SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): FEBRUARY 15, 2000
KEY TECHNOLOGY, INC.
(Exact name of registrant as specified in charter)
OREGON 0-21820 93-0822509
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
150 AVERY STREET
WALLA WALLA, WASHINGTON 99362
(Address of principal executive offices) (Zip Code)
(509) 529-2161
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
Effective February 15, 2000, Key Technology, Inc. ("Key Technology" or
the "Company") entered into an Agreement and Plan of Merger (the "Merger
Agreement") by and among the Company, KTC Acquisition Corp., an Oregon
corporation and wholly-owned subsidiary of the Company ("KTC"), and Advanced
Machine Vision Corporation, a California corporation ("AMVC"), providing for the
merger of KTC with and into AMVC, with AMVC as the surviving corporation (the
"Merger"). Following the Merger, AMVC will become a wholly-owned subsidiary of
the Company.
Under the terms of the Merger Agreement, a holder of one share of AMVC
common stock would receive:
o $1.00 per share in cash, plus
o one share of Key convertible preferred stock for each 10 shares of AMVC
common stock, redeemable for $1.00 in cash for each AMVC common share any
time after two years, or convertible at any time into 2/3 of a share of Key
common stock for each 10 shares of AMVC common stock, plus
o a five-year warrant to purchase Key common stock, redeemable at any time
for $.25 in cash for each AMVC common share, or which can be exercised to
purchase .025 shares of Key common stock per AMVC common share at an
exercise price of $15.00 per share of Key common stock.
For example, a holder of 100 shares of AMVC common stock would receive $100.00
in cash, 10 shares of Key Technology Series B Convertible Preferred Stock, with
each preferred share redeemable for cash at $10.00 per share at any time after
two years or convertible at any time into 2/3 of a share of Key common Stock,
and a warrant to purchase 2.5 shares of Key Technology common stock at $15.00
per share or redeemable at any time for $25.00 in cash.
Each share of AMVC Series B Preferred Stock will convert into the right to
receive $22.00 per share in cash.
The Merger is subject to approval of the issuance of Key Technology
shares by holders representing a majority of the Key Technology common shares
present in person or represented by proxy at a special meeting of Key Technology
shareholders, and approval of the Merger Agreement by the holders of a majority
of the outstanding AMVC common stock and a majority of the outstanding AMVC
preferred stock at a special meeting of AMVC shareholders. Accordingly, the
Merger is subject to the approval of FMC Corporation, holder of all of the
outstanding preferred stock of AMVC. The Company and AMVC intend to hold their
respective special shareholders meetings in May 2000. The Merger also is subject
to customary closing conditions, including, without limitation, the making of
all necessary governmental filings and the effectiveness of a registration
statement to be filed with the Securities and Exchange Commission with respect
to the Key Technology shares and warrants to be issued in the Merger.
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Under certain circumstances, either the Company or AMVC may be required to pay a
termination fee of up to $2,000,000 if the Merger Agreement is terminated.
The Merger Agreement and the Company's press release issued to announce
the Merger are filed as exhibits to this report. The description of the Merger
Agreement herein does not purport to be complete and is qualified in its
entirety by the provisions of the agreement.
The Company's common shares are quoted on the NASDAQ National Market
under the trading symbol "KTEC." AMVC's common shares are quoted on NASDAQ under
the trading symbol "AMVC."
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits.
EXHIBIT NO. DESCRIPTION
------------ -----------------------------------------------------------
2.1 Agreement and Plan of Merger by and among Key Technology,
Inc., KTC Acquisition Corp. and Advanced Machine Vision
Corporation, effective February 15, 2000.
2.2 Letter Amendment dated February 10, 2000.
99.1 Key Technology, Inc. Press Release issued February 15, 2000.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this current report on Form 8-K to be
signed on its behalf by the undersigned, hereunto duly authorized.
KEY TECHNOLOGY, INC.
By: /s/ Thomas C. Madsen
-------------------------------------
Thomas C. Madsen, President and Chief
Executive Officer
Dated: March 3, 2000
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
------------ -----------------------------------------------------------
2.1 Agreement and Plan of Merger by and among Key Technology,
Inc., KTC Acquisition Corp. and Advanced Machine Vision
Corporation, effective February 15, 2000.
2.2 Letter Amendment dated February 10, 2000.
99.1 Key Technology, Inc. Press Release issued February 15, 2000.
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger is made as of February 10, 2000
(this "Agreement"), by and among KEY TECHNOLOGY, INC., an Oregon corporation
("Parent"), KTC ACQUISITION CORP., an Oregon corporation ("Sub"), and ADVANCED
MACHINE VISION CORPORATION, a California corporation ("AMVC" or "Company").
RECITALS
A. The authorized capital stock of Parent consists of 5 million
shares of Series Preferred Stock, $.01 par value, of which 15,000 shares have
been designated as Series A Junior Participating Preferred Stock, none of which
are issued and outstanding, and 15 million shares of Common Stock ("Parent
Common Stock"), $.01 par value, of which 4,716,460 shares were issued and
outstanding on the close of business on December 31, 1999.
B. The authorized capital stock of Sub consists of 100 shares of
Common Stock, $.001 par value ("Sub Common Stock"), all of which are issued and
outstanding.
C. The authorized capital stock of the Company consists of 60
million shares of Common Stock, without par value ("Company Common Stock" or the
"Shares"), of which 12,921,884 shares of Class A Common Stock and 47,669 shares
of Class B Common Stock were issued and outstanding at the close of business on
December 31, 1999 and 3,217,529 additional shares were subject to issuance
pursuant to outstanding stock options or warrants ("Company Options")
outstanding, and 3 million shares of Preferred Stock, of which 400,000 shares
have been designated as Series A Junior Participating Preferred Stock, none of
which are issued and outstanding, and 119,106 shares of Series B Preferred Stock
which were issued and outstanding on December 31, 1999.
D. All of the issued and outstanding shares of Sub Common Stock are
owned by Parent.
E. The respective Boards of Directors of Parent, Sub and the Company
deem it advisable and in the best interests of their respective stockholders
that Sub shall merge into the Company pursuant to the articles and certificate
of merger attached hereto as Exhibit A (the "Articles of Merger") and the
applicable provisions of the laws of the States of Oregon and California and
have, by resolutions duly adopted, approved the principal terms of such merger
which are herein set forth, and Sub and the Company have directed that the
principal terms of such merger be submitted to their respective stockholders for
approval.
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F. The parties desire to state the terms and conditions of such
merger, the mode of carrying the same into effect, the consideration which the
holders of Company Common Stock, Company Options, Company Series B Stock and Sub
Common Stock are to receive in exchange for such shares upon the merger and such
other details and provisions as are deemed necessary or desirable.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS.
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"ACCOUNTS RECEIVABLE" -- as defined in Section 3.8.
"AFFILIATE" -- as defined by the Commission.
"AGREEMENT" -- as defined in the first paragraph of this Agreement.
"APPLICABLE CONTRACT" -- any Contract (a) under which the Company has
or may acquire any rights, (b) under which the Company has or may become subject
to any obligation or liability, or (c) by which the Company or any of the assets
owned or used by it are or may become bound.
"ARTICLES OF MERGER" -- as defined in the Recitals of this Agreement.
"BALANCE SHEET" -- as defined in Section 3.4.
"BEST EFFORTS" -- the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such result
is achieved as expeditiously as possible; provided, however, that an obligation
to use Best Efforts under this Agreement does not require the Person subject to
that obligation to take actions that would result in a materially adverse change
in the benefits to such Person of this Agreement and the Contemplated
Transactions.
"BREACH" -- a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been (a) any inaccuracy in or breach of, or any failure to perform or comply
with, such representation, warranty, covenant, obligation, or other provision,
or (b) any claim (by any Person) or other occurrence or circumstance that is or
was inconsistent with such representation, warranty, covenant, obligation, or
other provision, and the term "Breach" means any such inaccuracy, breach,
failure, claim, occurrence, or circumstance.
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"CCL" -- as defined in Section 2.1.
"CLOSING" -- as defined in Section 2.3.
"CLOSING DATE" -- as defined in Section 2.3.
"COMMISSION" -- the United States Securities and Exchange Commission.
"COMPANY" -- as defined in the first paragraph of this Agreement.
Unless otherwise indicated herein, the term "Company" includes in all instances
the Company and all of its subsidiaries, including without limitation SRC
Vision, Inc. and Ventek, Inc.
"COMPANY COMMON STOCK" -- as defined in the Recitals of this
Agreement.
"COMPANY OPTIONS" -- as defined in the Recitals of this Agreement.
"COMPANY SERIES B STOCK" -- the Company's Series B Preferred Stock.
"COMPANY STOCK RIGHTS PLAN" - The stock rights plan set forth in the
Rights Agreement entered into with American Stock Transfer and Trust Company
dated February 27, 1998.
"CONSENT" -- any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS" -- all of the transactions contemplated by
this Agreement, including:
(a) the Merger;
(b) the performance by Parent, Sub, Company and the Surviving
Stockholders of their respective covenants and obligations under this Agreement;
and
(c) Parent's acquisition and exercise of control over the
Company.
"CONTRACT" -- any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"CONVERSION RATIO" -- as defined in Section 2.5(a)(i).
"COPYRIGHTS" -- as defined in Section 3.21(a)(iii).
"DISCLOSURE LETTER" -- the disclosure letter referenced in Section 3
and to be delivered by the Company to Parent concurrently with the execution of
this Agreement.
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"DISSENTING SHARE" -- means any share of Company Common Stock which
any Stockholder who has exercised his or her dissenter's rights under the CCL
holds of record.
"EFFECTIVE TIME" -- as defined in Section 2.2.
"EMPLOYEE BENEFIT PLAN" -- as defined in Section 3.12(b)(i).
"ENCUMBRANCE" -- any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, restriction on use, voting, transfer, receipt of income, or
exercise of any other attribute of ownership.
"ENVIRONMENT" -- soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES" -- any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law, Occupational Safety and Health Law or any other Legal
Requirement and consisting of or relating to:
(a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental Lawor
Occupational Safety and Health Law for cleanup costs or corrective action,
including any investigation, cleanup, removal, containment, or other remediation
or response actions ("Cleanup") required by applicable Environmental Law or
Occupational Safety and Health Law (whether or not such Cleanup has been
required or requested by any Governmental Body or any other Person) and for any
natural resource damages; or
(d) any other compliance, corrective, investigative, or remedial
measures required under Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remedial," and "response action," include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. ss. 9601 et seq., as amended
("CERCLA").
"ENVIRONMENTAL LAW" -- as defined in Section 3.18.
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"ERISA" -- the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"ERISA AFFILIATE" -- as defined in Section 3.12.
"FACILITIES" -- any real property, leaseholds, or other interests
currently or formerly owned or operated by the Company and any buildings,
plants, or structures currently or formerly owned or operated by the Company.
"FINANCIAL STATEMENTS" -- as defined in Section 3.4.
"GAAP" -- generally accepted United States accounting principles,
applied on a basis consistent with the basis on which the Balance Sheet and the
other financial statements referred to in Section 3.4 were prepared.
"GOVERNMENTAL AUTHORIZATION" -- any approval, consent, license,
permit, waiver, or other authorization issued, granted, or given by or under the
authority of any Governmental Body or pursuant to any Legal Requirement.
"GOVERNMENTAL BODY" -- any:
(a) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal); or
(d) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
"HAZARDOUS ACTIVITY" -- the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from the Facilities or any part thereof into the Environment, and any
other act, business, operation, or thing that increases the danger, or risk of
danger, or poses an unreasonable risk of harm to persons or property on or off
the Facilities, or that may affect the value of the Facilities or the Company.
"HAZARDOUS MATERIALS" -- as defined in Section 3.18.
"INTELLECTUAL PROPERTY ASSETS" -- as defined in Section 3.21(a).
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"IRC" -- the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS" -- the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"KNOWLEDGE" -- an individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
(a) such individual is actually aware of such fact or other
matter; or
(b) a prudent individual could be expected to discover or
otherwise become aware of such fact or other matter in the course of conducting
a reasonable investigation concerning the existence of such fact or other
matter.
The Company will be deemed to have "Knowledge" of a particular fact or other
matter if any individual who is serving as a director or officer of the Company
has Knowledge of such fact or other matter.
"LEGAL REQUIREMENT" -- any federal, state, local, or municipal
administrative order, constitution, law, ordinance, principle of common law,
regulation, statute, or treaty.
"MARKS" -- as defined in Section 3.21(a)(i).
"MATERIAL ADVERSE CHANGE" -- a material adverse change in the
business, operations, properties, assets or condition of the Company.
"MATERIAL ADVERSE EFFECT" -- something that has caused or would be
likely to cause a Material Adverse Change.
"MERGER" -- as defined in Section 2.1.
"MULTIEMPLOYER PLAN" -- as defined in Section 3.12(b)(i).
"NASDAQ" -- the National Association of Securities Dealers Automated
Quotation System.
"OCCUPATIONAL SAFETY AND HEALTH LAW" -- any Legal Requirement designed
to provide safe and healthful working conditions and to reduce occupational
safety and health hazards, and any program, whether governmental or private
(including those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
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"ORDER" -- any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS" -- an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is substantially consistent with the past
practices of such Person and is taken in the ordinary course of the normal
day-to-day operations of such Person;
(b) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority) and is not required to be specifically authorized by the
parent company (if any) of such Person; and
(c) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors (or by
any Person or group of Persons exercising similar authority), in the ordinary
course of the normal day-to-day operations of other Persons that are in the same
line of business as such Person.
"ORGANIZATIONAL DOCUMENTS" -- (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.
"PARENT'S ADVISORS" -- as defined in Section 5.1.
"PARENT DISCLOSURE LETTER" -- as defined in Section 4.
"PERSON" -- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"PLAN" -- as defined in Section 3.12.
"PROCEEDING" -- any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.
"RELATED PERSON" -- with respect to a particular individual:
(a) each other member of such individual's Family;
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(b) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material Interest;
and
(d) any Person with respect to which such individual or one or
more members of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly
or indirectly controlled by, or is directly or indirectly under common control
with such specified Person;
(b) any Person that holds a Material Interest in such specified
Person;
(c) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material
Interest;
(e) any Person with respect to which such specified Person
serves as a general partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause (b)
or (c).
For purposes of this definition, (a) the "Family" of an individual includes (i)
the individual, (ii) the individual's spouse and former spouses, (iii) any other
natural person who is related to the individual or the individual's spouse
within the second degree, and (iv) any other natural person who resides with
such individual, and (b) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of voting securities or other voting interests representing at least 5% of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least 5% of the outstanding equity securities or
equity interests in a Person.
"RELEASE" -- any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
"REPRESENTATIVE" -- with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
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"RIGHTS IN MASK WORKS" -- as defined in Section 3.21.
"SECURITIES ACT" -- the Securities Act of 1933 or any successor law,
and regulations and rules issued pursuant to that Act or any successor law.
"SERIES B PREFERRED" -- as defined in Section 2.5.
"SHARES" -- as defined in the Recitals of this Agreement.
"STOCKHOLDER" -- any Person who owns at the relevant time one or more
of the Shares.
"SUBSIDIARY" -- with respect to any Person (the "Owner"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its Subsidiaries;
when used without reference to a particular Person, "Subsidiary" means a
Subsidiary of the Company.
"TAX" -- any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other fee,
and any related charge or amount (including any fine, penalty, interest, or
addition to tax), imposed, assessed, or collected by or under the authority of
any Governmental Body or payable pursuant to any tax-sharing agreement or any
other Contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency, or fee.
"TAX RETURN" -- any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"THREAT OF RELEASE" -- a substantial likelihood of a Release that may
require action in order to prevent or mitigate damage to the Environment that
may result from such Release.
"THREATENED" -- a claim, Proceeding, dispute, action, or other matter
will be deemed to have been "Threatened" if any demand or statement has been
made (orally or in writing) or any notice has been given (orally or in writing),
or if any other event has occurred or any other circumstances exist, that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
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"TRADE SECRETS" -- as defined in Section 3.21(a)(v).
"TRANSFER AGENT" - the Parent's transfer agent as of the Effective
Time.
"WARRANT" - as defined in Section 2.5.
"WELFARE PLAN" -- as defined in Section 3.12(b)(i).
"WHOLLY OWNED SUBSIDIARY" - as defined in Section 3.3.
2. MERGER AND EFFECTIVE TIME; ARTICLES OF INCORPORATION; BYLAWS;
DIRECTORS AND OFFICERS; CONVERSION AND EXCHANGE OF SHARES.
2.1 THE MERGER. At the Effective Time (as defined in Section 2.2
hereof), Sub shall be merged (the "Merger") into the Company, which shall be
(and is hereinafter sometimes referred to as) the "Surviving Corporation." The
corporate existence of the Company with all its rights, privileges, powers and
franchises shall continue unaffected and unimpaired by the Merger, and as the
Surviving Corporation it shall be governed by the laws of the State of
California and succeed to all rights, privileges, powers, franchises, assets,
liabilities and obligations of Sub in accordance with the Oregon Business
Corporation Act (the "OBCA") and the California Corporation Law (the "CCL"). The
separate existence and corporate organization of Sub shall cease at the
Effective Time and thereupon the Company and Sub shall be a single corporation,
the Company.
2.2 EFFECTIVE TIME OF THE MERGER. The Merger shall become effective at
the time (the "Effective Time") of filing with the Oregon Secretary of State and
the California Secretary of State of Articles of Merger in such form as is
required by, and executed in accordance with, the applicable provisions of the
OBCA and the CCL or at such later time as may be agreed to by Parent and the
Company and specified in the Articles of Merger. The parties will cause the
Articles of Merger to be filed with the Oregon Secretary of State and the
California Secretary of State as soon as practicable after the Closing.
2.3 CLOSING. On the same day as, but immediately prior to the filing
of the Articles of Merger, a closing (the "Closing") will take place for the
purpose of confirming the satisfaction or waiver of the conditions set forth in
Sections 7, 8 and 9 hereof. The Closing will take place as soon as practicable
but not later than three business days after the satisfaction or waiver of the
conditions set forth in such Sections (the date and time of the Closing being
hereinafter referred to as the "Closing Date"), at the offices of Tonkon Torp
LLP, 1600 Pioneer Tower, 888 SW Fifth Avenue, Portland, OR 97904-2099, unless
another time or place is agreed to by the parties hereto.
2.4 ARTICLES OF INCORPORATION; BYLAWS; DIRECTORS AND OFFICERS.
(a) ARTICLES OF INCORPORATION. The Articles of Incorporation of
the Company, as in effect immediately prior to the Effective Time, shall be
amended at the Effective Time to change Article III thereof to read in full as
follows: "Authorized Stock. The total number of shares of stock which the
corporation shall have the authority to issue is 100
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shares of common stock, without par value." From and after the Effective Time,
such Articles of Incorporation, as so amended, shall continue as the Articles of
Incorporation of the Surviving Corporation, until amended as provided by law.
(b) BYLAWS. The Bylaws of the Company, as in effect at the
Effective Time, shall continue to be the Bylaws of the Surviving Corporation,
until altered, amended or repealed in accordance with law, the Articles of
Incorporation of the Surviving Corporation and such Bylaws.
(c) DIRECTORS AND OFFICERS. The directors of the Surviving
Corporation at and immediately following the Effective Time shall be Thomas C.
Madsen and Gordon Wicher, to serve in accordance with the Bylaws of the
Surviving Corporation. The officers of the Surviving Corporation at and
immediately following the Effective Time shall be Thomas C. Madsen, President
and Gordon Wicher, Secretary, to serve in accordance with the Bylaws of the
Surviving Corporation.
2.5 CONVERSION AND EXCHANGE OF SHARES. The manner and basis of
converting at the Effective Time Company Common Stock into cash and shares of
Parent's Series B Convertible Preferred Stock, $10.00 par value, having the
rights and preferences set forth in the attached EXHIBIT 2.5A (the "Series B
Preferred") with the attached redeemable Warrant to purchase shares of Parent's
Common Stock in the form attached as Exhibit 2.5B, the exchange of certificates
therefor, the manner and basis of converting the Company's Series B Stock into
cash, and the manner and basis of converting Company Options outstanding at the
Effective Time shall be as set forth herein.
(a) CONVERSION OF SHARES.
(i) (A) Each share of Company Common Stock (both Class A
and Class B) issued and outstanding immediately prior to the
Effective Time (except Dissenting Shares) shall, by virtue of the
Merger and without any action on the part of the holder thereof,
be converted into the right to receive $1.00 in cash and
one-tenth of a share of Series B Preferred, with each share of
Series B Preferred to be accompanied by a Warrant, redeemable at
any time by the holder for $2.50 in cash and exercisable at any
time to purchase .25 of a share of Parent's Common Stock at a
price of $15.00 per share (such Series B Preferred shares and
attached Warrants to be issued for each share of Company Common
Stock constituting the "Conversion Ratio").
(B) Each Dissenting Share shall be converted into the
right to receive payment from the Surviving Corporation with
respect thereto in accordance with the provisions of the CCL.
(ii) Each share of the Company Series B Preferred Stock
outstanding at the Effective Date will be converted into the
right to receive $22.00 per share in cash.
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(iii) Each share of Sub Common Stock issued and outstanding
as of the Effective Time, shall, by virtue of the Merger and
without any action on the part of Parent, the sole stockholder of
Sub, be converted into one share of legally and validly issued,
fully paid and nonassessable Common Stock, without par value, of
the Surviving Corporation. The stock certificate of Sub
evidencing ownership of Sub Common Stock shall by virtue of the
Merger evidence ownership of Common Stock of the Surviving
Corporation.
(iv) In the event of any stock split, combination,
reclassification, recapitalization, exchange, stock dividend or
other distribution payable in Parent Common Stock with respect to
shares of Parent Common Stock (or if a record date with respect
to any of the foregoing should occur) during the period between
the date of this Agreement and the Effective Time, then the
Conversion Ratio will be appropriately adjusted to reflect such
stock split, combination, reclassification, recapitalization,
exchange, stock dividend or other distribution.
2.6 EXCHANGE OF CERTIFICATES; PAYMENT. Series B Preferred and attached
Warrants into which Company Common Stock shall be converted pursuant to the
Merger shall be deemed to have been issued at the Effective Time. At the
Closing, Parent shall deliver to the Transfer Agent certificates evidencing the
number of shares of Series B Preferred and attached Warrants to which that
Stockholder is entitled under Section 2.5, together with the cash payment
applicable thereto. The Company will cause to be delivered such transmittal
letters, documents and instruments as Parent or Parent's transfer agent may
reasonably request, each in form reasonably acceptable to Parent or such
transfer agent. Parent shall also deliver to the Transfer Agent the payment to
be made pursuant to Section 2.5(a)(ii) above with respect to any shares of
Company Series B Stock outstanding on the Effective Date.
2.7 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All shares of
Series B Preferred and attached Warrants issued upon the surrender for exchange
of shares of Company Common Stock in accordance with the terms hereof and the
cash amount per share to be paid pursuant to Section 2.5 shall be deemed to have
been issued and paid in full satisfaction of all rights pertaining to such
shares of Company Common Stock, and, on and after the Effective Time, there
shall be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Section 2, except that
any validly issued shares of Company Common Stock presented for exchange after
the Effective Time in excess of the number of shares of Common Stock represented
to be outstanding under Section 3.3 as updated at the Closing will by virtue of
the Merger be converted into the right to receive $.001 in cash per share.
2.8 CASH IN LIEU OF FRACTIONAL SHARES. No fractional shares of Series
B Preferred shall be issued in the Merger but, in lieu of any such fractional
shares, each Stockholder who would otherwise have been entitled to a fractional
share of Series B Preferred
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will be paid an amount of cash (without interest) determined by multiplying such
fractional amount by $10.00.
2.9 COMPANY STOCK OPTIONS. All outstanding Company Options are listed
by holder and amount on SCHEDULE 2.9 hereto. All such options will have been
exercised prior to Closing or will by virtue of the Merger be deemed cancelled.
2.10 DISSENTERS' RIGHTS. Any issued and outstanding Company Shares
held by any Shareholder who, in accordance with California Law, dissents from
the Merger (a "Dissenting Shareholder") and requires appraisal of such
Dissenting Shareholder's shares ("Dissenting Shares") shall not be converted or
cancelled as described elsewhere in this Section 2 but instead shall become the
right to receive from the Surviving Corporation such consideration as may be
determined to be due to such dissenting Shareholder pursuant to California Law;
provided, however, that Dissenting Shares outstanding at the Effective Time and
held by a Dissenting Shareholder who shall after the Effective Time withdraw
such Dissenting Shareholder's demand for appraisal or lose such Dissenting
Shareholder's right of appraisal as provided by California Law shall be deemed
to be converted as of the Effective Time into the right to receive the
consideration that would otherwise have been payable in respect thereof if no
dissent had been made.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to Parent that, except as
otherwise provided in the Disclosure Letter by reference in each instance to the
specific subsection numbers of this Section 3:
3.1 ORGANIZATION AND GOOD STANDING.
(a) Part 3.1 of the Disclosure Letter contains a complete and
accurate description of the Company name, jurisdiction of incorporation and
other jurisdictions in which it is authorized to do business. The Company is a
corporation duly organized and validly existing under the laws of California,
with full corporate power and authority to conduct its business as it is now
being conducted, to own or use the properties and assets that it purports to own
or use, and to perform all its obligations under Applicable Contracts. The
Company is duly qualified to do business as a foreign corporation and is in good
standing under the laws of each state or other jurisdiction in which either the
ownership or use of the properties owned or used by it, or the nature of the
activities conducted by it, requires such qualification except where any failure
to so qualify would not have a Material Adverse Effect.
(b) The Company has delivered to Parent correct and complete
copies of its Organizational Documents, as currently in effect.
3.2 AUTHORITY; NO CONFLICT.
(a) The Company has the requisite corporate power and authority
to execute and deliver this Agreement and all other agreements and documents
contemplated hereby and to carry out its obligations hereunder. The execution,
delivery and performance of this Agreement and all other agreements and
documents contemplated hereby and the
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consummation of the Merger and of the other transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of the
Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement and all other agreements and documents
contemplated hereby or to consummate the transactions so contemplated (other
than, with respect to the Merger, the approval and adoption of this Agreement by
the Company's stockholders in accordance with the CCL and the Company's Articles
of Incorporation). The affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock and the approving vote of any Company
Series B Stock outstanding in compliance with the CCL is the only vote of the
holders of any class or series of the Company's capital stock necessary to
approve this Agreement and the transactions contemplated hereby. This Agreement
has been duly executed and delivered by the Company and constitutes, and all
agreements and documents contemplated hereby when executed and delivered
pursuant hereto for value received will constitute, the valid and binding
obligations of the Company.
(b) Except as set forth in Part 3.2 of the Disclosure Letter,
neither the execution and delivery of this Agreement by the Company nor the
consummation or performance of any of the Contemplated Transactions by the
Company will, directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of
(A) any provision of the Organizational Documents of the Company,
or (B) any resolution adopted by the board of directors or the
stockholders of the Company;
(ii) contravene, conflict with, or result in a violation
of, or give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions or to exercise any
remedy or obtain any relief under, any Legal Requirement or any
Order to which the Company or any Stockholder, or any of the
assets owned or used by the Company, may be subject that would be
likely to have a Material Adverse Effect;
(iii) contravene, conflict with, or result in a violation of
any of the terms or requirements of, or give any Governmental
Body the right to revoke, withdraw, suspend, cancel, terminate,
or modify, any Governmental Authorization that is held by the
Company or that otherwise relates to the business of, or any of
the assets owned or used by, the Company;
(iv) cause Parent, Sub or the Company to become subject to,
or to become liable for the payment of, any material Tax;
(v) cause any of the assets owned by the Company to be
reassessed or revalued in any material way by any taxing
authority or other Governmental Body;
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(vi) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to
declare a default or exercise any remedy under, or to accelerate
the maturity or performance of, or to cancel, terminate, or
modify, any Applicable Contract that would have a Material
Adverse Effect; or
(vii) result in the imposition or creation of any material
charge, claim, community property interest, condition, equitable
interest, lien, option, pledge, security interest or encumbrance
upon or with respect to any of the assets owned or used by the
Company.
Except as set forth in Part 3.2 of the Disclosure Letter, the Company will not
be required to give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
3.3 CAPITALIZATION. The authorized equity securities of AMVC consist
of 60 million shares of common stock, without par value, of which 12,870,000
shares are issued and outstanding and 3 million shares of Preferred Stock, of
which 119,106 shares of Company Series B Stock are issued and outstanding.
SCHEDULE 2.9 sets forth all outstanding options or other rights to acquire any
securities of the Company, together with the exercise prices therefor. All of
the outstanding equity securities of the Company have been duly authorized and
validly issued and are fully paid and nonassessable. There are no Contracts
relating to the issuance, sale, or transfer of any equity securities or other
securities of the Company. Since January 1, 1994, none of the outstanding equity
securities or other securities of the Company was issued in violation of the
Securities Act or any applicable securities laws. The Company owns 100% of all
of the outstanding securities, and there are no outstanding rights to acquire
any securities, of Applied Laser Systems, Inc.; SRC Vision, Inc.; ARC
Netherlands BV and Ventek, Inc. (the "Wholly Owned Subsidiaries"). All
representations made in this Section 3 with respect to the Company are also made
with respect to each Wholly Owned Subsidiary when taken in the context of having
a Material Adverse Effect on the Company. Except as set forth in Part 3.3 of the
Disclosure Letter, the Company does not own, and does not have any Contract to
acquire, any equity securities or other securities of any Person (including any
Subsidiary) or any direct or indirect equity or ownership interest in any other
business.
3.4 FINANCIAL STATEMENTS. Company has delivered to Parent: an audited
balance sheet of the Company as at December 31, 1999 (the "Balance Sheet") and
the related statements of income, stockholders' equity, and cash flow for the
fiscal year then ended, together with the report thereon of Pricewaterhouse
Coopers LLP, independent certified public accountants (such financial statements
are collectively referred to herein as the "Financial Statements"). The
Financial Statements fairly present the financial condition and the results of
operations, changes in stockholders' equity, and cash flow of the Company as at
the dates of and for the periods referred to therein, all in accordance with
GAAP. The Financial Statements reflect the consistent application of such
accounting principles throughout the periods involved, except as disclosed in
the notes to such financial statements. No financial statements of any Person
other than the Company are required by GAAP to be included in the consolidated
financial statements of the Company.
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3.5 BOOKS AND RECORDS. Except as described in Part 3.5 to the
Disclosure Letter, the books of account, minute books, stock record books, and
other records of the Company specifically requested by Parent or its
Representatives, all of which have been or prior to the Closing Date will be
made available to Parent, are complete and correct in all material respects.
Except as described in Part 3.5 to the Disclosure Letter, the minute books of
the Company contain accurate and complete records of all meetings held of, and
corporate action taken by, the stockholders, the Boards of Directors, and
committees of the Boards of Directors of the Company, and no meeting of any such
stockholders, Board of Directors, or committee has been held for which minutes
have not been prepared and are not contained in such minute books. At the
Closing Date, all of those books and records will be in the possession of the
Company.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES. Part 3.6 of the Disclosure
Letter contains a complete and accurate list of all real property, leaseholds,
or other interests therein, if any, owned by the Company. Upon request, Company
will deliver to Parent copies of the deeds and other instruments (as recorded)
by which the Company acquired such real property and interests, and copies of
all title insurance policies, opinions, abstracts, and surveys in the possession
of the Company and relating to such property or interests. All material
properties and assets reflected in the Balance Sheet are free and clear of all
charges, claims, community property interests, conditions, equitable interests,
liens, options, pledges, security interests and encumbrances except, with
respect to all such properties and assets, (a) mortgages or security interests
shown on the Balance Sheet as securing specified liabilities or obligations,
with respect to which no default (or event that, with notice or lapse of time or
both, would constitute a default) exists, (b) mortgages or security interests
incurred in connection with the purchase of property or assets after the date of
the Balance Sheet (such mortgages and security interests being limited to the
property or assets so acquired), with respect to which no default (or event
that, with notice or lapse of time or both, would constitute a default) exists
and which mortgages or security interests are listed and described in Part 3.6
of the Disclosure Letter, and (c) liens for current taxes not yet due.
3.7 CONDITION AND SUFFICIENCY OF ASSETS. As of the date of this
Agreement, the buildings, plants, structures, and equipment of the Company are
to the Company's Knowledge structurally sound, are in good operating condition
and repair, and are adequate for the uses to which they are being put, and none
of such buildings, plants, structures, or equipment is in need of maintenance or
repairs except for ordinary, routine maintenance and repairs that are not
material in nature or cost. The building, plants, structures, and equipment of
the Company are sufficient for the continued conduct of the Company's business
after the Closing Date in substantially the same manner as conducted prior to
the Closing Date.
3.8 ACCOUNTS RECEIVABLE. All accounts receivable of the Company that
are reflected on the Balance Sheet or on the accounting records of the Company
(collectively, the "Accounts Receivable") represent or will represent valid
obligations arising from sales actually made or services actually performed in
the Ordinary Course of Business. There is no material contest, claim, or right
of set-off, other than returns in the Ordinary Course of Business, under any
Contract with any obligor of an Accounts Receivable relating to the amount or
validity of such Accounts Receivable.
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3.9 NO UNDISCLOSED LIABILITIES. Except as set forth in Part 3.9 of the
Disclosure Letter, the Company has no material liabilities or obligations of any
nature (whether known or unknown and whether absolute, accrued, contingent, or
otherwise) except for liabilities or obligations reflected or reserved against
in the Financial Statements for the year ended December 31, 1999 and current
liabilities incurred in the Ordinary Course of Business since the date thereof.
3.10 TAXES.
(a) Except as described in Part 3.10 of the Disclosure Letter,
the Company has filed or caused to be filed all Tax Returns that are or were
required to be filed by it pursuant to applicable Legal Requirements. Part 3.10
of the Disclosure Letter contains a complete and accurate list of all such Tax
Returns filed since January 1, 1997. The Company has paid, or made sufficient
provision for the full payment of, all Taxes that have or may have become due
pursuant to those Tax Returns or otherwise, or pursuant to any assessment
received by the Company, except such Taxes, if any, as are listed in Part 3.10
of the Disclosure Letter and are being contested in good faith and as to which
adequate reserves (determined in accordance with GAAP) have been provided in the
Financial Statements for the year ended December 31, 1999 and the Interim
Financial Statements.
(b) All deficiencies which have been or may be proposed as a
result of audits of the United States federal and state income Tax Returns of
the Company have been paid, reserved against, settled, or, as described in Part
3.10 of the Disclosure Letter, are being contested in good faith by appropriate
proceedings. Except as described in Part 3.10 of the Disclosure Letter, the
Company has not given or been requested to give waivers or extensions (or is or
would be subject to a waiver or extension given by any other Person) of any
statute of limitations relating to the payment of Taxes of the Company or for
which the Company may be liable.
(c) The charges, accruals, and reserves with respect to Taxes on
the books of the Company are adequate (determined in accordance with GAAP).
There exists no proposed or unpaid actual Tax assessment against the Company
except as disclosed in the Financial Statements for the year ended December 31,
1999, or in Part 3.10 of the Disclosure Letter. Except as disclosed in Part 3.10
to the Disclosure Letter, all Taxes that the Company is or was required by Legal
Requirements to withhold or collect have been duly withheld or collected and, to
the extent required, have been paid to the proper Governmental Body or other
Person.
(d) Except as disclosed in Part 3.10 to the Disclosure Letter,
all Tax Returns filed by the Company are true, correct, and complete in all
material respects. There is no tax sharing agreement that will require any
payment by the Company after the date of this Agreement.
3.11 NO MATERIAL ADVERSE CHANGE. Since the date of the Balance Sheet,
and except as set forth in the Disclosure Letter, there has not been any
Material Adverse Change.
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3.12 EMPLOYEE BENEFITS.
(a) The Company has no ownership interest in, and does not
contribute to, any credit union which has been established by the Company for
any of its employees.
(b)
(i) Neither the Company nor any affiliate of the Company
as determined under IRC ss. 414(b), (c), (m) or (o) ("ERISA
Affiliate") maintains, administers or contributes to, nor do the
employees of the Company or any ERISA Affiliate receive or expect
to receive as a condition of employment, benefits pursuant to:
any employee pension benefit plan (as defined in ss. 3(2) of
ERISA) ("Plan"), including, without limitation, any multiemployer
plan as defined in IRC ss. 3(37) of ERISA ("Multiemployer Plan");
any employee welfare benefit plan (as defined in IRC ss. 3(1) of
ERISA) ("Welfare Plan"); or any bonus, deferred compensation,
stock purchase, stock option, stock appreciation, severance,
salary continuation, vacation, sick leave, fringe benefit,
incentive, insurance, welfare or similar plan or arrangement
("Employee Benefit Plan") other than those Plans, Welfare Plans
and Employer Benefit Plans described in Part 3.12 of the
Disclosure Letter. Except as required by IRC ss. 4980B or as
disclosed in Part 3.12 of the Disclosure Letter, neither the
Company nor any ERISA Affiliate has promised any former employee
or other individual not employed by the Company or any ERISA
Affiliate medical or other benefit coverage, maintains or
contributes to any plan or arrangement providing medical benefits
to former employees, their spouses or dependents or any other
individual not employed by the Company.
(ii) All Plans, Welfare Plans and Employee Benefit Plans
and any related trust agreements or annuity contracts (or any
related trust instruments) comply with and are and have been
operated in accordance with each applicable provision of ERISA,
the IRC (including, without limitation, the requirements of
IRC ss. 401(a) to the extent any Plan is intended to conform to
that section), other Federal statutes, state law (including,
without limitation, state insurance law) and the regulations and
rules promulgated pursuant thereto or in connection therewith.
The Company has no Knowledge of any violation of any of the
foregoing by any Plan, Welfare Plan, or Employee Benefit Plan.
Each Welfare Plan which is a group health plan (within the
meaning of ss. 5000(b)(1) of the Code) complies with and has been
maintained and operated in accordance with each of the
requirements of IRC ss. 162(k) as in effect for years beginning
prior to 1989, IRC ss. 4980B for years beginning after December
31, 1988 and Part 6 of Subtitle B of Title I of ERISA. A
favorable determination as to the qualification under the Code of
the Company's Profit Sharing or 401(k) Plan and each amendment
thereto has
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been made by the IRS, the Profit Sharing Plan at all times has
been and remains qualified under the IRC, and the related trust
at all times has been and remains tax exempt.
(iii) Neither any Plan or Welfare Plan fiduciary nor any
Plan or Welfare Plan has engaged in any transaction in violation
of ss. 406 of ERISA or any "prohibited transaction" (as defined
in ss. 4975(c)(1) of the IRC and there has been no "reportable
event" (as defined in ss. 4043(b) of ERISA) with respect to any
Plan. Neither the Company nor any ERISA Affiliate has failed to
make any contributions or to pay any amounts due and owing as
required by the terms of any Plan, Welfare Plan or Employee
Benefit Plan, or collective bargaining agreement or ERISA or any
other applicable law.
(iv) True and complete copies of each Plan, Welfare Plan
and Employee Benefit Plan, related trust agreements, annuity
contracts, determination letters, summary plan descriptions, all
communication to employees regarding any Plan, Welfare Plan, or
Employee Benefit Plan, annual reports on Form 5500 for the last
three years, and each plan, agreement, instrument and commitment
referred to herein, have been identified in writing and made
available to Parent; all of the foregoing are legally valid,
binding, in full force and effect, and there are no defaults
thereunder, and none of the rights of the Company thereunder will
be impaired by this Agreement or the consummation of the
transaction contemplated hereby. The annual reports on Form 5500
fully and accurately set forth the financial and actuarial
condition of each Plan and each trust funding any Welfare Plan.
With respect to each Plan, Welfare Plan and Employee Benefit
Plan, the Disclosure Letter sets forth the name and address of
the administrator and trustees and the policy number and insurer
under all insurance policies.
(v) There are no pending or threatened claims by or on
behalf of any of the Plans, Welfare Plans, or Employee Benefit
Plans by any employee or beneficiary covered under any Plans,
Welfare Plans or Employee Benefit Plans or otherwise involving
any Plan, Welfare Plan or Employee Benefit Plan (other than
routine claims for benefits).
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3.13 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS.
(a) To the Knowledge of the Company, except as set forth in Part
3.13 of the Disclosure Letter:
(i) the Company is, and at all times has been, in material
compliance with each material Legal Requirement that is or was
applicable to it or to the conduct or operation of its business
or the ownership or use of any of its assets;
(ii) no event has occurred or circumstance exists that
(with or without notice or lapse of time) (A) may constitute or
result in a violation by the Company of, or a failure on the part
of the Company to comply with, any material Legal Requirement, or
(B) may give rise to any obligation on the part of the Company to
undertake, or to bear all or any portion of the cost of, any
remedial action of any nature, that with respect to either of the
preceding, is likely to have a Material Adverse Effect; and
(iii) since January 1, 1997, the Company has not received
any notice or other communication (whether oral or written) from
any Governmental Body or any other Person regarding (A) any
actual, alleged, possible, or potential violation of, or failure
to comply with, any Legal Requirement, or (B) any actual,
alleged, possible, or potential obligation on the part of the
Company to undertake, or to bear all or any portion of the cost
of, any remedial action of any nature, that with respect to
either of the preceding, is likely to have a Material Adverse
Effect.
(b) Part 3.13 of the Disclosure Letter contains a complete and
accurate list of each material Governmental Authorization that is held by the
Company. Each material Governmental Authorization listed or required to be
listed in Part 3.13 of the Disclosure Letter is valid and in full force and
effect. Except as set forth in Part 3.13 of the Disclosure Letter:
(i) the Company is, and at all times has been, in material
compliance with all of the terms and requirements of each
Governmental Authorization identified or required to be
identified in Part 3.13 of the Disclosure Letter;
(ii) to the Knowledge of the Company, no event has occurred
or circumstance exists that may (with or without notice or lapse
of time) (A) constitute or result directly or indirectly in a
violation of or a failure to comply with any term or requirement
of any Governmental Authorization listed or required to be listed
in Part 3.13 of the Disclosure Letter, or (B) result directly or
indirectly in the revocation, withdrawal, suspension,
cancellation, or termination of, or any modification to, any
Governmental Authorization listed or required to be listed in
Part 3.13 of the Disclosure Letter, that with respect to either
of the preceding, is likely to have a Material Adverse Effect;
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(iii) since January 1, 1997, the Company has not received,
at any time, any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding
(A) any actual, alleged, possible, or potential violation of or
failure to comply with any term or requirement of any
Governmental Authorization, or (B) any actual, proposed,
possible, or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to any Governmental
Authorization, that with respect to either of the preceding, is
likely to have a Material Adverse Effect; and
(iv) all applications required to have been filed for the
renewal of the material Governmental Authorizations listed or
required to be listed in Part 3.13 of the Disclosure Letter have
been duly filed on a timely basis with the appropriate
Governmental Bodies, and all other filings required to have been
made with respect to such Governmental Authorizations have been
duly made on a timely basis with the appropriate Governmental
Bodies.
The Governmental Authorizations listed in Part 3.13 of the Disclosure Letter
collectively constitute all of the material Governmental Authorizations
necessary to permit the Company to lawfully conduct and operate its business in
the manner it currently conducts and operates such business and to permit the
Company to own and use its assets in the manner in which it currently owns and
uses such assets, except where the failure to have such Governmental
Authorizations would not be reasonably likely to have a Material Adverse Effect.
3.14 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Part 3.14 of the Disclosure Letter,
there is no pending Proceeding:
(i) that has been commenced by or against the Company or
that otherwise relates to or may affect the business of, or any
of the assets owned or used by, the Company; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering
with, any of the Contemplated Transactions.
To the Knowledge of the Company, (1) no such Proceeding has been Threatened, and
(2) no event has occurred or circumstance exists that may give rise to or serve
as a basis for the commencement of any such material Proceeding. Company has
delivered to Parent copies of all pleadings, correspondence, and other documents
relating to each Proceeding listed in Part 3.14 of the Disclosure Letter. The
Proceedings listed in Part 3.14 of the Disclosure Letter taken collectively will
not have a material adverse effect on the business, operations, assets,
condition, or prospects of the Company.
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(b) To the Knowledge of the Company,
(i) there is no Order to which the Company, or any of the
assets owned or used by the Company, is specifically subject; and
(ii) no officer, director, agent, or employee of the
Company is specifically subject to any Order that prohibits such
officer, director, agent, or employee from engaging in or
continuing any conduct, activity, or practice relating to the
business of the Company.
3.15 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth in
Part 3.15 of the Disclosure Letter, since the date of the Balance Sheet, the
Company has conducted its business only in the Ordinary Course of Business and
there has not been any:
(a) change in the Company's authorized or issued capital stock;
grant of any stock option or right to purchase shares of capital stock of the
Company; issuance of any security convertible into such capital stock; grant of
any registration rights; purchase, redemption, retirement, or other acquisition
by the Company of any shares of any such capital stock; or declaration or
payment of any dividend or other distribution or payment in respect of shares of
capital stock;
(b) amendment to the Organizational Documents of the Company;
(c) payment or increase by the Company of any bonuses, salaries,
or other compensation to any stockholder, director, officer, or (except in the
Ordinary Course of Business) employee or entry into any employment, severance,
or similar Contract or commitment with any director, officer, or employee or the
adoption of any severance policy applicable to employees in general;
(d) adoption of, or increase in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings, insurance,
pension, retirement, or other employee benefit plan for or with any employees of
the Company;
(e) damage to or destruction or loss of any asset or property of
the Company, whether or not covered by insurance, materially and adversely
affecting the properties, assets, business, financial condition, or prospects of
the Company, taken as a whole;
(f) entry into, termination of, or receipt of notice of
termination of (i) any material license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or (ii) any
Contract or transaction involving a total remaining commitment by or to the
Company of at least $10,000 (except for Contracts or transactions entered into
in the Ordinary Course of Business with the Company's customers or vendors which
do not exceed, individually, a commitment of $50,000);
(g) sale (other than sales of inventory in the Ordinary Course
of Business), lease, or other disposition of any asset or property of the
Company or mortgage, pledge, or imposition of any lien or other encumbrance on
any material asset or property of the
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Company, including the sale, lease, or other disposition of any of the
Intellectual Property Assets, in any case greater than $10,000;
(h) cancellation or waiver of any claims or rights with a value
to the Company in excess of $10,000;
(i) material change in the accounting methods used by the
Company;
(j) any hiring of new employees except as replacements for
persons whose employment with the Company terminated since such date, or the
hiring of any employee at an annual compensation rate of $75,000 or more per
year; or
(k) agreement, whether oral or written, by the Company to do any
of the foregoing.
3.16 CONTRACTS; NO DEFAULTS.
(a) Part 3.16(a) of the Disclosure Letter contains a complete
and accurate list of each, and except as so disclosed there is no:
(i) applicable Contract that involves performance of
services or delivery of goods or materials by the Company of an
amount or value in excess of $25,000;
(ii) applicable Contract that involves performance of
services or delivery of goods or materials to the Company of an
amount or value in excess of $25,000;
(iii) applicable Contract that was not entered into in the
Ordinary Course of Business and that involves expenditures or
receipts of the Company in excess of $5,000;
(iv) lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable
Contract affecting the ownership of, leasing of, title to, use
of, or any leasehold or other interest in, any real or personal
property (except personal property leases and installment and
conditional sales agreements having a value per item or aggregate
payments of less than $15,000 and with terms of less than one
year);
(v) contract relating to Intellectual Property Assets to
which the Company is a party or by which the Company is bound,
except for any license implied by the sale of a product and
perpetual, paid-up licenses for commonly available software
programs with a value of less than $2,500 under which the Company
is the licensee, including agreements with current or former
employees, consultants, or contractors regarding the
appropriation or the non-disclosure of any of the Intellectual
Property Assets;
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(vi) collective bargaining agreement and other Applicable
Contract to or with any labor union or other employee
representative of a group of employees;
(vii) joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits, losses,
costs, or liabilities by the Company with any other Person;
(viii) applicable Contract containing covenants that in any
material way purport to restrict the business activity of the
Company or any Affiliate of the Company or limit the freedom of
the Company or any Affiliate of the Company to engage in any line
of business or to compete with any Person;
(ix) applicable Contract providing for payments to or by
any Person based on sales, purchases, or profits, other than
direct payments for goods;
(x) power of attorney that is currently effective and
outstanding;
(xi) applicable Contract for capital expenditures which,
by its terms, provides for an aggregate balance payable
thereunder since December 31, 1999 in excess of $15,000 for any
such Contract;
(xii) written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by
the Company other than in the Ordinary Course of Business; and
(xiii) amendment, supplement, and modification (whether oral
or written) in respect of any of the foregoing.
(b) To the Knowledge of the Company, except as set forth in
Part 3.16(b) of the Disclosure Letter, with respect to each Contract identified
or required to be identified in Part 3.16(a) of the Disclosure Letter:
(i) the Company is, and at all times has been, in
material compliance with all applicable terms and requirements of
each such Contract under which the Company has or had any
obligation or liability or by which the Company or any of the
assets owned or used by the Company is or was bound; and
(ii) each other Person that has or had any obligation or
liability under any material Contract under which the Company has
or had any rights is, and at all times has been, in full material
compliance with all applicable terms and requirements of such
Contract.
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3.17 INSURANCE.
(a) Company has delivered to or otherwise made available for
inspection by Parent:
(i) true and complete copies of all policies of insurance
to which the Company is a party or under which the Company, or
any director of the Company, is or has been covered at any time
preceding the date of this Agreement;
(ii) true and complete copies of all pending applications
for policies of insurance; and
(iii) any statement by the Company's auditors with regard to
the adequacy of such entity's coverage or of the reserves for
claims.
(b) Part 3.17(b) of the Disclosure Letter describes:
(i) any self-insurance arrangement by or affecting the
Company, including any reserves established thereunder;
(ii) any contract or arrangement, other than a policy of
insurance, for the transfer or sharing of any risk by the
Company; and
(iii) all obligations of the Company to third parties with
respect to insurance (including such obligations under leases and
service agreements) and identifies the policy under which such
coverage is provided.
(c) Part 3.17(c) of the Disclosure Letter sets forth, by year,
for the current policy year and each of the three preceding policy years:
(i) a summary of the loss experience under each policy in
excess of $5,000; and
(ii) a statement describing the loss experience for all
claims that were self-insured, including the number and aggregate
cost of such claims.
(d) Except as set forth on Part 3.17(d) of the Disclosure
Letter:
(i) All policies to which the Company is a party or that
provide coverage to the Company, or any Company-funded policy
providing coverage to any director or officer of the Company: (A)
to the Company's Knowledge, are valid, outstanding, and
enforceable; (B) are sufficient for compliance with all Legal
Requirements and Contracts to which the Company is a party or by
which it is bound; (C) will continue in full force and effect
following the consummation of the Contemplated
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Transactions; and (D) do not provide for any retrospective
premium adjustment or other experienced-based liability on the
part of the Company.
(ii) To the Company's Knowledge, the Company has not
received (A) any refusal of coverage or any notice that a defense
will be afforded with reservation of rights, or (B) any notice of
cancellation or any other indication that any insurance policy is
no longer in full force or effect or will not be renewed or that
the issuer of any policy is not willing or able to perform its
obligations thereunder in connection with any policy of the
Company.
(iii) The Company has paid all premiums due, and has
otherwise performed all of its obligations, under each policy to
which the Company is a party or that provides coverage to the
Company or any director thereof.
(iv) To the Company's Knowledge, the Company has given
notice to the insurer of all claims as to which it has notice
that may be insured thereby.
3.18 ENVIRONMENTAL MATTERS. Except as set forth in Part 3.18 of the
Disclosure Letter, to the Knowledge of the Company, the Company is not in
violation, or aware, of any imminent or alleged violation by the Company, of any
federal, state or local law, statute, rule, regulation, judgment, consent decree
or ordinance relating to public health, safety, conservation, waste management,
pollution or the indoor or outdoor Environment, including relating to the
release, discharge, emission, storage, treatment, handling or disposal of
Hazardous Materials (defined below) ("Environmental Law"). The Company is not a
party to, or threatened by, and has not been subject to, any judicial,
administrative or regulatory litigation, claim, notice, proceeding or
investigation arising from the operation or violation of any applicable
Environmental Law, or is aware after diligent inquiry of any grounds or basis
for such a claim. The Company does not have or currently use, store, treat,
dispose or otherwise handle hazardous, toxic, radioactive, infectious or harmful
substances or materials, including, without limitation, asbestos and petroleum,
including, crude oil or any fraction thereof and any material prohibited or
regulated by any Environmental Law ("Hazardous Material") except in compliance
with Environmental Law, or know of any release, threat of release, disposal,
cleanup or presence of any Hazardous Material at, on or under any real property
owned, occupied or operated by the Company except in compliance with
Environmental Law.
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3.19 EMPLOYEES.
(a) Part 3.19 of the Disclosure Letter contains a complete and
accurate list of the following information for each employee or director of the
Company, including each employee on leave of absence or layoff status, in each
instance identified by employer as to the applicable Wholly Owned Subsidiary or
AMVC: employee name; job title; current compensation paid or payable; vacation
accrued; and vested and unvested Company Options.
(b) To the Knowledge of the Company, no director or employee of
the Company is a party to, or is otherwise bound by, any agreement or
arrangement, including any confidentiality, noncompetition, or proprietary
rights agreement, between such director or employee and any other Person
("Proprietary Rights Agreement") that in any way adversely affects or will
affect (i) the performance of his duties as an employee or director of the
Company, or (ii) the ability of the Company to conduct its business, including
any confidentiality or proprietary rights agreement with the Company. To the
Company's Knowledge, no director, officer, or other key employee of the Company
intends to terminate his employment with the Company, except as set forth in
Part 3.19 of the Disclosure Letter.
(c) Part 3.19 of the Disclosure Letter also contains a complete
and accurate list of the following information, if applicable, for each former
employee or director of the Company, or their dependents, receiving benefits or
scheduled to receive benefits from the Company or Company Plans in the future:
name, pension benefit, pension option election, retiree medical insurance
coverage, retiree life insurance coverage, and other benefits.
3.20 LABOR RELATIONS; COMPLIANCE. The Company has not been, and is
not, a party to any collective bargaining or other labor Contract. There has not
been, there is not presently pending or existing, and to the Company's Knowledge
there is not Threatened, (a) any strike, slowdown, picketing, work stoppage, or
employee grievance process, (b) any Proceeding against or affecting the Company
relating to the alleged violation of any Legal Requirement pertaining to labor
relations or employment matters, including any charge or complaint filed by an
employee or union with the National Labor Relations Board, the Equal Employment
Opportunity Commission, or any comparable Governmental Body, organizational
activity, or other labor or employment dispute against or affecting the Company
or its premises, or (c) any application for certification of a collective
bargaining agent. To the Knowledge of the Company, no event has occurred or
circumstance exists that could provide the basis for any work stoppage or other
labor dispute. There is no lockout of any employees by the Company, and no such
action is contemplated by the Company. Except as disclosed in Part 3.20 of the
Disclosure Letter, the Company has complied in all material respects with all
Legal Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closing. The Company is not liable for the payment of any
compensation, damages, taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements.
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3.21 INTELLECTUAL PROPERTY.
(a) INTELLECTUAL PROPERTY ASSETS. The term "Intellectual
Property Assets" includes:
(i) the Company's name, all fictional business names,
trade names, registered and unregistered trademarks, service
marks, and applications (collectively, "Marks");
(ii) patents, patent applications, and inventions and
discoveries that may be patentable (collectively, "Patents");
(iii) all copyrights and registrations and applications
therefor in both published works and unpublished works
(collectively, "Copyrights");
(iv) all rights in mask works (collectively, "Rights in
Mask Works"); and
(v) all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process
technology, plans, drawings, and blue prints (collectively,
"Trade Secrets");
owned, used, or licensed by the Company as licensee or licensor. All such
Intellectual Property Assets are listed by category as part of Part 3.21 of the
Disclosure Letter.
(b) AGREEMENTS. Part 3.21 of the Disclosure Letter sets forth a
complete and accurate list of all Contracts relating to the Intellectual
Property Assets to which the Company is a party or by which the Company is
bound, except for any license implied by the sale of a product and perpetual,
paid-up licenses for commonly available software programs with a value of less
than $2,500 under which the Company is the licensee. There are no outstanding or
Threatened disputes or disagreements with respect to any such agreement.
(c) KNOW-HOW NECESSARY FOR THE BUSINESS. Except as described in
Part 3.21 of the Disclosure Letter:
(i) The Intellectual Property Assets are all those
necessary for the operation of the Company's business as it is
currently conducted. The Company is the owner of all right,
title, and interest in and to each of the material Intellectual
Property Assets, free and clear of all material liens, security
interests, charges, encumbrances, equities, and other adverse
claims, and has the right to use without payment to a third party
all of the Intellectual Property Assets.
(ii) Except as set forth in Part 3.21 of the Disclosure
Letter, since January 1, 1994 all of the former and current
employees of the Company have executed written Contracts with the
Company that assign to the Company all rights to any inventions,
improvements, discoveries, or information relating to the
business of the Company. To the Company's
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Knowledge, no employee of the Company has entered into any
Contract that restricts or limits in any way the scope or type of
work in which the employee may be engaged or requires the
employee to transfer, assign, or disclose information concerning
his work to anyone other than the Company.
(d) PATENTS. Except as described in Part 3.21 of the Disclosure
Letter:
(i) Part 3.21(d) of the Disclosure Letter contains a
complete and accurate list (including identifying numbers and
dates of issuance) and summary description of all Patents.
(e) TRADEMARKS. Except as described in Part 3.21 of the
Disclosure Letter:
(i) Part 3.21(e) of Disclosure Letter contains a complete
and accurate list (including identifying numbers and dates of
issuance) and summary description of all Marks that have been
registered with the United States Patent and Trademark Office or
that have been submitted to such Office for registration. The
Company is the owner of all right, title, and interest in and to
each of the trademark applications listed thereon, free and clear
of all liens, security interests, charges, encumbrances,
equities, and other adverse claims.
(ii) To the Company's Knowledge, no Mark has been or is now
involved in any opposition and, to the Company's Knowledge, no
such action is Threatened with the respect to any of the Marks.
(iii) To the Company's Knowledge, there is no potentially
interfering trademark or trademark application of any third
party.
(iv) No Mark is infringed or, to the Company's Knowledge,
has been challenged or threatened in any way. To the Company's
Knowledge, none of the Marks used by the Company infringes or is
alleged to infringe any trade name, trademark, or service mark of
any third party.
(v) All products and materials containing a registered
Mark bear the proper federal registration notice where permitted
by law.
(f) COPYRIGHTS. The Company has filed no copyright applications
with the United States Copyright Office except as set forth on Part 3.21(f) of
the Disclosure Letter. No Copyright is infringed or, to Stockholder's Knowledge,
has been challenged or threatened in any way. To the Company's Knowledge, none
of the subject matter of any of the Copyrights infringes or is alleged to
infringe any copyright of any third party or is a derivative work based on the
work of a third party.
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(g) TRADE SECRETS.
(i) With respect to each material Trade Secret, the
documentation relating to such Trade Secret is current, accurate,
and sufficient in detail and content to identify and explain it
and to allow its full and proper use without reliance on the
knowledge or memory of any individual.
(ii) The Company has taken all reasonable precautions to
protect the secrecy, confidentiality, and value of their Trade
Secrets.
(iii) The Company has good title and an absolute (but not
necessarily exclusive) right to use the Trade Secrets. No Trade
Secret is subject to any adverse claim or has been challenged or
threatened in any way that is likely to have a Material Adverse
Effect on the Company's business, assets or financial condition.
(h) COMPLIANCE WITH LEGAL AND CONTRACTUAL REQUIREMENTS. Except
as disclosed on Part 3.21(h) of the Disclosure Letter, the Company has all
material software and other Intellectual Property Asset licenses, and has paid
all royalties and fees with respect thereto required to be paid prior to the
date of this Agreement, necessary to operate its business in compliance with all
material contractual requirements and Legal Requirements to which it may be
subject.
3.22 CERTAIN PAYMENTS. Since January 1, 1997, to the Knowledge of the
Company neither the Company nor any director, officer, agent, or employee of the
Company, or any other Person associated with or acting for or on behalf of the
Company, has directly or indirectly, in violation of any Legal Requirement, (a)
made any contribution, gift, bribe, rebate, payoff, influence payment, kickback,
or other payment to any Person, private or public, regardless of form, whether
in money, property, or services (i) to obtain favorable treatment in securing
business, (ii) to pay for favorable treatment for business secured, or (iii) to
obtain special concessions or for special concessions already obtained, for or
in respect of the Company or any Affiliate of the Company, or (b) established or
maintained any fund or asset that has not been recorded in the books and records
of the Company.
3.23 RELATIONSHIPS WITH RELATED PERSONS. No director or officer of the
Company has, or since January 1, 1997 has had, any interest in any property
(whether real, personal, or mixed and whether tangible or intangible), used in
or pertaining to the Company's business. Except as described in Part 3.23 to the
Disclosure Letter, no director or officer of the Company is, or since January 1,
1997 has owned (of record or as a beneficial owner) an equity interest or any
other financial or profit interest in, a Person that has (i) had business
dealings or a material financial interest in any transaction with the Company
other than business dealings or transactions conducted in the Ordinary Course of
Business with the Company at substantially prevailing market prices and on
substantially prevailing market terms, or (ii) engaged in competition with the
Company with respect to any line of the products or services of the Company (a
"Competing Business") in any market presently served by the Company. Except as
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set forth in Part 3.23 of the Disclosure Letter, no director or officer of the
Company is a party to any Contract with, or has any claim or right against, the
Company.
3.24 BROKERS OR FINDERS. The Company has incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement.
3.25 S-4 REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS. None
of the information supplied by the Company for inclusion or incorporation by
reference in the S-4 Registration Statement or the Proxy Statement/Prospectus
will (a) in the case of the S-4 Registration Statement, at the time it becomes
effective, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading or (b) in the case of the Proxy Statement/Prospectus, at the time
of mailing the Proxy Statement/Prospectus, and at the time of the Company
Shareholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. If at any time prior to the Effective Time any event with
respect to the Company or its Principal Shareholders, officers or directors
shall occur that is required to be described in the Proxy Statement/Prospectus
or the S-4 Registration Statement, the Company shall notify Parent thereof by
reference to this Section 3.25 and cooperate with Parent in preparing and filing
with the Commission and, as required by law, disseminating to the shareholders
of the Company an amendment or supplement which accurately describes such event
or events in compliance with all provisions of applicable law.
3.26 CUSTOMERS AND SUPPLIERS. Part 3.26 of the Disclosure Letter sets
forth: (a) a complete and accurate list of the customers of the Company
accounting for 2% or more of the Company's sales during the 24-month period
ended December 31, 1999, showing the approximate total sales by the Company to
each such customer during such period and (b) a complete and accurate list of
the suppliers of the Company from whom the Company has purchased 5% or more of
the goods or services purchased by the Company during the 24-month period ended
December 31, 1999.
3.27 ORDERS, COMMITMENTS AND RETURNS. Part 3.27 of the Disclosure
Letter contains (a) an accurate summary of the company's total backlog of orders
as of December 31, 1999 (including all accepted and unfulfilled sales orders)
and (b) the aggregate of all outstanding purchase orders issued by the Company
as of December 31, 1999 (which include all contracts or commitments for the
purchase by the Company of merchandise, materials or other supplies). A list of
all outstanding purchase orders for inventory components in excess of $10,000 as
of December 31, 1999, categorized by vendor, has been provided by the Company to
Parent in writing. All such sale and purchase commitments were made in the
Ordinary Course of Business. Except as set forth in Part 3.27 of the Disclosure
Letter, there are no outstanding claims in excess of $50,000 in the aggregate or
$10,000 individually against the Company to return products or merchandise by
reason of alleged failure to conform to customer expectations, defective
products, missed delivery dates or otherwise, or of products in the possession
of customers under an understanding that such products would be returnable.
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3.28 DISCLOSURE. No representation or warranty of the Company in this
Agreement and no statement in the Disclosure Letter omits to state a material
fact necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
4. REPRESENTATIONS AND WARRANTIES OF PARENT.
Except as provided in the Parent's Disclosure Letter (the
"Parent Disclosure Letter"), Parent represents and warrants to the Company as
follows:
4.1 ORGANIZATION AND GOOD STANDING. Each of Parent and Sub is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Oregon, with full corporate power and authority to conduct
its business as it is now being conducted and to own or use the properties and
assets that it purports to own or use. Each of Parent and Sub is duly qualified
to do business as a foreign corporation and is in good standing under the laws
of each state or other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by it,
requires such qualification.
4.2 AUTHORITY; NO CONFLICT.
(a) Each of Parent and Sub has the requisite corporate power and
authority to execute and deliver this Agreement and all other agreements and
documents contemplated hereby and to carry out its obligations hereunder. The
execution, delivery and performance of this Agreement and all other agreements
and documents contemplated hereby and the consummation of the Merger and of the
other transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of each of Parent and Sub and no other
corporate proceedings on the part of Parent or Sub are necessary to authorize
this Agreement and all other agreements and documents contemplated hereby or to
consummate the transactions so contemplated. This Agreement has been duly
executed and delivered by each of Parent and Sub and constitutes, and all
agreements and documents contemplated hereby when executed and delivered
pursuant hereto for value received will constitute, the valid and binding
obligations of each of Parent and Sub.
(b) Neither the execution and delivery of this Agreement by
Parent and Sub, nor the consummation or performance of any of the Contemplated
Transactions by Parent or Sub, will, directly or indirectly (with or without
notice or lapse of time):
(i) contravene, conflict with, or result in a violation of
(A) any provision of the Organizational Documents of either
Parent or Sub, or (B) any resolution adopted by the board of
directors or the stockholders of either Parent or Sub;
(ii) contravene, conflict with, or result in a violation
of, or give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions or to exercise any
remedy or obtain any relief under, any Legal Requirement or any
Order to which Parent or Sub, or any of the assets owned or used
by Parent or Sub, may be subject;
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(iii) contravene, conflict with, or result in a violation of
any of the terms or requirements of, or give any Governmental
Body the right to revoke, withdraw, suspend, cancel, terminate,
or modify, any Governmental Authorization that is held by Parent
or Sub or that otherwise relates to the business of, or any of
the assets owned or used by, Parent or Sub;
(iv) cause Parent, Sub or the Company to become subject to,
or to become liable for the payment of, any Tax;
(v) cause any of the assets owned by the Company to be
reassessed or revalued by any taxing authority or other
Governmental Body;
(vi) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to
declare a default or exercise any remedy under, or to accelerate
the maturity or performance of, or to cancel, terminate, or
modify, any contract to which Parent or Sub is a party; or
(vii) result in the imposition or creation of any charge,
claim, community property interest, condition, equitable
interest, lien, option, pledge, security interest or encumbrance
upon or with respect to any of the assets owned or used by Parent
or Sub.
Except as set forth in Part 4.2 of the Parent Disclosure Letter, neither Parent
nor Sub is or will be required to give any notice to or obtain any Consent from
any Person in connection with the execution and delivery of this Agreement or
the consummation or performance of any of the Contemplated Transactions.
4.3 COMMISSION REPORTS. Parent has heretofore delivered or made
available to the Company true and complete copies of all reports, registration
statements and other documents (in each case together with all amendments
thereto) filed by Parent with the Commission since January 1, 1998 (such
reports, registration statements, definitive proxy statements and other
documents, together with any amendments thereto, are sometimes collectively
referred to as the "Parent Commission Filings"). The Parent Commission Filings
constitute all of the documents (other than preliminary material) that Parent
was required to file with the Commission since such date. As of their respective
dates, each of the Parent Commission Filings complied in all material respects
with the applicable requirements of the Securities Act, the Exchange Act and the
rules and regulations under each such Act, and none of the Parent Commission
Filings contained as of such date any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
4.4 CERTAIN PROCEEDINGS. There is no pending Proceeding that has been
commenced against Parent or Sub that challenges, or may have the effect of
preventing,
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delaying, making illegal, or otherwise interfering with, any of the Contemplated
Transactions. To Parent's Knowledge, no such Proceeding has been Threatened.
4.5 BROKERS OR FINDERS. Neither Parent, Sub nor their respective
agents have incurred any obligation or liability, contingent or otherwise, for
brokerage or finders' fees or agents' commissions or other similar payment in
connection with this Agreement.
4.6 INTERIM OPERATIONS OF SUB. Sub was formed solely for the purpose
of engaging in the transactions contemplated hereby and has not engaged in any
business activities or conducted any operations other than in connection with
the transactions contemplated hereby.
4.7 COMPANY STOCK OWNERSHIP. Neither Parent nor any of its
Subsidiaries owns any shares of Company Common Stock or any securities
convertible into Company Common Stock except as set forth in Part 4.7 of the
Parent Disclosure Letter.
4.8 S-4 REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS. None
of the information supplied by Parent for inclusion or incorporation by
reference in the S-4 Registration Statement will at the time it becomes
effective contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If at any time prior to the Effective Time any event with
respect to Parent shall occur that is required to be described in the S-4
Registration Statement, Parent shall notify Company thereof by reference to this
Section 4.8 and cooperate with Company in preparing and filing with the
Commission and, as required by law, disseminating to the shareholders of the
Company an amendment or supplement which accurately describes such event or
events in compliance with all provisions of applicable law.
4.9 DISCLOSURE. No representation or warranty of Parent in this
Agreement and no statement in Parent's Disclosure Letter omits to state a
material fact necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not misleading.
5. COVENANTS OF COMPANY PRIOR TO EFFECTIVE TIME.
5.1 ACCESS AND INVESTIGATION. Between the date of this Agreement and
the earlier to occur of the Effective Time or termination of this Agreement
under Section 10, Company will, and will cause its Representatives to, (a)
afford Parent and its Representatives (collectively, "Parent's Advisors") full
and free access to the Company's personnel, properties (including subsurface
testing), contracts, books and records, and other documents and data, (b)
furnish Parent and Parent's Advisors with copies of all such contracts, books
and records, and other existing documents and data as Parent may reasonably
request, and (c) furnish Parent and Parent's Advisors with such additional
financial, operating, and other data and information as Parent may reasonably
request.
5.2 OPERATION OF THE BUSINESSES OF THE COMPANY. Between the date of
this Agreement and the earlier to occur of the Effective Time or termination of
this Agreement under Section 10, Company will:
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(a) conduct the business of the Company only in the Ordinary
Course of Business;
(b) not grant, nor (except as required under applicable Company
plans) accelerate the vesting of, any options with respect to any shares of the
capital stock of the Company;
(c) use its Best Efforts to preserve intact the current business
organization of the Company, keep available the services of the current
officers, employees, and agents of the Company, and maintain the relations and
goodwill with suppliers, customers, landlords, creditors, employees, agents, and
others having business relationships with the Company;
(d) confer with Parent concerning operational matters of a
material nature; and
(e) otherwise report periodically to Parent concerning the
status of the business, operations, and finances of the Company.
5.3 NEGATIVE COVENANT. Except as otherwise expressly permitted by
this Agreement, between the date of this Agreement and the earlier to occur of
the Effective Time and termination of this Agreement under Section 10, Company
will not, without the prior consent of Parent, take any affirmative action, or
fail to take any reasonable action within its control, as a result of which any
of the changes or events (including without limitation the entering into of any
applicable Contract described therein) listed in Section 3.15 is likely to
occur.
5.4 REQUIRED APPROVALS. As promptly as practicable after the date of
this Agreement, Company will make all filings required by Legal Requirements to
be made by them in order to consummate the Contemplated Transactions. Between
the date of this Agreement and the earlier to occur of the Effective Time or
termination of this Agreement under Section 10, Company will (a) cooperate with
Parent with respect to all filings that Parent elects to make or is required by
Legal Requirements to make in connection with the Contemplated Transactions, and
(b) cooperate with Parent in obtaining all required consents.
5.5 NOTIFICATION. Between the date of this Agreement and the earlier
to occur of the Effective Time or termination of this Agreement under Section
10, Company will promptly notify Parent in writing if Company becomes aware of
any fact or condition that causes or constitutes a Breach of any of Company's
representations and warranties as of the date of this Agreement. Should any such
fact or condition require any change in the Disclosure Letter if the Disclosure
Letter were dated the date of the occurrence or discovery of any such fact or
condition, Company will promptly deliver to Parent a supplement to the
Disclosure Letter specifying such change. During the same period, Company will
promptly notify Parent of the occurrence of any Breach of any covenant of
Company in this Section 5 or of the occurrence of any event that may make the
satisfaction of the conditions in Sections 7 or 9 impossible or unlikely.
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5.6 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS. Except for the
indebtedness listed on Schedule 5.6 or as expressly provided otherwise in this
Agreement, Company will cause all indebtedness owed by any Stockholder or any
Related Person of Company to be paid in full prior to the Closing Date.
5.7 NO SOLICITATIONS.
(a) The Company shall not, directly or indirectly, through any
Shareholder, officer, director, employee, representative or agent of the Company
or any of its Subsidiaries, solicit or encourage (including by way of furnishing
information) the initiation of any inquiries or proposals regarding any merger,
sale of substantial assets, sale of shares of capital stock (including, without
limitation, by way of a tender offer) or similar transactions involving the
Company or any of its Subsidiaries (any of the foregoing inquiries or proposals
being referred to herein as an "Acquisition Proposal"); provided, however, that
nothing contained in this Agreement shall prevent the Board of Directors of the
Company from referring any Third Party to this Section 5.7 or from making a copy
of this Section 5.7 available to any Third Party. Nothing contained in this
Section 5.7 shall prevent the Board of Directors of the Company from
considering, negotiating, approving and recommending to the shareholders of the
Company (after consulting with its financial advisors, and determining after
consulting with counsel that the Board of Directors is required to do so in
order to discharge properly its fiduciary duties) a Superior Proposal. A
"Superior Proposal" shall mean an unsolicited bona fide Acquisition Proposal
made by a Third Party on terms that a majority of the members of the Company's
Board of Directors determines in their good faith reasonable judgment (based on
the advice of an independent financial advisor) would be more favorable to the
Company's shareholders than the transactions contemplated by this Agreement and
for which any required financing is committed or which, in the good faith
reasonable judgment of a majority of such members (after consultation with an
independent financial advisor), is reasonably capable of being financed by such
Third Party.
(b) The Company shall promptly (but in no case later than one
business day) notify Parent after receipt of any Acquisition Proposal or any
request for nonpublic information relating to the Company or any of its
Subsidiaries in connection with an Acquisition Proposal or for access to the
properties, books or records of the Company or any of its Subsidiaries by any
Person that informs the Board of Directors of the Company or such Subsidiary
that it is considering making, or has made, an Acquisition Proposal. Such notice
to Parent shall be made orally and in writing and shall indicate in reasonable
detail the identity of the offeror and the terms and conditions of such
proposal, inquiry or contact.
(c) If the Board of Directors of the Company receives a request
for material nonpublic information by a party who makes a bona fide Acquisition
Proposal and the Board of Directors of the Company determines that such proposal
is a Superior Proposal then, and only in such case, the Company may, subject to
the execution of a confidentiality agreement substantially similar to that then
in effect between the Company and Parent, provide such party with access to
information regarding the Company. The Company will promptly (but in no case
later than 24 hours) notify Parent of any determination by the Company's Board
of Directors that a "Superior Proposal" has been made.
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(d) The Company shall immediately cease and cause to be
terminated any existing discussions or negotiations with any parties (other than
Parent and Sub) conducted heretofore with respect to any of the foregoing. The
Company agrees not to release any Third Party from an confidentiality or
standstill agreement to which the Company is a party.
(e) The Company shall ensure that the officers, directors and
employees of the Company and its Subsidiaries, and any investment banker or
other advisor or representative retained by the Company, are aware of the
restrictions described in this Section 5.7.
5.8 MEETING OF SHAREHOLDERS. The Company will take all action
necessary in accordance with applicable law and its Articles of Incorporation
and Bylaws to convene a meeting of its Shareholders (the "Company Shareholders
Meeting") as promptly as practicable to consider and vote upon the Merger.
Subject to the fiduciary duties of the Company's Board of Directors under
applicable law as advised by counsel, the Board of Directors of the Company
shall recommend and declare advisable such approval, and the Company shall as
promptly as possible following dissemination of the Proxy Statement/Prospectus
take all lawful action to solicit, and use all reasonable efforts to obtain,
such approval.
5.9 REGISTRATION STATEMENT/PROXY MATERIALS. The Company will, as
promptly as practicable, cooperate with Parent to prepare and file with the
Commission preliminary proxy materials that will constitute a proxy statement in
connection with the vote of Company's Shareholders with respect to the Merger,
together with any amendments thereof or supplements thereto (in each case, in
the form or forms mailed to the Company's shareholders, the "Proxy
Statement/Prospectus"). Parent will also prepare and file with the SEC a
registration statement on Form S-4 (the "S-4 Registration Statement"),
containing the definitive Proxy Statement/Prospectus, in connection with the
registration under the Securities Act of the Series B Preferred shares issuable
upon conversion of the Company Shares and the other transactions contemplated
hereby. Parent and the Company will use all reasonable efforts to have the S-4
Registration Statement declared effective as promptly as practicable, and also
will take any other action required to be taken under federal or state
securities laws, and will use all reasonable efforts to cause the Proxy
Statement/Prospectus to be mailed to shareholders of the Company at the earliest
practicable date. If at any time prior to the Effective Time any event relating
to or affecting the Company or Parent shall occur as a result of which it is
necessary, in the opinion of counsel for the Company or of counsel for Parent,
to supplement or amend the S-4 Registration Statement in order to make such
document not misleading in light of the circumstances existing at the time
approval of the shareholders of the Company is sought, the Company and Parent
will forthwith prepare and file with the SEC an amendment or supplement to the
S-4 Registration Statement so that such document, as so supplemented or amended,
will not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
5.10 TERMINATION OF COMPANY STOCK RIGHTS PLAN. Between the date hereof
and the Effective Time, the Company's Board of Directors will terminate the
Company Stock Rights Plan.
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5.11 BEST EFFORTS. Between the date of this Agreement and the earlier
to occur of the Effective Time and termination of this Agreement under Section
10, Company will use its Best Efforts to cause the conditions in Sections 7, 8
and 9 to be satisfied.
6. COVENANTS OF PARENT AND SUB PRIOR TO EFFECTIVE TIME.
6.1 APPROVAL OF PARENT. Parent, as the sole shareholder of Sub, will
act by written consent to approve the Merger and the adoption of this Agreement
by Sub, which consent Parent and Sub represent and warrant will constitute the
requisite approval of the Merger and this Agreement by Sub.
6.2 APPROVALS OF GOVERNMENTAL BODIES. As promptly as practicable
after the date of this Agreement, Parent and Sub will, and will cause each of
their Related Persons to, make all filings required by Legal Requirements to be
made by them to consummate the Contemplated Transactions. Between the date of
this Agreement and the earlier to occur of the Effective Time, Parent will, and
will cause each Related Person to, (a) cooperate with Company and Stockholders
with respect to all filings that Company elect to make or are required by Legal
Requirements to make in connection with the Contemplated Transactions, and (b)
cooperate with Company in obtaining all required consents.
6.3 CONDUCT OF BUSINESS OF SUB. During the period from the date of
this Agreement to the earlier to occur of the Effective Time or termination of
this Agreement under Section 10, Sub shall not engage in any activities of any
nature except as provided in or contemplated by this Agreement.
6.4 ACCESS AND INVESTIGATION. Between the date of this Agreement and
the earlier to occur of the Effective Time or termination of this Agreement
under Section 10, Parent will, and will cause its Representatives to, (a) afford
Company and its Representatives (collectively, "Company's Advisors") full and
free access to the Company's books and records, and other documents and data,
(b) furnish Company and Company's Advisors with copies of all such documents and
data as Company may reasonably request, and (c) furnish Company and Company's
Advisors with such additional financial, operating, and other data and
information as Company may reasonably request.
6.5 NOTIFICATION. Between the date of this Agreement and the earlier
to occur of the Effective Time or termination of this Agreement under Section
10, Parent will promptly notify Company in writing if Parent becomes aware of
any fact or condition that causes or constitutes a Breach of any of Parent's
representations and warranties as of the date of this Agreement. Should any such
fact or condition require any change in the Parent Disclosure Letter if the
Disclosure Letter were dated the date of the occurrence or discovery of any such
fact or condition, Parent will promptly deliver to Company a supplement to the
Disclosure Letter specifying such change. During the same period, Parent will
promptly notify Company of the occurrence of any Breach of any covenant of
Parent in this Section 6 or of the occurrence of any event that may make the
satisfaction of the conditions in Sections 8 or 9 impossible or unlikely.
6.6 REGISTRATION STATEMENT/PROXY MATERIALS. Parent will prepare and
file with the SEC a registration statement on Form S-4 (the "S-4 Registration
Statement"), containing the
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definitive Proxy Statement/Prospectus, in connection with the registration under
the Securities Act of the Series B Preferred shares issuable upon conversion of
the Company Shares and the other transactions contemplated hereby. Parent will
use all reasonable efforts to have the S-4 Registration Statement declared
effective as promptly as practicable, and also will take any other action
required to be taken under federal or state securities laws, and will use all
reasonable efforts to assist the Company to cause the Proxy Statement/Prospectus
to be mailed to shareholders of the Company at the earliest practicable date. If
at any time prior to the Effective Time any event relating to or affecting the
Parent shall occur as a result of which it is necessary, in the opinion of
counsel for the Company or of counsel for Parent, to supplement or amend the S-4
Registration Statement in order to make such document not misleading in light of
the circumstances existing at the time approval of the shareholders of the
Company is sought, Parent will with Company's cooperation forthwith prepare and
file with the SEC an amendment or supplement to the S-4 Registration Statement
so that such document, as so supplemented or amended, will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
6.7 BEST EFFORTS. Between the date of this Agreement and the earlier
to occur of the Effective Time or termination of this Agreement under Section
10, Parent and Sub will use their Best Efforts to cause the conditions in
Sections 7, 8 and 9 to be satisfied.
6.8 NASDAQ LISTING. Within 120 days following the Closing, the
Company will cause the Series B Shares and attached Warrants issued in the
Merger to be listed on Nasdaq.
7. CONDITIONS PRECEDENT TO PARENT'S AND SUB'S OBLIGATION TO CLOSE.
The obligation of Parent and the obligation of Sub to effect the
Merger and the other Contemplated Transactions shall be subject to the
fulfillment, at or prior to the Closing Date, of the following conditions:
7.1 REPRESENTATIONS AND WARRANTIES TRUE AT THE EFFECTIVE TIME. Each
of the Company's representations and warranties in this Agreement must have been
accurate in all respects as of the date of this Agreement, and the
representations and warranties contained in Sections 3.2, 3.3, 3.11, 3.14 (to
the extent of any Proceeding under Section 3.14(a)(ii) or any Proceeding under
Section 3.14(a)(i), excluding matters set forth in the Disclosure Letter, that
may result in an uninsured loss in excess of $2 million), 3.24 and 3.25 must be
accurate in all respects as of the Closing Date as if made on and as of the
Closing Date, without giving effect to any supplement to the Disclosure Letter,
and the Company shall have delivered to Parent a certificate to such effect
signed by the Chief Executive Officer of the Company.
7.2 THE COMPANY'S PERFORMANCE. All of the covenants and obligations
of the Company to be performed or complied with pursuant to the terms of this
Agreement on or before the Closing Date shall have been fully performed in all
material respects, and at the Closing Date the Company shall have delivered to
Parent a certificate to such effect signed by the Chief Executive Officer of the
Company.
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7.3 AUTHORITY. All action required to be taken by, or on the part of,
the Company and its stockholders to authorize the execution, delivery and
performance of this Agreement and the Articles of Merger and the consummation of
the transactions contemplated hereby and thereby shall have been duly and
validly taken by the Company's Board of Directors and by the holders of the
Company's outstanding Common Stock and Preferred Stock.
7.4 DELIVERIES. Company shall have delivered to Parent the following:
(a) The corporate minute book and stock book of Company.
(b) Resignations of the each of the existing directors and
officers of the Company, to be effective upon the Closing Date.
(c) An opinion of Troy & Gould, P.C., counsel to the Company,
dated the Closing Date, substantially in the form of EXHIBIT 7.4(c)
hereto.
(d) A certificate of the Secretary of the Company, dated the
Closing Date, in the form of EXHIBIT 7.4(d) hereto.
7.5 CERTAIN LITIGATION. There must not be in effect any Legal
Requirement or any injunction or other Order that (a) prohibits the Merger or
the other Contemplated Transactions, and (b) has been adopted or issued, or has
otherwise become effective, since the date of this Agreement.
7.6 CONSENTS OBTAINED. All consents and approvals of
Governmental Entities or third parties necessary for consummation of the Merger
shall have been obtained.
7.7 TERMINATION OF AGREEMENTS. The agreements listed on
Exhibit 7.7 between the Company and FMC Corporation shall have been terminated
prior to the Effective Date. The Company shall have terminated the Company Stock
Rights Plan.
7.8 ACTION BY COMPANY SERIES B STOCK. Either (i) all shares of the
Company Series B Stock shall have been redeemed prior to the shareholders
meeting referenced in Section 5.8 or the holder thereof shall have voted in
favor of the Merger as part of such meeting.
8. CONDITIONS PRECEDENT TO COMPANY'S OBLIGATION TO CLOSE.
The obligation of the Company to effect the Merger and the other
Contemplated Transactions is subject to the satisfaction, at or prior to the
Closing, of each of the following conditions:
8.1 ACCURACY OF REPRESENTATIONS. Each of Parent's representations and
warranties in this Agreement must have been accurate in all respects as of the
date of this Agreement and must be accurate in all respects as of the Closing
Date as if made at the Closing Date and Parent shall have delivered to Company a
certificate to such effect signed by the Chief Executive Officer of the Parent.
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8.2 PARENT'S AND SUB'S PERFORMANCE. All of the covenants and
obligations of the Parent and of Sub to be performed or complied with pursuant
to the terms of this Agreement on or before the Closing Date shall have been
fully performed in all material respects, and at the Closing Date the Parent and
Sub shall have delivered to Company a certificate to such effect signed by the
Chief Executive Officer of the Parent.
8.3 AUTHORITY. All action required to be taken by, or on the part of,
the Parent and Sub to authorize the execution, delivery and performance of this
Agreement and the Articles of Merger and the consummation of the Contemplated
Transactions shall have been duly and validly taken by Parent and Sub.
8.4 DELIVERIES. Parent and Sub shall have delivered to Company and
Stockholders the following:
(a) An opinion of Tonkon Torp LLP, counsel to Parent and Sub,
dated the Closing Date, substantially in the form of EXHIBIT 8.4(a) hereto.
(b) A certificate of the Secretary of each of Parent and of Sub,
dated the Closing Date, in the form of EXHIBIT 8.4(b) hereto.
8.5 FAIRNESS OPINION. The Company shall have received an opinion as
to the fairness of the Merger transaction to the Company's stockholders in form
acceptable to the Company's board of directors.
8.6 CERTAIN LITIGATION. There must not be in effect any Legal
Requirement or any injunction or other Order that (a) prohibits the Merger or
the other Contemplated Transactions, and (b) has been adopted or issued, or has
otherwise become effective, since the date of this Agreement.
9. CONDITIONS TO OBLIGATIONS OF EACH PARTY.
The obligations of each party to effect the Merger and the other
Contemplated Transactions shall be subject to the fulfillment, at or prior to
the Closing Date, of the following conditions:
9.1 COMMISSION APPROVAL. The S-4 Registration Statement with respect
to the issuance of the Series B Preferred shares issuable pursuant to the Merger
shall have been declared effective.
9.2 APPROVAL BY COMPANY'S COMMON AND PREFERRED STOCK. The holders of
the requisite number of the Company's Common Stock under the CCL and the holder
of any Company Series B Stock outstanding at the date of the Company's special
meeting of shareholders held pursuant to Section 5.8 shall have voted such
shares in favor of the transaction.
10. TERMINATION.
10.1 TERMINATION EVENTS. This Agreement may, by notice given prior to
or at the Closing, be terminated after the date hereof and prior to the Closing:
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(a) by Parent if a material Breach of any provision of this
Agreement has been committed by Company, and in any such case such Breach has
not been waived by Parent or is not cured by Company within ten days following
receipt of notice of the Breach;
(b) by Parent if any of the conditions in Section 7 has not been
satisfied as of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Parent to comply with its
obligations under this Agreement) and Parent has not waived such condition on or
before the Closing Date;
(c) by Parent or the Company if at the Company Shareholders
Meeting (including any adjournment or postponement thereof), the requisite vote
of the holders of the Company's Common Stock or Preferred Stock shall not have
been obtained;
(d) by Parent if (i) the Board of Directors of the Company shall
fail to recommend, or shall withdraw, modify or change its recommendation of,
this Agreement or the Merger in a manner adverse to Parent or shall have
resolved to do any of the foregoing; (ii) the Board of Directors of the Company
shall have resolved to recommend, or have recommended, to the shareholders of
the Company an Superior Proposal; or (iii) a tender offer or exchange offer for
25% or more of the outstanding shares of Company voting stock is commenced and
the Board of Directors of the Company has resolved to recommend, or has
recommended, that the shareholders of the Company tender their shares in such
tender offer or exchange offer;
(e) by Company if a material Breach of any provision of this
Agreement has been committed by Parent or Sub, and in any such case such Breach
has not been waived or is not cured within ten days following receipt of notice
of the Breach;
(f) by Company if any of the conditions in Section 8 has not
been satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Company to comply with
their obligations under this Agreement) and Company has not waived such
condition on or before the Closing Date;
(g) by Company or Parent if Company's Board of Directors has
voted to approve a Superior Proposal;
(h) by mutual consent of Parent and Company; or
(i) by Parent or Company if the Closing has not occurred (other
than through the failure of any party seeking to terminate this Agreement to
comply fully with its obligations under this Agreement) on or prior to October
31, 2000, or such later date as the parties may agree upon.
10.2 EFFECT OF TERMINATION. Except as expressly provided otherwise
herein, each party's right of termination is in addition to any other rights it
may have under this Agreement or otherwise, and the exercise of a right of
termination will not be an election of remedies. If this Agreement is terminated
by a party because the other party failed to satisfy a condition, then
termination of this Agreement shall be deemed to be an election of remedies, and
neither party shall have any further right or claim with respect to the other
party; provided, however, that if this Agreement is terminated by a party
because of the other party's failure to
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comply with any of its covenants under this Agreement, the terminating party's
right to pursue all legal remedies will survive such termination unimpaired.
11. GENERAL PROVISIONS.
11.1 FEES AND EXPENSES.
(a) Except as set forth in subsection (b) of this Section 11.1
or as otherwise provided herein, all fees and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expenses, whether or not the Merger is consummated;
provided, however, that Parent shall pay 100% of all fees and expenses, other
than attorneys and accountants fees (as to which each party shall bear its own
expenses), incurred in connection with the printing and filing of the Proxy
Statement/Prospectus (including any preliminary materials relating thereto) and
the S-4 Registration Statement (including financial statements and exhibits) and
any amendments or supplements thereto (together, the "Proxy Expenses"); provided
further, however, that Company shall pay 100% of the Proxy Expenses in the event
the Merger is not approved by the holders of the Company's Common Stock and
Preferred Stock.
(b) The Company shall pay Parent a fee of $2 million upon the
earliest to occur of any of the following events:
(i) the termination of this Agreement by Parent pursuant
to Section 10.1(d);
(ii) the termination of this Agreement by Parent pursuant
to Section 10.1(a); or
(iii) the termination of this Agreement by the Company or
Parent pursuant to Section 10.1(g).
(c) The Company shall pay Parent a fee of $500,000 upon the
termination of this Agreement by Parent or the Company pursuant to Section
10.1(c) as a result of the failure to receive the requisite approval of the
Company's outstanding Common Stock or Preferred Stock, or by Parent pursuant to
Section 10.1(b) based on a failure of the condition in Section 7.5, or by the
Company pursuant to Section 10.1(f) based on the failure of the condition set
forth in Section 8.6, if in any such event within 24 months from the date of
this Agreement the Company enters into an agreement to be acquired by any third
party (including any current AMVC shareholder) or a majority of AMVC Common
Stock is acquired by a third party in a tender offer.
(d) Parent shall pay the Company a fee of $2 million upon
termination of this Agreement by the Company pursuant to Section 10.1(e) after a
Breach by Parent of this Agreement, or pursuant to Section 10.1(f) based upon a
failure of the conditions set forth in Sections 8.1 through 8.4.
(e) The fees payable pursuant to Sections 11.1(b), (c) or
11.1(d) shall be paid within one business day after the first to occur of the
events described in
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Sections 11.1(b), (c) or 11.1(d), as the case may be, and the expenses payable
pursuant to Section 11.1(a) shall be paid within five business days after
receipt of written documentation of the amount of expenses so payable; provided,
however, that in no event shall Parent or the Company, as the case may be, be
required to pay such fees or expenses to the other, if, immediately prior to the
termination of this Agreement, the party to receive the fees or expenses was in
material breach of its obligations under this Agreement.
11.2 PUBLIC ANNOUNCEMENTS. Any public announcement or similar
publicity with respect to this Agreement or the Contemplated Transactions will
be issued, if at all, at such time and in such manner as Parent and Company
mutually determine. The Company and Parent will consult with each other
concerning the means by which the Company's employees, customers, and suppliers
and others having dealings with the Company will be informed of the Contemplated
Transactions.
11.3 LEGAL PROCEEDINGS. In the event any legal proceeding is initiated
by either party in connection with this Agreement the parties expressly consent
to exclusive jurisdiction and venue with the state or federal courts located in
Portland, Oregon, with the prevailing party entitled to recover attorney fees
and other costs incurred in all pretrial, trial or appellate proceedings.
11.4 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand, (b) sent by facsimile, provided that a copy is
mailed by certified mail, return receipt requested, (c) received by the
addressee, if sent by certified mail, return receipt requested, or (d) when
received by the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate addresses and
facsimile numbers set forth below (or to such other addresses and facsimile
numbers as a party may designate by notice to the other parties):
Company: Advanced Machine Vision Corporation
Attn: William J. Young
2709 Citation Way, Suite 102
Medford, OR 97504
With copy to: Troy & Gould, P.C.
Attn: William D. Gould
1801 Century Park East, 16th Floor
Los Angeles, CA 90067
Parent: Key Technology, Inc.
Attn: Thomas C. Madsen
150 Avery Street
Walla Walla, WA 99362
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With copy to: Tonkon Torp LLP
Attn: Ronald L. Greenman
1600 Pioneer Tower
888 SW Fifth Avenue
Portland, OR 97204-2099
11.5 FURTHER ASSURANCES. The parties agree (i) to furnish upon request
to each other such further information, (ii) to execute and deliver to each
other such other documents, and (iii) to do such other acts and things, all as
the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
11.6 WAIVER. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
11.7 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the amendment.
11.8 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. Neither party
may assign any of its rights under this Agreement without the prior consent of
the other parties, which will not be unreasonably withheld, except that Parent
may assign any of its rights under this Agreement to any present or future
Subsidiary of Parent. Subject to the preceding sentence, this Agreement will
apply to, be binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties. Nothing expressed or referred
to in this Agreement will be construed to give any Person other than the parties
to this Agreement any legal or equitable right, remedy, or claim under or with
respect to this Agreement or any provision of this Agreement. This Agreement and
all of its provisions and conditions are for the sole and exclusive benefit of
the parties to this Agreement and their successors and assigns.
11.9 SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will
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remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
11.10 SECTION HEADINGS; CONSTRUCTION. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
11.11 TIME OF ESSENCE. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
11.12 GOVERNING LAW. This Agreement will be governed by the laws of
the State of Oregon without regard to conflicts of laws principles.
[Remainder of Page Intentionally Left Blank]
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11.13 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above.
KEY TECHNOLOGY, INC.
By /s/ Thomas P. Madsen
-----------------------------
KTC ACQUISITION CORP.
By /s/ Thomas P. Madsen
-----------------------------
ADVANCED MACHINE VISION
CORPORATION
By /s/ W. J. Young
-----------------------------
47
February 10, 2000
William D. Gould
Troy & Gould
1801 Century Park East
16th Floor
Los Angeles, CA 90067
Dear Bill:
We have agreed that Section 7.1 will be modified to delete the
reference to Section 3.15 and that the following insert will be added after the
reference to Section 3.14:
(to the extent of any Proceeding under Section 3.14(a)(ii) or any
Proceeding under Section 3.14(a)(i), excluding matters set forth in
the Disclosure Letter, that may result in an uninsured loss in excess
of $2 M)
The Agreement and Plan of Merger will be conformed to reflect the above
change.
Very truly yours,
/s/ Ronald L. Greenman
Ronald L. Greenman
[KEY TECHNOLOGY, INC., LOGO]
FOR IMMEDIATE RELEASE: February 15, 2000
CONTACT: Tom Madsen Ted Sharp
President/CEO Chief Financial Officer
Key Technology, Inc. Key Technology, Inc.
(509) 529-2161 (509) 529-2161
KEY TECHNOLOGY ANNOUNCES PLANS TO ACQUIRE
ADVANCED MACHINE VISION CORPORATION
WALLA WALLA, WA - Key Technology, Inc. (NASDAQ/NMS: KTEC) announced today that
it has signed a definitive agreement and Plan of Merger with Advanced Machine
Vision Corporation (NASDAQ: AMVC). AMVC is comprised of two subsidiaries--SRC
VISION, Inc. and Ventek, Inc. SRC VISION, located in Medford, Oregon and
Eindhoven, the Netherlands, designs and manufactures machine vision systems for
the food, agricultural, plastics, tobacco, and pulp wood industries. Ventek,
located in Eugene, Oregon, designs and assembles machine vision systems for
automated inspection and process control in the plywood and wood panel
industries. AMVC had revenues of $24 million in 1999 and employs approximately
190 people.
Under the terms of the Agreement, each share of AMVC common stock would receive:
- - $1.00 per share in cash, plus
- - Key convertible preferred stock, redeemable for $1.00 in cash for each
AMVC common share any time after two years, or convertible at any time
into 2/3 of a share of Key common stock for each 10 shares of AMVC common
stock, plus
- - a warrant to purchase Key common stock, redeemable at any time for $.25 in
cash for each AMVC common share, or which can be exercised to purchase .025
shares of Key common stock per AMVC common share at an exercise price of
$15.00 per share of Key common stock.
The Agreement is subject to approval by the holders of Key's common stock and
AMVC's common and preferred stock, which will be solicited at stockholders
meetings expected to be held in May of this year.
150 Avery, Walla Walla, WA 99362-1668 U.S.A.
Telephone:509-529-2161-Administration Fax:509-522-3378-Web Sight:www.keyww.com
<PAGE>
"We are pleased to have been able to structure this merger plan with the support
of AMVC's management and board of directors," commented Tom Madsen, President
and CEO of Key Technology. "We feel the features of the Plan that permit AMVC
stockholders to acquire Key Technology common stock offer meaningful upside to
the Plan's cash value. The merger with AMVC provides unique opportunities for
growth and operating efficiencies, and allows AMVC stockholders to share in that
added value with Key's stockholders."
"The Company believes that the transaction will result in substantial cost
reductions and is expected to be accretive to earnings in Fiscal 2001.
Management expects that approximately $4-5 million in direct cost reduction can
be achieved through reductions in manufacturing, combining sales and marketing
efforts and elimination of redundancies in research and development programs. At
the same time, the acquisition will allow the Company to more aggressively
expand geographic and market sector sales coverage. The combined company will
also expand the development of new technologies for solving customers' quality,
safety and productivity problems, and provide a higher level of customer service
with the combination of the two service organizations. Key's Specialized
Conveying Systems (SCS) division, which designs and manufactures conveying
equipment, will benefit immediately from the increased level of systems work
that will be generated by the sale of SRC optical sorting machines," said Mr.
Madsen.
"The acquisition of AMVC fits our strategy of growth through acquisition of
companies with unique technology and market positions that will be additive to
our own internal development," commented Mr. Madsen. "Both companies' product
lines will be continued since each offers unique capabilities. Our customers
will play an important role in helping us with positioning of the best
technologies for various applications. Adding AMVC clearly positions us in
certain markets where we have not been as strong and offers diversification into
non-food and non-seasonal markets. Key Technology will increase its access to
some of the world's largest commodities markets, including food, tobacco and
forest products."
"The timing of this acquisition complements our plan to announce additional
elements of our vision for providing automation and process control systems to
enhance quality and productivity in the near future," stated Mr. Madsen. "Each
step in the fulfillment of this vision will allow our customers to enhance their
own competitiveness by reducing costs, improving throughput, increasing quality
and improving cycle time. Key plans to introduce a new Internet-based, online
remote access product later this year. The new service product will allow Key's
service center to diagnose customers' automated inspection machines to achieve
optimum performance
150 Avery, Walla Walla, WA 99362-1668 U.S.A.
Telephone:509-529-2161-Administration Fax:509-522-3378-Web Sight:www.keyww.com
<PAGE>
while the customers' processing lines are running. Gaining access to AMVC's
installed base of over 1000 systems will roughly double Key's existing base of
installations where this new
remote access product can be applied. This acquisition will clearly enhance the
ability to bring a higher level of service to Key and AMVC customers, many of
whom are located a great distance from service centers."
Key Technology, an ISO-9000 certified company, is a leading designer and
manufacturer of process automation systems, primarily for the food processing
industry, which integrate electro-optical inspection and sorting, specialized
conveying and product preparation equipment. Key systems allow processors to
improve quality, increase yield and reduce cost. With worldwide sales and
service, the company maintains manufacturing facilities and demonstration
laboratories in Beusichem, the Netherlands and Walla Walla, WA.
THE EXCHANGE OFFER BY KEY TECHNOLOGY, INC. DESCRIBED IN THIS ANNOUNCEMENT HAS
NOT YET COMMENCED. ONCE THE EXCHANGE OFFER COMMENCES, WE WILL FILE A PROXY
STATEMENT AND OTHER RELEVANT DOCUMENTS WITH THE SECURITIES AND EXCHANGE
COMMISSION. YOU SHOULD READ THESE DOCUMENTS WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE EXCHANGE OFFER. YOU CAN OBTAIN
THESE RELEVANT DOCUMENTS THAT WILL BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION FOR FREE WHEN THEY ARE AVAILABLE ON THE SECURITIES AND EXCHANGE
COMMISSION'S WEB SITE AT HTTP://WWW.SEC.GOV. ALSO, YOU CAN REQUEST COPIES OF
SUCH DOCUMENTS FOR FREE WHEN THEY ARE AVAILABLE BY CALLING TED R. SHARP, CHIEF
FINANCIAL OFFICER, AT (509) 529-2161 OR WRITING TO: KEY TECHNOLOGY, INC., 150
AVERY STREET, WALLA WALLA, WASHINGTON 99362, ATTN: TED R. SHARP.
COMMENTS INCLUDED IN THIS DOCUMENT MAY INCLUDE "FORWARD-LOOKING STATEMENTS"
WITHIN THE MEANING OF THE FEDERAL SECURITIES LAWS. THESE STATEMENTS AS TO
ANTICIPATED FUTURE RESULTS ARE BASED ON CURRENT EXPECTATIONS AND ARE SUBJECT TO
A NUMBER OF RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE PROJECTED OR DISCUSSED HERE. SUCH RISKS AND UNCERTAINTIES
ARE DETAILED IN THE COMPANY'S ANNUAL REPORT ON EXHIBIT 99.1 OF THE FORM 10-K
FILED WITH THE SEC IN DECEMBER 1999 AND ARE INCORPORATED HEREIN BY REFERENCE.
THE COMPANY CAUTIONS READERS NOT TO PLACE UNDUE RELIANCE UPON ANY SUCH
FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF. THE COMPANY
DISCLAIMS ANY OBLIGATION SUBSEQUENTLY TO REVISE FORWARD-LOOKING STATEMENTS TO
REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE OF SUCH STATEMENTS OR TO REFLECT
THE OCCURRENCE OF ANTICIPATED OR UNANTICIPATED EVENTS.
NOTE: NEWS RELEASES AND OTHER INFORMATION ON KEY TECHNOLOGY, INC. CAN BE
ACCESSED AT WWW.KEYWW.COM ON THE INTERNET
150 Avery, Walla Walla, WA 99362-1668 U.S.A.
Telephone:509-529-2161-Administration Fax:509-522-3378-Web Sight:www.keyww.com
