceeding arising out of or related to this Agreement or the transactions
or events contemplated hereby or any course of conduct, course of dealing,
statements (whether verbal or written) or actions of any party hereto. The
parties hereto each agree that any and all such claims and causes of action
shall be tried by a court trial without a jury. Each of the parties hereto
further waives any right to seek to consolidate any such legal proceeding in
which a jury trial has been waived with any other legal proceeding in which a
jury trial cannot or has not been waived.
20. Invalidity. In case any one or more of the provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect the validity of any other provision of this Agreement, and such
provision(s) shall be deemed modified to the extent necessary to make it
enforceable.
21. Section Headings. The section headings in this Agreement are for
convenience only, and form no part of this Agreement and shall not affect its
interpretation.
22. Specific Enforcement: Extension of Period.
(a) Employee acknowledges that the restrictions contained in
Sections 7, 8, and 9 hereof are reasonable and necessary to protect the
legitimate interests of the Company and its affiliates and that the Company
would not have entered into this Agreement in the absence of such restrictions.
Employee also acknowledges that any breach by him of Sections 7, 8, and 9 hereof
will cause continuing and irreparable injury to the Company for which monetary
damages would not be an adequate remedy. The Employee shall not, in any action
or proceeding to enforce any of the provisions of this Agreement, assert the
claim or defense that an adequate remedy at law exists. In the event of such
breach by Employee, the Company shall have the right to enforce the provisions
of Sections 7, 8 or 9 of this Agreement by seeking injunctive or other relief in
any court, and this Agreement shall not in any way limit remedies of law or in
equity otherwise available to the Company. If an action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to recover, in addition to any other relief, reasonable
attorneys' fees, costs and disbursements. In the event that the provisions of
Sections 7, 8 or 9 hereof should ever be adjudicated to exceed the time,
geographic, or other limitations permitted by applicable law in any applicable
jurisdiction, then such provisions shall be deemed reformed in such jurisdiction
to the maximum time, geographic, or other limitations permitted by applicable
law.
<PAGE> 41
(b) In the event that Employee shall be in breach of any of
the restrictions contained in Section 9 hereof, then the Restricted Period shall
be extended for a period of time equal to the period of time that Employee is in
breach of such restriction.
22. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.
<PAGE> 42
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed the day and year first written above.
OPTIMATION TECHNOLOGY, INC.
By:
-----------------------------------------------
Name:
Title:
EMPLOYEE
-----------------------------------------------
William K. Pollock
<PAGE> 43
EMPLOYMENT AGREEMENT
OF TIMOTHY A. LASCH
THIS EMPLOYMENT AGREEMENT (this "Agreement"), is made this day of
, 2000, by and between Timothy A. Lasch ("Employee") and OPTIMATION
TECHNOLOGY, INC., a New York corporation (the "Company").
WHEREAS, pursuant to that certain Agreement and Plan of Merger (the
"Merger Agreement") dated as of November , 2000 by and among Nematron
Corporation ("Nematron"), Nematron Acquisition Corp. ("Sub"), the Employee and
the other shareholders of the Company, Nematron acquired, through a merger with
Sub in which the Company was the surviving corporation (the "Acquisition") all
of the issued and outstanding stock of the Company;
WHEREAS, as a condition precedent to the consummation of the
Acquisition, Nematron has required Employee and the Company to enter into this
Agreement to ensure the continued employment of Employee by the Company;
WHEREAS, the consummation of the transactions contemplated by the
Purchase Agreement is also a condition precedent to the effectiveness of this
Agreement;
WHEREAS, the Company is engaged in the business of providing process
and mechanical design, instrumentation and electrical design, system
integration, software programming and computer aided drafting to its customers
in various industry segments (the "Business"); and
WHEREAS, the Company desires to employ Employee, and Employee desires
to be employed by the Company upon the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
obligations contained herein, and intending to be legally bound, the parties,
subject to the terms and conditions set forth herein, agree as follows:
1. Employment and Term. The Company hereby employs Employee, and
Employee hereby accepts employment with the Company as its Vice President (the
"Position") for a period commencing on the date hereof and continuing for a
period of four (4) years, subject to earlier termination pursuant to the
provisions of Section 10 hereof (the "Term").
2. Duties. During the Term, Employee shall serve the Company faithfully
and to the best of his ability and shall devote his full attention, skill and
efforts to the performance of the duties required by or appropriate for his
Position, shall use his best skill and abilities to promote the interest of the
Company, and shall work with other officers and employees of the Company in a
competent and professional manner. Employee agrees to assume such duties and
responsibilities as are commensurate with his Position. Employee shall report
directly to the President of the Company. Employee shall be based in the
Company's offices in the Rochester, New York area.
3. Other Business Activities. During the Term, Employee will not,
without the prior approval of the Board of Directors, directly or indirectly
engage in any other business activities or pursuits which may interfere with the
performance of his responsibilities and obligations pursuant to this Agreement.
<PAGE> 44
4. Compensation. The Company shall pay Employee, and Employee hereby
agrees to accept, as compensation for all services rendered hereunder and for
Employee's covenant not to compete provided for in Section 9 hereof, an initial
base salary of ($48.30) per hour for not less than 2,080 hours per calendar
year, less applicable withholdings, commencing upon closing of the Acquisition
(the "Base Salary"), and ($72.45) per hour for each hour in excess of 2,080
hours per calendar year, payable in a manner and at such times as is consistent
with the payroll practices of the Company or Nematron. The Employee shall also
be entitled to participate in such incentive bonus or long-term incentive
programs as may be established from time to time by the compensation committee
appointed by the Board of Directors or, if none, the Board of Directors, upon
terms established by the compensation committee or the Board of Directors, and,
to the extent and upon the terms determined by Nematron's board of directors in
its sole discretion, in Nematron's Gainsharing Program and Nematron's Long-Term
Incentive Plan.
5. Other Benefits. Employee shall be entitled to those employee
benefits which the Company, as determined by the compensation committee or Board
of Directors, may from time to time generally makes available to its senior
executives ("Benefits"). The Benefits shall initially include, without
limitation, health insurance, life insurance, and disability income insurance
substantially similar to the disability income insurance policy in effect for
Employee's benefit as of November 1, 2000, and such other benefits as the
compensation committee or Board of Directors may determine from time to time.
6. Reimbursement of Expenses. Subject to such conditions as the Company
may from time to time determine, Employee shall be reimbursed for ordinary and
reasonable documented business expenses incurred by him in the performance of
his duties under this Agreement.
7. Confidentiality. Employee recognizes and acknowledges that the
Proprietary Information (as hereinafter defined) is a valuable, special and
unique asset of the Business of the Company. As a result, both during the Term
and thereafter, Employee shall not, without the prior written consent of the
Company, for any reason, either directly or indirectly divulge to any
third-party or use for his own benefit or for any purpose other than the
exclusive benefit of the Company any confidential, proprietary, business or
technical information or trade secrets of the Company or of any subsidiary or
affiliate of the Company ("Proprietary Information") revealed, obtained or
developed in the course of his employment with the Company. Such Proprietary
Information shall include, but shall not be limited to, the intangible personal
property described in Section 8(b) hereof, any information relating to methods
of production, manufacture, service, research, computer codes or instructions
(including source and object code listings, program logic algorithms,
subroutines, modules or other subparts of computer programs and related
documentation, including program notation), computer processing systems and
techniques, concepts, layouts, flowcharts, specifications, know-how any
associated user or service manuals or other like textual materials (including
any other data and materials used in performing the Employee's duties), all
computer inputs and outputs (regardless of the media on which stored or
located), hardware and software configurations, designs, architecture,
interfaces, plans, sketches, blueprints, any other materials prepared by
Employee in the course of, relating to or arising out of his employment by the
Company or prepared by any other Company employee or contractor for the Company
or its customers, costs, business studies, business procedures, finances,
marketing data, methods, plans and efforts, the identities of customers,
contractors and suppliers and prospective customers, contractors and suppliers,
the terms of contracts and agreements with customers, contractors and suppliers,
the Company's relationship with actual and prospective customers, contractors
and suppliers and the needs and requirements of, and the Company's course of
dealing with, any such actual or prospective customers, contractors and
suppliers, personnel information, customer and vendor credit information and any
other materials that have not
<PAGE> 45
been made available to the general public; provided, that nothing herein
contained shall restrict Employee's ability to make such disclosures during the
course of his employment as may be necessary or appropriate to the effective and
efficient discharge of the duties required by or appropriate for his Position or
as such disclosures may be required by law; and further provided, that nothing
herein contained shall restrict Employee from divulging or using for his own
benefit or for any other purpose any Proprietary Information that is readily
available to the general public so long as such information did not become
available to the general public as a direct or indirect result of Employee's
breach of this Section 7. Failure by the Company to mark any of the Proprietary
Information as confidential or proprietary shall not affect its status as
Proprietary Information under the terms of this Agreement.
8. Inventions and Property.
(a) All right, title and interest in and to Proprietary
Information shall be and remain the sole and exclusive property of the Company.
During the Term, Employee shall not remove from the Company's offices or
premises any documents, records, notebooks, files, correspondence, reports,
memoranda or similar materials of, or containing, Proprietary Information or
other materials or property of any kind belonging to the Company, unless
necessary or appropriate in accordance with the duties and responsibilities
required by or appropriate for his Position, and, in the event that such
materials or property are removed, all of the foregoing shall be returned to
their proper files or places of safekeeping as promptly as possible after the
removal shall serve its specific purpose. Employee shall not make, retain,
remove and/or distribute any copies of any of the foregoing for any reason
whatsoever, except as may be necessary in the discharge of his assigned duties,
and shall not divulge to any third person the nature of and/or contents of any
of the foregoing or of any other oral or written information to which he may
have access or with which for any reason he may become familiar, except as
disclosure shall be necessary in the performance of his duties. Upon the
termination of Employee's employment with the Company, he shall leave with or
return to the Company all originals and copies of the foregoing then in his
possession, whether prepared by Employee or by others.
(b) (i) Employee agrees that all right, title and interest
in and to any innovations, designs, systems, analyses, ideas for marketing
programs, customer contacts, and all copyrights, patents, trademarks and trade
names, or similar intangible personal property which have been or are developed
or created in whole or in part by Employee (A) at any time and at any place
during the Employee's employment with the Company and which, in the case of any
or all of the foregoing, are related to and used in connection with the Business
of the Company, (B) as a result of tasks assigned to Employee by the Company or
(C) from the use of premises or personal property (whether tangible or
intangible) owned, leased or contracted for by the Company (collectively, the
"Intellectual Property"), shall be and remain forever the sole and exclusive
property of the Company. The Employee shall promptly disclose to the Company all
Intellectual Property and the Employee shall have no claim for additional
compensation for the Intellectual Property.
(ii) The Employee acknowledges that all the
Intellectual Property that is copyrightable shall be considered a work made
for hire under United States Copyright Law. To the extent that any copyrightable
Intellectual Property may not be considered a work made for hire under the
applicable provisions of the United States Copyright Law, or to the extent that,
notwithstanding the foregoing provisions, the Employee may retain an interest in
any Intellectual Property that is not copyrightable, the Employee hereby
irrevocably assigns and transfers to the Company any and all right, title, or
interest that the Employee may have in the Intellectual Property under
copyright, patent, trade secret and trademark law, in perpetuity or for the
longest period otherwise permitted by law, without the
<PAGE> 46
necessity of further consideration. The Company shall be entitled to obtain and
hold in its own name all copyrights, patents, trade secrets, and trademarks with
respect thereto.
(iii) Employee further agrees to reveal promptly
all information relating to the same to an appropriate officer of the Company
and to cooperate with the Company and execute such documents as may be necessary
or appropriate (A) in the event that the Company desires to seek copyright,
patent or trademark protection, or other analogous protection, thereafter
relating to the Intellectual Property, and when such protection is obtained, to
renew and restore the same, and (B) to defend any opposition proceedings in
respect of obtaining and maintaining such copyright, patent or trademark
protection, or other analogous protection.
(iv) In the event the Company is unable after
reasonable effort to secure Employee's signature on any of the documents
referenced in Section 8(b)(iii) hereof, whether because of Employee's physical
or mental incapacity or for any other reason whatsoever, Employee hereby
irrevocably designates and appoints the Company and its duly authorized officers
and agents as Employee's agent and attorney-in-fact, to act for and in his
behalf and stead to execute and file any such documents and to do all other
lawfully permitted acts to further the prosecution and issuance of any such
copyright, patent or trademark protection, or other analogous protection, with
the same legal force and effect as if executed by Employee.
9. Covenant Not to Compete. The Employee shall not, during the
Term and for a period of three (3) years thereafter (such period, the
"Restricted Period"), do any of the following directly or indirectly, within the
continental United States, without the prior written consent of the Company:
(a) engage or participate in any business activity
competitive with the Business of the Company;
(b) become interested in (as owner, stockholder, lender,
partner, co-venturer, director, officer, employee, agent, consultant or
otherwise) any person, firm, corporation, association or other entity engaged in
any business that is competitive with the Business of the Company.
Notwithstanding the foregoing, Employee may hold not more than one percent (1%)
of the outstanding securities of any class of any publicly-traded securities of
a company that is engaged in activities referenced in Section 9(a) hereof;
(c) solicit or call on, either directly or indirectly, in
connection with any business which is competitive with the Business of the
Company, any (i) customer with whom the Company shall have dealt at any time or
(ii) any distributor, supplier or other contracting party with whom the Company
shall have dealt;
(d) influence or attempt to influence any supplier,
distributor, customer or potential customer of the Company to terminate or
modify any written or oral agreement or course of dealing with the Company; or
(e) except in his capacity as an employee of the Company,
influence or attempt to influence any person to either (i) terminate or modify
his employment, consulting, agency, distributorship or other arrangement with
the Company or (ii) employ or retain, or arrange to have any other person or
entity employ or retain, any person who has been employed or retained by the
Company as an employee, consultant, agent or distributor of the Company at any
time during the two year period immediately preceding the termination of
Employee's employment hereunder.
<PAGE> 47
10. Termination. Employee's employment hereunder may be
terminated during the Term upon the occurrence of any one of the events
described in this Section 10. Upon termination, Employee shall be entitled only
to such compensation and benefits as described in this Section 10.
10.1. Termination by Death or Permanent Disability.
(a) In the event of Employee's death or Permanent
Disability (as defined below) during the Term, Employee's employment hereunder
shall be terminated thereby and the Company shall pay to Employee or Employee's
executors, legal representatives or administrators an amount equal to the vested
or accrued and unpaid portion of his Base Salary, Benefits and other forms of
compensation and benefits payable or provided in accordance with the terms of
any then existing compensation or benefit plan or arrangement ("Other
Compensation").
(b) Except as specifically set forth in this Section
10.1, the Company shall have no liability or obligation hereunder to Employee's
executors, legal representatives, administrators, heirs or assigns or any other
person claiming under or through him by reason of Employee's death or Permanent
Disability, except that Employee's executors, legal representatives or
administrators will be entitled to receive the payment prescribed under any
death or disability benefits plan in which he is a participant as an employee of
the Company and to exercise any rights afforded under any compensation or
benefit plan then in effect. For the purposes of this Agreement, "Permanent
Disability" shall have the same meaning as such phrase is given under the long
term disability plan sponsored by the Company or, in the absence of such policy,
as determined by a physician selected by the Company and reasonably satisfactory
to Employee or his personal representative.
10.2. Termination for Cause.
(a) The Company may terminate Employee's
employment hereunder at any time for "cause" upon written notice to Employee.
For purposes of this Agreement, "cause" shall mean, in each case as determined
by a majority of the Board of Directors: (i) any breach by Employee of any of
his material obligations under this Agreement (other than as a result of
incapacity due to physical or mental illness), in each case if such breach is
not cured within thirty (30) calendar days after written notice thereof to
Employee by Company, (ii) commission of a felony or a crime involving moral
turpitude or other commission of any act or omission of Employee involving
dishonesty, fraud, embezzlement, theft, substance abuse or sexual misconduct
with respect to the Company or any of its affiliates or subsidiaries or any of
their employees, vendors, suppliers, distributors or customers, (iii) Employee's
substantial neglect of duties or failure to follow a directive of the Board of
Directors, after written notice from the Board of Directors of such neglect or
failure has not been cured within thirty (30) days after the Employee receives
such notice, (iv) the Employee's misappropriation of funds or assets of the
Company or one of its affiliates or subsidiaries for personal use, or (v) the
Employee's gross negligence or willful misconduct in the performance of his
duties.
(b) In the event of a termination of Employee's
employment hereunder pursuant to Section 10.2(a), Employee shall be entitled
to receive all vested or accrued but unpaid (as of the effective date of such
termination) Base Salary, Benefits and Other Compensation. All Base Salary,
Benefits and Other Compensation shall cease at the time of such termination,
subject to the terms of any benefit or compensation plan then in force and
applicable to Employee. Except as specifically set forth in this Section 10.2,
the Company shall have no liability or obligation hereunder by reason of
Employee's termination pursuant to this Section 10.2.
<PAGE> 48
10.3. Termination Without Cause.
In the event of termination by the Company of
Employee's employment hereunder without Cause, Employee shall be entitled to
receive all accrued, but unpaid (as of the effective date of such termination)
Base Salary, Benefits and Other Compensation, plus an amount equal to One
hundred percent (100%) of the Employee's annual Base Salary (as of the date of
termination) for the remainder of the term of this Agreement or twelve months,
whichever is longer.
10.4. Termination by Employee.
(a) Employee may terminate his employment
for any reason upon ninety (90) days' written notice to Company.
(b) In the event of termination of Employee's
employment hereunder pursuant to Section 10.4(a), Employee shall be entitled
to receive all accrued but unpaid (as of the effective date of such termination)
Base Salary, Benefits and Other Compensation. All Base Salary, Benefits and
Other Compensation shall cease at the time of such termination, subject to the
terms of any benefit or compensation plan then in force and applicable to
Employee.
11. Indemnification. The Company shall indemnify Employee and shall
save and hold Employee harmless from, against, for, and in respect of, any and
all damages, losses, obligations, deficiencies, costs and expenses, including,
without limitation, reasonable attorneys' fees and other costs and expenses,
incident to, or arising out of, any threatened, pending or completed suit,
action, claim or proceeding, whether civil, criminal, administrative or
investigative, suffered, incurred or required to be paid by Employee by reason
of being a director, officer, employee or agent of the Company or by reason of
service, at the request of the Company, as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise (whether or not Employee continues to be a director, officer,
employee or agent of the Company or such corporation, partnership, joint
venture, trust or other enterprise at the time such action, suit or proceeding
is brought or threatened) if the Board of Directors determines that Employee's
act or omission was taken or made in good faith and in a manner reasonably
believed to be in, or not inconsistent with, the best interests of the Company;
provided, that such act or omission did not constitute gross negligence, willful
misconduct or fraud. The foregoing right of indemnification shall be in addition
to any rights to which Employee may otherwise be entitled and shall inure to the
benefit of Employee's heirs, executors or administrators. If authorized under
the circumstances by the Board of Directors of the Company, the Company may pay
the expenses incurred by Employee (including without limitation reasonable
attorneys' fees) in defending any action, suit or proceeding upon receipt of an
undertaking by Employee to repay such payment if there shall be a final
adjudication or determination that it is not entitled to indemnification as
provided herein.
12. Other Agreements. Employee represents and warrants to the
Company that:
(a) There are no restrictions, agreements or understandings
whatsoever to which Employee is a party which would prevent or make unlawful
Employee's execution of this Agreement or Employee's employment hereunder, or
which is or would be inconsistent or in conflict with this Agreement or
Employee's employment hereunder, or would prevent, limit or impair in any way
the performance by Employee of his obligations hereunder;
<PAGE> 49
(b) That Employee's execution of this Agreement and
Employee's employment hereunder shall not constitute a breach of any contract,
agreement or understanding, oral or written, to which Employee is a party or by
which Employee is bound;
(c) That Employee is free to execute this Agreement
and to enter into the employ of the Company pursuant to the provisions set forth
herein; and
(d) That Employee shall disclose the existence and terms of
the restrictive covenants set forth in this Agreement to any employer that the
Employee may work for during the term of this Agreement (which employment is not
hereby authorized) or after the termination of the Employee's employment at the
Company.
13. Survival of Provisions. The provisions of this Agreement
set forth in Sections 7, 8, 9 and 22 hereof shall survive the termination of
Employee's employment hereunder.
14. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Company and Employee and their respective
successors, executors, administrators, heirs and/or permitted assigns; provided,
however, that neither Employee nor the Company may make any assignment of this
Agreement or any interest herein, by operation of law or otherwise, without the
prior written consent of the other party hereto, except that, without such
consent, the Company may assign this Agreement to any successor to all or
substantially all of its assets and business by means of liquidation,
dissolution, merger, consolidation, transfer of assets, or otherwise, provided
that such successor entity assumes in writing all of the obligations of the
Company under this Agreement. Except as provided in this Section 14, this
Agreement is not intended to, and shall not, confer any rights upon any third
parties.
15. Notice. Any notice or communication required or permitted
under this Agreement shall be made in writing and sent by certified or
registered mail, return receipt requested, addressed as follows:
If to Employee:
Timothy Lasch
---------------------
---------------------
---------------------
If to the Company:
Optimation Technology, Inc.
c/o Nematron Corporation
5840 Interface Drive
Ann Arbor, MI 48103
Attn: Matthew S. Galvez
Fax: (734) 994-8074
or to such other address as either party may from time to time duly specify by
notice given to the other party in the manner specified above.
<PAGE> 50
16. Entire Agreement; Amendments. This Agreement, contains the
entire agreement and understanding of the parties hereto relating to the subject
matter hereof, and merge and supersede all prior and contemporaneous
discussions, agreements and understandings of every nature between the parties
hereto relating to the employment of Employee with the Company. This Agreement
may not be changed or modified, except by an Agreement in writing signed by each
of the parties hereto.
17. Waiver. The waiver of the breach of any term or provision of
this Agreement shall not operate as or be construed to be a waiver of any
other or subsequent breach of this Agreement.
18. Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Michigan.
19. Waiver of Jury Trial. Each of the parties hereto hereby
irrevocably waives any and all right to trial by jury of any claim or cause of
action in any legal proceeding arising out of or related to this Agreement or
the transactions or events contemplated hereby or any course of conduct, course
of dealing, statements (whether verbal or written) or actions of any party
hereto. The parties hereto each agree that any and all such claims and causes of
action shall be tried by a court trial without a jury. Each of the parties
hereto further waives any right to seek to consolidate any such legal proceeding
in which a jury trial has been waived with any other legal proceeding in which a
jury trial cannot or has not been waived.
20. Invalidity. In case any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the validity of any other provision of this
Agreement, and such provision(s) shall be deemed modified to the extent
necessary to make it enforceable.
21. Section Headings. The section headings in this Agreement
are for convenience only, and form no part of this Agreement and shall not
affect its interpretation.
22. Specific Enforcement: Extension of Period.
(a) Employee acknowledges that the restrictions
contained in Sections 7, 8, and 9 hereof are reasonable and necessary to protect
the legitimate interests of the Company and its affiliates and that the Company
would not have entered into this Agreement in the absence of such restrictions.
Employee also acknowledges that any breach by him of Sections 7, 8, and 9 hereof
will cause continuing and irreparable injury to the Company for which monetary
damages would not be an adequate remedy. The Employee shall not, in any action
or proceeding to enforce any of the provisions of this Agreement, assert the
claim or defense that an adequate remedy at law exists. In the event of such
breach by Employee, the Company shall have the right to enforce the provisions
of Sections 7, 8 or 9 of this Agreement by seeking injunctive or other relief in
any court, and this Agreement shall not in any way limit remedies of law or in
equity otherwise available to the Company. If an action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to recover, in addition to any other relief, reasonable
attorneys' fees, costs and disbursements. In the event that the provisions of
Sections 7, 8 or 9 hereof should ever be adjudicated to exceed the time,
geographic, or other limitations permitted by applicable law in any applicable
jurisdiction, then such provisions shall be deemed reformed in such jurisdiction
to the maximum time, geographic, or other limitations permitted by applicable
law.
<PAGE> 51
(b) In the event that Employee shall be in breach of any
of the restrictions contained in Section 9 hereof, then the Restricted Period
shall be extended for a period of time equal to the period of time that Employee
is in breach of such restriction.
22. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.
<PAGE> 52
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed the day and year first written above.
OPTIMATION TECHNOLOGY, INC.
By:
------------------------------------
Name:
Title:
EMPLOYEE
---------------------------------------
Timothy A. Lasch
<PAGE> 53
EXHIBIT B
<PAGE> 54
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is made this day
of , 2000, by and between William K. Pollock, Timothy A. Lasch, and
Pollock and Lasch, as Trustees of the Optimation Technology, Inc. Employee Stock
Ownership Trust (collectively, the "Holders"), and NEMATRON CORPORATION, a
Michigan corporation, with offices at 5840 Interface Drive, Ann Arbor, Michigan
48103 ("Company").
Nematron, Nematron Acquisition Sub, Optimation Technology, Inc. and the
Holders are parties to an Agreement and Plan of Merger dated November , 2000
herewith pursuant to which the Holders, in connection with the acquisition by
Nematron of Optimation Technology, Inc. ("OTI") through a merger of its
subsidiary with and into OTI, are receiving 3,112,500 shares of Nematron's
Common Stock, no par value per share ("Common Stock"). In connection with the
issuance of the Common Stock, Nematron has agreed to provide the Holders with
the certain registration rights.
1. CERTAIN DEFINITIONS. As used in this Agreement, the
following capitalized terms shall have the following respective meanings:
"COMMISSION" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"REGISTRABLE SECURITIES" shall mean the 3,112,500 shares of
Nematron's Common Stock issued to the Holders, and any securities issued in
respect of such shares upon any conversion, stock split, stock dividend,
recapitalization or similar event, which have not been sold to the public
pursuant to a Registration.
The terms "REGISTER, "REGISTERED" AND "REGISTRATION" shall
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and applicable rules and
regulations promulgated thereunder, and the declaration or ordering of the
effectiveness of such registration statement.
"REGISTRATION EXPENSES" shall mean all expenses incurred by
Nematron in compliance with Section 2 hereof, including, without limitation, all
Registration and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for Nematron, blue sky fees and expenses, and the
expenses of any special audits incident to or required by any such Registration
but shall not include Selling Expenses, fees and disbursements of counsel for
the Holders.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"SELLING EXPENSES" shall mean all underwriting discounts,
selling commissions and stock transfer fees applicable to the sale of
Registrable Securities and all fees and disbursements of counsel for the
Holders.
<PAGE> 55
2. COMPANY REGISTRATION.
2.1 NOTICE OF REGISTRATION. If at any time or from time to
time Nematron shall determine to Register any of its capital stock or other
issued securities, either for its own account or the account of a security
holder or holders (other than the Holders), other than (x) a Registration
relating solely to employee benefit plans, or (y) a Registration relating solely
to a Commission Rule 145 transaction, or (z) a Registration on any Registration
form which does not permit secondary sales or does not include substantially the
same information as would be required to be included in a Registration statement
covering the sale of Registrable Securities, Nematron shall:
2.1.1. promptly give to the Holders written notice thereof;
and
2.1.2. use its best efforts to include in such Registration
(and any related qualification under blue sky laws or other compliance) and in
any underwriting involved therein, all the Registrable Securities specified in a
written request or requests made by a Holder within ten (10) days after the
Holder's receipt of the written notice from Nematron described in Section 2.1.1
above, except as set forth in Section 2.2 below.
2.2 UNDERWRITING. If the Registration of which Nematron
gives notice is for a Registered public offering involving an underwriting,
Nematron shall so advise the Holders as a part of the written notice given
pursuant to Section 2.1.1. In such event the right of the Holders to
Registration pursuant to this Section 2 shall be conditioned upon the Holders'
participation in such underwriting and the inclusion of the Holders' Registrable
Securities in the underwriting to the extent provided herein. A Holder, if
proposing to distribute its securities through such underwriting, shall
(together with Nematron and the other holders of securities of Nematron with
registration rights to participate therein, distributing their securities
through such underwriting), enter into an underwriting agreement in customary
form with the managing underwriter selected for underwriting by Nematron.
Notwithstanding any other provision of this Section 2, if the managing
underwriter advises Nematron in writing that marketing factors require a
limitation on the number of shares to be underwritten, the underwriter may
(subject to the allocation priority set forth below), exclude all Registrable
Securities from or limit the number of Registrable Securities to be included in
the Registration and underwriting. If a limitation on the number of Registrable
Securities is required as a result of these limits, the number of Registrable
Securities that may be included in the Registration and underwriting shall be
allocated among all such holders requesting to participate in such Registration
in proportion, as nearly as practicable, to the respective amounts of
registrable securities which they had requested to be included in such
Registration at the time of filing the Registration statement. No Registrable
Securities excluded from the underwriting by reason of the managing
underwriter's marketing limitation shall be included in such Registration.
3. EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with any Registration, qualification or compliance pursuant to this
Agreement shall be borne by Nematron, and all Selling Expenses shall be borne by
the holders of the securities so Registered pro rata on the basis of the number
of their shares so Registered.
4. REGISTRATION PROCEDURES. In the case of each Registration,
qualification or compliance effected by Nematron pursuant to this Agreement,
Nematron will keep the Holders, if participating therein, advised in writing as
to the initiation of each Registration, qualification or compliance and as to
the completion thereof. At its expense, Nematron will use its best efforts to:
4.1. Except for offerings pursuant to Rule 145 or successors
thereto under the Securities Act, Nematron will keep such Registration,
qualification or compliance effective and current
<PAGE> 56
for a period of one hundred twenty (120) days or until the Holders have
completed the distribution described in Registration statement relating thereto,
whichever first occurs.
4.2 Nematron will furnish such number of prospectuses and
other documents incident thereto as each Holder from time to time may reasonably
request.
4.3 Nematron will notify the Holders, if Registrable
Securities are covered by a Registration statement, at any time when a
prospectus relating thereto covered by such Registration statement is required
to be delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such Registration statement includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of circumstances then existing.
5. INDEMNIFICATION.
5.1 Nematron will indemnify the Holders, and the Holders'
legal counsel and independent accountants, with respect to which Registration,
qualification or compliance has been effected pursuant to this Agreement,
against all expenses, claims, losses, damages and liabilities (or actions in
respect thereof) including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any such
Registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by
Nematron of the Securities Act or any rule or regulation thereunder or any state
securities law applicable to Nematron and relating to action or inaction
required of Nematron in connection with any such Registration, qualification or
compliance, and will reimburse the Holders for any legal and any other expenses
reasonably incurred in connection with investigating, defending any such claim,
loss, damage, liability, or action, provided that Nematron will not be liable in
any case to the extent that any such claim, loss, damage liability or expense
arises out of or is based on any untrue statement or omission based upon written
information furnished to Nematron by such Holder and stated to be specifically
for use therein. It is agreed that the indemnity agreement contain in this
Section 5.1 shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if settlement is effected without the consent
of Nematron (which consent has not been unreasonably withheld).
5.2. Each Holder, if Registrable Securities held by him are
included in the securities as to which such Registration, qualification or
compliance is being effected, will indemnify Nematron and each of its directors
and officers, each person who controls Nematron within the meaning of the
Securities Act and the rules and regulations thereunder, each other such Holder
or holder participating in such Registration, and each of their officers,
directors and partners, and each person controlling such Holder and the legal
counsel and independent accountants of the foregoing persons against all claims,
losses, damages and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering circular
or other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse Nematron and such holders, directors,
officers, partners, persons or control persons for any legal or any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such
<PAGE> 57
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to Nematron
and stated to be specifically for use therein; provided, however, that the
liability and obligations of each Holder hereunder shall be limited to any
amount equal to the gross proceeds received by such Holder of Registrable
Securities sold as contemplated therein.
5.3 Each party entitled to indemnification under this Section
5 ("Indemnified Party") shall give notice to the party required to provide
indemnification ("Indemnifying Party") promptly after such Indemnified Party has
actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld). The Indemnified Party may participate in such defense
at such party's expense; provided, however, the Indemnifying Party shall bear
the expenses of such defense of the Indemnified Party (including the fees and
disbursements of one additional counsel to all Indemnified Parties which shall
be selected by the Indemnified Parties) if representation of both parties by the
same counsel would be inappropriate due to actual or potential conflicts of
interest. The omission by any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this
Section 5 except to the extent the omission results in a failure of actual
notice to the Indemnified Party and such Indemnified Party is damaged solely as
a result of the failure to give notice. No Indemnifying Party, in the defense of
any such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting therefrom.
If the indemnification provided for in this Section 5 is held by a
court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage, or expense referred to therein,
then the Indemnifying Party, in lieu of indemnifying such Indemnified Party
hereunder, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage, or expense as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by the Indemnified
Party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control.
6. INFORMATION BY HOLDER. Each Holder, if any of the Registrable
Securities are included in any Registration, shall furnish to Nematron such
information regarding such Holder and the distribution proposed by such Holder
as Nematron may reasonably request in writing and as shall be reasonably
required in connection with any Registration, qualification or compliance
referred to in this
<PAGE> 58
Agreement. Such information shall be furnished to Nematron by an instrument duly
executed by such Holder and stated to be specifically for use therein.
7. TRANSFER OR ASSIGNMENT OF REGISTRATION RIGHTS. The rights to
cause Nematron to Register securities granted under Section 2 may be transferred
or assigned by a Holder to one or more permitted transferees or assignees of at
least one-third of the total number of Registrable Securities, provided that (i)
such transfer may otherwise be effected in accordance with applicable securities
laws, (ii) Nematron is given written notice by such Holder thirty (30) days
prior to said transfer or assignment, stating the name and address of each
transferee or assignee and identifying the securities with respect to which such
Registration rights are being transferred or assigned and Nematron consents to
the transfer or assignment (which consent will not be unreasonably withheld),
and (iii) that the transferee or assignee of such rights assumes the obligations
of such Holder under this Agreement and executes and delivers an assumption
agreement reasonably satisfactory to Nematron to that effect.
8. "MARKET STAND-OFF" AGREEMENT. Each Holder agrees, if requested
by Nematron and an underwriter of Common Stock (or other securities) of
Nematron, not to sell or otherwise transfer or dispose of any Common Stock (or
other securities) of Nematron held by such Holder during the one hundred fifty
(150) day period following the effective date of a Registration statement of
Nematron filed under the Securities Act, provided that all officers and
directors of Nematron enter into similar agreements. Nematron may impose
stop-transfer instructions with respect to the securities subject to the
foregoing restriction until the end of such one hundred fifty (150) day period.
9. SUSPENSION OF REGISTRATION RIGHTS. The registration rights
granted pursuant to Sections 2 hereof shall not be exercisable by any Holder
during the period in which such Holder has the ability to sell all of the
Registrable Securities held by the Holder under Rule 144 or Rule 144A during a
single ninety (90) day period.
10. DELAY OF REGISTRATION. The Holders shall not have any right to
take any actions to restrain, enjoin or otherwise delay any registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Agreement.
11. GENERAL.
11.1 GOVERNING LAW. This agreement shall be governed in all
respects by the laws of the State of Michigan without giving effect to any
conflicts of laws principles.
11.2. REMEDIES. Any person having rights under any provisions
of this Agreement will be entitled to enforce such rights specifically, to
recover damages caused by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law.
11.3. ENTIRE AGREEMENT, AMENDMENTS AND WAIVERS. This Agreement
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof and supersedes all previous agreements with respect to
such subject matter. Except as otherwise provided herein, the provisions of this
Agreement may be amended in a writing signed by Nematron and the Holders.
11.4. SUCCESSORS AND ASSIGNS. All covenants and agreements
in this Agreement by or on behalf of any of the parties hereto will bind and
inure to the benefit of the respective successors and assigns of the parties
hereto.
<PAGE> 59
11.5. NOTICES AND OTHER COMMUNICATIONS. All notices and other
communications required or permitted hereunder shall be in writing and shall be
mailed by first-class mail, postage pre paid, or delivered by hand, addressed
(i) if to the Holders, at their respective addresses set forth in the preamble
of this Agreement or at such other address as a Holder shall have furnished to
Nematron in writing, and (ii) if to Nematron, at its address set forth at the
beginning of this Agreement, or at such other address as Nematron shall have
furnished to the Holders in writing.
11.6. TITLE AND SUBTITLES. The titles of the sections and.
paragraphs of this Agreement are for convenience of reference only and are not
to, be considered in construing this Agreement.
11.7. 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.
<PAGE> 60
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused this Agreement to be executed by their respective officers, thereunto
duly authorized, as of the day and year first above written.
------------------------------------
William K. Pollock
Address for Notices:
------------------------------------
------------------------------------
------------------------------------
------------------------------------
Timothy A. Lasch
Address for Notices:
------------------------------------
------------------------------------
------------------------------------
OPTIMATION TECHNOLOGY, INC.
EMPLOYEE STOCK OWNERSHIP TRUST
By:
---------------------------------
William K. Pollock, Trustee
By:
---------------------------------
Timothy A. Lasch, Trustee
Address for Notices:
------------------------------------
------------------------------------
------------------------------------
NEMATRON CORPORATION
By:
---------------------------------
David P. Gienapp
Its: Vice President, Finance and
Administration
<PAGE> 61
EXHIBIT C
<PAGE> 62
AGREEMENT NOT TO COMPETE
AGREEMENT NOT TO COMPETE (the "Agreement"), dated as of ,
2000 between Timothy A. Lasch ("Lasch") having an address at
and Optimation Technology, Inc. (the "Company") having an address at
and Nematron Corporation ("Nematron") having an address at 5840
Interface Drive, Ann Arbor, Michigan 48103.
WHEREAS, Lasch, a shareholder, officer and key employee of the Company
entered into an agreement dated as of November , 2000 (the "Merger
Agreement") pursuant to which Nematron will, through a merger of its subsidiary
with and into the Company, acquire all of the issued and outstanding stock of
the Company;
WHEREAS, Lasch has acquired significant expertise in the business and
operations of the Company and in the business of providing process and
mechanical design, instrumentation and electrical design, system integration,
software programming and computer aided drafting to its customers in various
industry segments (the "Business");
WHEREAS, the Company and Nematron desire that Lasch not engage in
competition or use his expertise to compete or assist others in competition with
the Company;
NOW THEREFORE, in consideration of the execution of the Merger
Agreement, the mutual agreements contained herein and therein and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
Lasch agrees for the benefit of the Company and Nematron that, during
the period commencing on the effective time of the Merger under the Merger
Agreement (the "Closing Date") and ending on the third (3rd) anniversary of the
Closing Date, he will not:
(a) engage or participate in any business activity competitive
with the Business of the Company;
(b) become interested in (as owner, stockholder, lender, partner,
co-venturer, director, officer, employee, agent, consultant or otherwise) any
person, firm, corporation, association or other entity engaged in any business
that is competitive with the Business of the Company. Notwithstanding the
foregoing, Lasch may hold not more than one percent (1%) of the outstanding
securities of any class of any publicly-traded securities of a company that is
engaged in activities competitive with the Business of the Company;
(c) solicit or call on, either directly or indirectly, in
connection with any business which is competitive with the Business of the
Company, any (i) customer with whom the Company shall have dealt at any time or
(ii) any distributor, supplier or other contracting party with whom the Company
shall have dealt;
(d) influence or attempt to influence any supplier, distributor,
customer or potential customer of the Company to terminate or modify any written
or oral agreement or course of dealing with the Company; or
(e) except in his capacity as an employee of the Company,
influence or attempt to influence any person to either (i) terminate or modify
his employment, consulting, agency,
<PAGE> 63
distributorship or other arrangement with the Company or (ii) employ or retain,
or arrange to have any other person or entity employ or retain, any person who
has been employed or retained by the Company as an employee, consultant, agent
or distributor of the Company at any time during the two year period immediately
preceding the termination of Employee's employment hereunder.
The foregoing shall not apply to Lasch's activities as an employee of
the Company after the Closing Date or his ownership of shares of common stock of
Nematron.
Lasch agrees that a monetary remedy for a breach of the agreements set
forth in this Agreement will be inadequate and impracticable and further agrees
that such a breach would cause the Company irreparable harm, and that the
Company will be entitled to temporary and permanent injunctive relief without
the necessity of proving actual damages. In the event of such a breach, Lasch
agrees that the Company will be entitled to such injunctive relief, including
temporary restraining orders, preliminary injunctions and permanent injunctions,
as a court of competent jurisdiction may determine.
If any provision of this Agreement is held invalid in part, it will be
curtailed, both as to time and location, to the minimum extent required for its
validity and will be binding and enforceable with respect to Lasch as so
curtailed.
This Agreement shall be construed an interpreted, and the rights of the
parties shall be determined in accordance with the laws of the State of Michigan
without giving effect to the principles of conflict of laws of such state.
Terms used herein but not defined shall be defined by reference to the
Merger Agreement.
<PAGE> 64
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date and year first above written.
-----------------------------
Timothy A. Lasch
OPTIMATION TECHNOLOGY, INC.
By:
-------------------------
Its: Vice President -- Finance and
Administration
NEMATRON CORPORATION
By:
-------------------------
Its: Vice President -- Finance and
Administration
<PAGE> 65
AGREEMENT NOT TO COMPETE
AGREEMENT NOT TO COMPETE (the "Agreement"), dated as of ,
2000 between William K. Pollock ("Pollock") having an address at
and Optimation Technology, Inc. (the "Company") having an address at
and Nematron Corporation ("Nematron") having an address at
5840 Interface Drive, Ann Arbor, Michigan 48103.
WHEREAS, Pollock, a shareholder, officer and key employee of the
Company entered into an agreement dated as of November , 2000 (the "Merger
Agreement") pursuant to which Nematron will, through a merger of its subsidiary
with and into the Company, acquire all of the issued and outstanding stock of
the Company;
WHEREAS, Pollock has acquired significant expertise in the business and
operations of the Company and in the business of providing process and
mechanical design, instrumentation and electrical design, system integration,
software programming and computer aided drafting to its customers in various
industry segments (the "Business");
WHEREAS, the Company and Nematron desire that Pollock not engage in
competition or use his expertise to compete or assist others in competition with
the Company;
NOW THEREFORE, in consideration of the execution of the Merger
Agreement, the mutual agreements contained herein and therein and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
Pollock agrees for the benefit of the Company and Nematron that, during
the period commencing on the effective time of the Merger under the Merger
Agreement (the "Closing Date") and ending on the third (3rd) anniversary of the
Closing Date, he will not:
(a) engage or participate in any business activity competitive
with the Business of the Company;
(b) become interested in (as owner, stockholder, lender, partner,
co-venturer, director, officer, employee, agent, consultant or otherwise) any
person, firm, corporation, association or other entity engaged in any business
that is competitive with the Business of the Company. Notwithstanding the
foregoing, Pollock may hold not more than one percent (1%) of the outstanding
securities of any class of any publicly-traded securities of a company that is
engaged in activities competitive with the Business of the Company;
(c) solicit or call on, either directly or indirectly, in
connection with any business which is competitive with the Business of the
Company, any (i) customer with whom the Company shall have dealt at any time or
(ii) any distributor, supplier or other contracting party with whom the Company
shall have dealt;
(d) influence or attempt to influence any supplier, distributor,
customer or potential customer of the Company to terminate or modify any written
or oral agreement or course of dealing with the Company; or
<PAGE> 66
(e) except in his capacity as an employee of the Company,
influence or attempt to influence any person to either (i) terminate or modify
his employment, consulting, agency, distributorship or other arrangement with
the Company or (ii) employ or retain, or arrange to have any other person or
entity employ or retain, any person who has been employed or retained by the
Company as an employee, consultant, agent or distributor of the Company at any
time during the two year period immediately preceding the termination of
Employee's employment hereunder.
The foregoing shall not apply to Pollock's activities as an employee of
the Company after the Closing Date or his ownership of shares of common stock of
Nematron.
Pollock agrees that a monetary remedy for a breach of the agreements
set forth in this Agreement will be inadequate and impracticable and further
agrees that such a breach would cause the Company irreparable harm, and that the
Company will be entitled to temporary and permanent injunctive relief without
the necessity of proving actual damages. In the event of such a breach, Pollock
agrees that the Company will be entitled to such injunctive relief, including
temporary restraining orders, preliminary injunctions and permanent injunctions,
as a court of competent jurisdiction may determine.
If any provision of this Agreement is held invalid in part, it will be
curtailed, both as to time and location, to the minimum extent required for its
validity and will be binding and enforceable with respect to Pollock as so
curtailed.
This Agreement shall be construed an interpreted, and the rights of the
parties shall be determined in accordance with the laws of the State of Michigan
without giving effect to the principles of conflict of laws of such state.
Terms used herein but not defined shall be defined by reference to the
Merger Agreement.
<PAGE> 67
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date and year first above written.
-------------------------------------
William K. Pollock
OPTIMATION TECHNOLOGY, INC.
By:
----------------------------
Its: Vice President -- Finance and
Administration
NEMATRON CORPORATION
By:
----------------------------
Its: Vice President -- Finance and
Administration
<PAGE> 68
EXHIBIT D
<PAGE> 69
TAX REPRESENTATION CERTIFICATE
OPTIMATION TECHNOLOGY, INC.
, 2000
---------------
Nematron Corporation Dickinson Wright PLLC
5840 Interface Drive 500 Woodward Avenue, Suite 4000
Ann Arbor, MI 48103 Detroit, Michigan 48226-3425
RE: MERGER PURSUANT TO THE AGREEMENT AND PLAN OF MERGER DATED AS OF NOVEMBER ,
2000, AMONG NEMATRON CORPORATION, A MICHIGAN CORPORATION ("PARENT"),
NEMATRON ACQUISITION CORP., A NEW YORK CORPORATION AND A WHOLLY OWNED
SUBSIDIARY OF PARENT ("MERGER SUB"), OPTIMATION TECHNOLOGY, INC. A NEW YORK
CORPORATION (THE "COMPANY") AND THE SHAREHOLDERS OF THE COMPANY, (THE
"MERGER AGREEMENT").
Ladies and Gentlemen:
This letter is supplied to you in connection with the above referenced
merger transaction ("Merger"). Unless otherwise indicated, capitalized terms not
defined herein have the meanings set forth in the Merger Agreement.
After consulting with its counsel and auditors regarding the meaning of
and factual support for the following representations, the undersigned hereby
certifies and represents that the following statements are accurate now and will
be accurate as of the Effective Time:
1. Pursuant to the terms of the Merger Agreement and the Certificate of
Merger to be filed by Merger Sub and the Company with the New York Department of
State at the Effective Time, Merger Sub will merge into the Company, and the
Company will acquire (by operation of law) all of the assets and liabilities of
Merger Sub. Specifically. at least ninety percent (90%) of the fair market value
of the net assets and at least seventy percent (70%) of the fair market value of
the gross assets held by the Company immediately prior to the Merger will
continue to be held by the Company immediately after the Merger. For the purpose
of determining the percentage of the Company's net and gross assets held by the
Company immediately after the Merger, the following assets will be treated as
property held by the Company immediately prior but not subsequent to the Merger:
(a) assets disposed of by the Company prior to or subsequent to the Merger and
in contemplation thereof (including, without limitation, any asset disposed of
by the Company, other than in the ordinary course of business, pursuant to a
plan or intent existing during the period beginning with the commencement of
negotiations (whether formal or informal) with Parent regarding the Merger and
ending at the Effective Time (the "Pre-Merger Period"); (b) assets used by the
Company to pay the shareholders of the Company in connection with the exercise
of dissenters' rights or to pay other expenses or liabilities incurred in
connection with the Merger; and (c) assets used to make distribution, redemption
or other payments in respect of shares of Company capital stock or rights to
acquire such stock (including payments treated as such for tax purposes) that
are made in contemplation of the Merger or that are related thereto.
<PAGE> 70
2. Other than in the ordinary course of business or pursuant to its
obligations under the Merger Agreement, the Company has made not transfer of any
of its assets (including any distribution of assets with respect to, or in
redemption of, stock) (a) in contemplation of the Merger or (b) during the
Pre-Merger Period.
3. The Company's principal reasons for participating in the Merger are
bona fide business purposes not related to taxes, and are more specifically as
part of a strategic business plan to build a global service organization focused
on plant floor-to-enterprise needs in a variety of targeted industries.
4. At the Effective Time, the Company will have no outstanding equity
interests other than the Company's common stock, no par value. At the Effective
Time, the Company will have no outstanding warrants, options, or convertible
securities or any other type of right outstanding pursuant to which any person
could acquire shares of the Company capital stock or any other equity interest
in the Company other than those disclosed in Section 2.03 of the Merger
Agreement or the Company Disclosure Schedule with respect thereto.
5. Upon consummation of the Merger, shares of Company capital stock
representing "Control" of the Company will be exchanged solely for shares of
Parent Common Stock. At the Effective Time, there will exist no rights to
acquire Company capital stock or to vote (or restrict or otherwise control the
vote of) shares of Company capital stock which, if exercised, would affect
Parent's acquisition and retention of Control of the Company. (For purposes of
the preceding sentence, shares of Company capital stock exchanged in the Merger
for cash and other property (including, without limitation, cash paid to
shareholders of the Company in connection with the exercise of dissenters'
rights or in lieu of fractional shares of Parent Common Stock) will be treated
as shares of Company capital stock outstanding at the Effective Time but not
exchanged for shares of Parent Common Stock.) As used in this letter, "Control"
of a corporation shall consist of direct ownership of shares of stock possessing
at least eighty percent (80%) of the total combined voting power of shares of
all classes of stock of such corporation entitled to vote and at least eighty
percent (80%) of the total number of shares of all other classes of stock of
such corporation. For purposes of determining Control, a person shall not be
considered to own shares of voting stock if rights to vote such shares (or
rights to restrict or otherwise control the voting of such shares) are held by a
third party (including a voting trust) other than an agent of such person.
6. The total fair market value of all consideration other than shares
of Parent Common Stock to be received by shareholders of the Company in the
Merger (including, without limitation, cash paid to shareholders of the Company
in connection with the exercise of dissenters' rights or in lieu of fractional
shares of Parent Common Stock) will be less than ten percent (10%) of the
aggregate fair market value of all Company capital stock outstanding immediately
prior to the Merger.
7. The Company has no plan or intention to issue additional shares of
capital stock after the Merger, or take any other action that would result in
Parent not being in Control of the Company.
8. Except for transfers described in both Section 368(a)(2)(C) of the
Code and Treasury Regulation ss. 1.368-2(j)(4), the Company has no plan or
intention to sell or otherwise dispose of any of its assets or of any of the
assets acquired from Merger Sub in the Merger except for dispositions made in
the ordinary course of business.
9. The Company intends to continue its historic business or use a
significant portion of its historic business assets in a business following the
Merger.
<PAGE> 71
10. The liabilities of the Company have been incurred by the Company in
the ordinary course of its business.
11. The fair market value of the Company's assets will, at the
Effective Time, exceed the aggregate liabilities of the Company plus the amount
of liabilities, if any, to which such assets are subject.
12. The Company is not, and will not be at the Effective Time, an
"investment company" within the meaning of Section 368(a)(2)(F)(iii) and (iv) of
the Code.
13. The Company is not, and will not be at the Effective Time, under
the jurisdiction of a court in a Title II or similar case within the meaning of
Section 368(a)(3)(A) of the Code.
14. After due inquiry with its officers, directors and principal
shareholders, the Company has no knowledge of, and believes that there does not
exist, any plan or intention on the part of the shareholders (or any
shareholder) of the Company to engage in a sale, exchange, transfer,
distribution, pledge, disposition or any other transaction which would result in
a reduction in ft risk of ownership or a direct or indirect disposition (a
"Sale") of shares of Parent Common Stock to be received in the Merger that would
reduce the Company shareholders' ownership of such Parent Common Stock to a
number of shares having an aggregate fair market value, as of the Effective
Time, of less than fifty percent (50%) of the aggregate fair market value, of
the Company capital stock outstanding immediately prior to the consummation of
the Merger. (For purposes of the preceding sentence, shares of Company capital
stock (a) with respect to which a shareholder of the Company receives
consideration in the Merger other than shares of Parent Common Stock (including,
without limitation, cash received in connection with the exercise of dissenters'
rights or in lieu of fractional shares of Parent Common Stock) and/or (b) with
respect to which a Sale occurs prior to and in contemplation of the Merger,
shall be considered outstanding shares of Company capital stock exchanged for
shares of Parent Common Stock in the Merger and then disposed of pursuant to a
plan.)
15. There will be no payments of cash to shareholders of the Company in
connection with the exercise of dissenters' rights, and one hundred percent
(100%) of the Company capital stock outstanding immediately prior to the Merger
will be exchanged solely for shares of Parent Common Stock. Thus, the Company
intends that no consideration be paid or received (directly or indirectly,
actually or constructively) for shares of Company capital stock other than
shares of Parent Common Stock.
16. The fair market value of the shares of Parent Common Stock received
by each shareholder of the Company will be approximately equal to the fair
market value of the shares of Company capital stock surrendered in exchange
therefor and the aggregate consideration received by shareholders of the Company
in exchange for their shares of Company capital stock will be approximately
equal to the fair market value of all of the outstanding shares of Company
capital stock immediately prior to the Merger.
17. Each of Merger Sub, Parent, the Company and each shareholder of the
Company will pay separately his or its own expenses relating to the Merger.
18. There is no intercorporate indebtedness existing between Parent and
the Company or between Merger Sub and the Company that was issued, acquired or
will be settled at a discount as a
<PAGE> 72
result of the Merger; Parent will assume no liabilities of the Company or any
shareholder of the Company in connection with the Merger.
19. The terms of the Merger Agreement and of the other agreements
relating thereto are the product of arm's length negotiations.
20. None of the compensation received or to be received by any
shareholder-employee of the Company will be separate consideration for, or
allocable to, any of such shareholder-employee's shares of Company capital
stock; none of the shares of Parent Common Stock to be received by any
shareholder-employee of the Company in the Merger will be separate consideration
for, or allocable to, any employment agreement or any covenant not to compete;
and the compensation paid or to be paid to any shareholder-employee of the
Company will be for services actually rendered and will be commensurate with
amounts paid to third parties bargaining at arm's length for similar services.
21. With respect to each instance, if any, in which shares of Company
capital stock have been purchased by a stockholder of Parent (a "Stockholder")
during the Pre-Merger Period (a "Stock Purchase"): (a) to the best knowledge of
the Company, (i) the Stock Purchase was made by such Stockholder on its own
behalf, rather than as a representative, or for the benefit, of Parent, (ii) the
Stock Purchase was entered into solely to satisfy the separate interests of such
Stockholder and the seller, and (iii) the purchase price paid by such
Stockholder pursuant to the Stock Purchase was the product of arm's length
negotiations; and (b) the Stock Purchase was not a formal or informal condition
to the consummation of the Merger.
<PAGE> 73
22. The Company is authorized to make all of the representations set
forth herein.
Notwithstanding anything herein to the contrary, the undersigned makes
no representations regarding any actions or conduct of the Company pursuant to
Parent's exercise of control over the Company after the Merger.
Very truly yours,
OPTIMATION TECHNOLOGY, INC.
By:
----------------------------------------
Title:
-------------------------------------
<PAGE> 74
SCHEDULES (OMITTED)
Company Disclosure Schedule
Schedule 3.03 No Conflict, Required Filings and Consents
Omitted Schedules will be furnished upon request.
