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EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
DATED AS OF JUNE 30, 2000
BY AND AMONG
NEMATRON CORPORATION,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, INDIVIDUALLY,
AND
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, TRUSTEE OF THE
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ REVOCABLE TRUST
DATED MARCH 14, 1990,
AS AMENDED
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of June 30, 2000 among the ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Trustee of the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Revocable Trust dated March 14, 1990,
as amended ("Seller"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, individually ("▇▇▇▇▇▇▇"), and Nematron
Corporation, a Michigan corporation ("Purchaser").
WHEREAS, Seller is the owner of 1,000 shares of common stock, $1.00 par
value per share (the "Shares") of A-OK Controls Engineering, Inc., a Michigan
corporation (the "Company"), which Shares constitute 100% of the issued and
outstanding capital stock of the Company;
WHEREAS, Purchaser wishes to purchase from Seller and Seller wishes to
sell to Purchaser, upon the terms and conditions hereinafter provided, the
Shares;
NOW, THEREFORE, the parties agree as follows:
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REPRESENTATIONS AND WARRANTIES
OF SELLER AND ▇▇▇▇▇▇▇
1.00 Representations of Seller and ▇▇▇▇▇▇▇. The Seller and ▇▇▇▇▇▇▇
jointly and severally represent and warrant to Purchaser as follows:
1.01 Ownership of the Shares. Seller is the lawful owner of the Shares,
free and clear of all liens, encumbrances, restrictions and claims of every
kind. Except as set forth on Schedule 1.1 attached hereto, Seller has full legal
right, power and authority to sell assign, transfer and convey the Shares in
accordance with the terms and subject to the conditions of this Agreement. The
delivery to Purchaser of the Shares pursuant to the provisions of this Agreement
will transfer to Purchaser valid title thereto, free and clear of any claim,
lien, encumbrance or agreement with respect thereto.
1.02. Existence and Good Standing of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Michigan and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted. The Company is duly qualified or licensed as a foreign corporation to
do business, and is in good standing in each jurisdiction in which the character
or location of the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except where the
failure to be so duly qualified or licensed would not have a material adverse
effect on the business, financial condition or results of operations of the
Company. Schedule 1.2 attached hereto contains a list of all of the
jurisdictions in which the Company is presently doing business, with states
where it is qualified as a foreign corporation noted thereon.
1.03. Capital Stock. The Company has an authorized capitalization
consisting of 50,000 shares of common stock, par value $1.00 per share, of which
1,000 shares are issued and owned by the Seller. All such outstanding shares
have been duly authorized and validly issued and are fully paid and
nonassessable. There are no outstanding subscriptions, options, warrants,
rights, calls, commitments, conversion rights, rights of exchange, plans or
other agreements providing for the purchase, issuance or sale of any shares of
the capital stock of the Company, other than as contemplated by this Agreement.
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1.04 Subsidiary. The Company does not own any subsidiary or own,
directly or indirectly, any interest or have an investment in any person. The
term "subsidiary" as used in this Section 1.04 shall mean any person of which
the Company owns, directly, or indirectly, more than 50% of the stock or other
equity interests that are generally entitled to vote for the election of the
board of directors or governing body of such person.
1.05 Financial Statements and No Material Adverse Change. The Company
has heretofore furnished Purchaser with certain financial statements, which
include a balance sheet of the Company (the "Balance Sheet") as at November 30,
1999 (the "Balance Sheet Date"), and the related statements of income,
shareholders equity and cash flows for the year then ended. Such financial
statements, including the footnotes thereto, have been prepared in accordance
with generally accepted accounting principles and fairly present in all material
respects the financial condition and results of the operations of the Company
and the changes in its respective financial position at such date and for such
period. Since the Balance Sheet Date, except as shown on Schedule 1.5 attached
hereto, there has been no material adverse change in the business, financial
condition or results of operations of the Company. For purposes of this Section
1.05, "material adverse change" means any change, individually or in the
aggregate, of $25,000 or more.
1.06 Title to Properties; Encumbrances. Except as set forth on Schedule
1.6 attached hereto, the Company has good title to all its properties and assets
(other than real property), including, without limitation, all the properties
and assets reflected in the Balance Sheet (except as indicated in the footnotes
thereto and except for properties and assets reflected in the Balance Sheet
which have been sold or otherwise disposed of in the ordinary course of business
after the Balance Sheet Date), subject to no encumbrance, lien, charge or other
restriction of any kind or character, except for (a) liens reflected in the
Balance Sheet or on Schedule 1.6, (b) liens or irregularities in title thereto
which do not materially detract from the value, of or impair the use of, such
property by the Company in the operation of its business, (c) liens arising by
operation of law and (d) liens for current taxes, assessments or governmental
charges or levies on property not yet due and delinquent (liens of the type
described in clauses (a) through (d) above, inclusive, together with liens
consisting of zoning or planning restrictions, easements, permits and other
restrictions or limitations of record on the use of real property are
hereinafter sometimes referred to as "Permitted Liens").
1.07 Real Property. The Company does not own any real property.
1.08 Leases. Schedule 1.8 attached hereto contains a list of (a) all
leases of real property to which the Company is a party (and Purchaser
acknowledges that the landlord under the Auburn Hills and Saginaw leases is an
entity owned and controlled by ▇▇▇▇▇▇▇) and (b) all other leases pursuant to
which payments of greater than $25,000 per annum are paid. Each such lease set
forth on Schedule 1.8 is in full force and effect; all rents and additional
rents due to date on each such lease have been paid; in each case, the Company
has not received notice that it is in default thereunder. Except as set forth on
Schedule l.8, there exists no event, occurrence, condition or act (including the
purchase of the Stock hereunder) which, with the giving of notice, the lapse of
time or the happening of any further event or condition, would become a material
default by the Company under such lease. All the buildings, structures and
appurtenances situated on the real property listed on Schedule 1.8 are in good
operating condition and in a state of good maintenance and repair, ordinary wear
and tear excepted. There are no condemnation or appropriation proceedings
pending or, to the Seller's knowledge, threatened against any of the real
property leased by the Company. To the Seller's knowledge no work has been
performed on or materials supplied to the real property leased by the Company in
Auburn Hills or Saginaw within any applicable statutory period which could give
rise to mechanic's or materialmen's liens; all bills and
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claims for labor performed and materials furnished to or for the benefit of the
real property in Auburn Hills and Saginaw for all periods prior to the Closing
Date shall be paid in full, and Seller has no knowledge of any mechanic's or
materialmen's liens, whether or not perfected, nor affecting any portion of the
real property leased by the Company in Auburn Hills and Saginaw.
1.09 Material Contracts. Except as set forth on Schedule 1.8, 1.9 or
1.13 attached hereto, the Company does not have and is not bound by (a) any
written agreement, contract or commitment relating to the employment of any
Person by the Company, (b) any agreement, contract or commitment limiting the
freedom of the Company to engage in any line of business or to compete with any
other Person, (c) any agreement, contract or commitment not entered into in the
ordinary course of business which involves payment by the Company of $25,000 or
more in any calendar year and is not cancelable without penalty within 30 days,
(d) any contracts relating to the future disposition or acquisition of any
material assets, other than dispositions or acquisitions of inventory in the
ordinary course of business, (e) any contract (other than employees benefit
plans, leases and insurance policies) that (i) involves the payment or potential
payment, pursuant to its terms, by or to the Company of more than $25,000
annually and (ii) cannot be terminated within thirty (30) days after giving
notice of termination without resulting in any material cost or penalty to the
Company, (f) any contract with distributors, dealers, manufacturer's
representatives, sales representatives or sales agencies with whom the Company
deals in connection with its business. The Company has not violated any term or
condition of any contract or agreement set forth on Schedule 1.9 in any material
respect and to the knowledge of Seller no other party to such contracts has
violated any term or condition of such contracts in any material respect. The
Company has fulfilled all material obligations required pursuant to such
contracts to have been performed by it on its part prior to the date hereof.
Contracts made in the ordinary course of business involving an obligation or
commitment on the part of the Company of less than $25,000 in any calendar year
shall be deemed not to be material for purposes of this Section 1.9 and shall
not be required to be disclosed on Schedule 1.9.
1.10 No Violations. Except as set forth on Schedule 1.10 attached
hereto, the execution and delivery of this Agreement by Seller and the
consummation of the transactions contemplated hereby (a) will not violate any
provision of the Articles of Incorporation or By-Laws of the Company, (b) to the
knowledge of Seller will not violate any statute, rule, regulation, order or
decree of any public body or authority by which the Company is bound or binding
upon any of their respective properties or assets and, (c) to the knowledge of
Seller will not result in a violation or breach of, or constitute a default
under, any license, franchise, permit, indenture, agreement or other instrument
to which the Company is a party, or by which the Company or any of their
respective assets or properties is bound, excluding from the foregoing clauses
(b) and (c) violations, breaches or defaults which, either individually or in
the aggregate, would not have a material adverse effect on the business,
financial condition or of operations of the Company.
1.11 Litigation. Except as set forth on Schedule 1.11 attached hereto,
Seller has no notice of any action, suit or proceeding at law or in equity by
any person or any arbitration or any administrative or other proceeding by or
before any governmental or other instrumentality or agency, pending, or, to the
knowledge of Seller, threatened against the Company.
1.12 Taxes. The Company has filed or caused to be filed, or will file
or cause to be filed on or prior to the Closing Date (as defined in Section
3.01), all federal, state, local and foreign tax returns and tax reports which
are required to be filed by, or with respect to, the Company on or prior to the
Closing Date (taking into account any extension of time to file granted to or an
behalf of the Company) (collectively, the "Returns"). Except as set forth on
Schedule 1.12 attached hereto, all federal, state, local and foreign taxes
("Taxes") due and payable by the Company have been, or prior to the Closing Date
will be, paid or fully provided for on the books and records of the Company in
accordance with generally accepted accounting principles. Except as disclosed on
Schedule 1.12, (a) there are no waivers in effect
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of the applicable statutory period of limitation for Taxes of the Company for
any taxable period, and (b) no deficiency assessment or proposed adjustment with
respect to any tax liability of the Company for any taxable period is pending
or, to the knowledge of Seller, threatened. The federal income tax returns of
the Company have been audited by the Internal Revenue Service through the fiscal
year ended November 30, 1991 and any deficiencies assessed thereby have been
paid.
1.13 Conduct of Business. Since the Balance Sheet Date, and except as
set forth on Schedule 1.13 or 1.20 attached hereto or as contemplated or
expressly required or permitted by this Agreement, the Company has not taken any
action which, if taken subsequent to the execution of this Agreement and on or
prior to the Closing Date, would constitute a breach of Seller's agreements set
forth in Article IV.
1.14 Intellectual Properties. The Company does not own any domestic and
foreign patents, patent applications, patent licenses, software licenses (other
than those obtained on a non-exclusive basis in ordinary course business
transactions from software designers, packagers or resellers, which software
licenses are not proprietary as they relate to the Company), trade names (other
than the name of the Company registered as a corporate name in the states in
which the Company is either incorporated or qualified), trademarks, service
marks, trademarks registrations and applications, service ▇▇▇▇ registrations and
applications, copyright registrations and applications (collectively, the
"Intellectual Property"). To the knowledge of Seller and ▇▇▇▇▇▇▇, except as
stated on Schedule 1.14, there are no pending proceedings or litigation or other
adverse claims made in writing affecting or with respect to the Intellectual
Property. To the knowledge of Seller and ▇▇▇▇▇▇▇, the Company has not received
any notice that it is infringing any Intellectual Property of any other person
in connection with the conduct of the business of the Company and to the
knowledge of Seller and ▇▇▇▇▇▇▇, no claim is pending or has been made to such
effect that has not been resolved and, to the knowledge of Seller and ▇▇▇▇▇▇▇
the Company is not infringing any Intellectual Property of any other Person.
1.15 Environmental Laws and Regulations. To the knowledge of Seller and
▇▇▇▇▇▇▇, except as set forth on Schedule 1.15, (a) the Company is in compliance
in all material respects with applicable Environmental Laws and the requirements
of permits issued under such laws with respect to any property of the Company
such that the Company is fully able to carry out its business as currently
conducted; (b) there are no pending or threatened Environmental Claims against
the Company or any real property that individually or in the aggregate could
reasonably be expected to have a material adverse effect on the business,
financial condition or results of operations of the Company; (c) there have been
no releases of Hazardous Materials on, in, above or about any real property that
individually or in the aggregate could reasonably be expected to have a material
adverse effect on the business, financial condition or results of operations of
the Company, and (d) no Company facilities are hazardous waste treatment,
storage or disposal facilities, as such term is used in the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq., which individually or
in the aggregate could reasonably be expected to have a material adverse effect
on the business, financial condition or results of operations of the Company as
the result of noncompliance with such statute. For proposes of this Agreement:
"Environmental Law" means any applicable federal state or local
statute, law, rule, regulation, ordinance, code or rule of common law in each
case in effect and as amended as of the Closing Date, and any applicable
judicial or administrative interpretation thereof as of the Closing Date,
including any judicial or administrative order, consent decree or judgment,
relating to the environment, health, safety or Hazardous Materials;
"Environmental Claims" means administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
non-compliance or violation, investigations or proceedings relating to any
applicable Environmental Law or any permit issued under any such Law (hereafter
"Claims"), including (i) Claims by governmental or regulatory authorities for
enforcement,
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cleanup, removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law, and (ii) Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment; and
"Hazardous Materials" means (i) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is friable, urea
formaldehyde foam insulation, transformers or other equipment that contains
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas,
and (ii) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances, "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants," or words of similar import under any applicable
Environmental Law.
1.16 Compliance with Laws. Except as set forth on Schedule 1.16
attached hereto, the Company is, to the knowledge of Seller and ▇▇▇▇▇▇▇, in
compliance with all applicable laws, regulations, orders, judgments and decrees
except where the failure to so comply would not have a material adverse effect
on the business, financial condition or results of operations of the Company.
1.17 Employee Benefit Plans. Each employee benefit plan within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), currently or over the last five years maintained or
contributed to by the Company, or any entity currently treated as a single
employer under Section 414(b) or (c) of the Internal Revenue Code of 1986, as
amended (the "Code") ("ERISA Affiliates") with the Company, with respect to
which the Company has a liability, and any deferred compensation, bonus, or
material fringe benefit plan, policy, trust, or arrangement whether written or
oral, with or for the benefit of any present or prior officer, director, or
employee with respect to which the Company is or will be required to make any
payment is listed on Schedule 1.17 attached hereto (collectively, the "Employee
Benefit Plans"). Except as set forth on such Schedule 1.17: (a) each Employee
Benefit Plan is, in all material respects, in compliance with applicable law and
has been administered and operated in all material respects in accordance with
its terms; (b) each Employee Benefit Plan which is intended to be "qualified"
within the meaning of Section 401(a) of the Code, has received a favorable
determination letter from the Internal Revenue Service (the "IRS") and, to the
knowledge of the Seller and ▇▇▇▇▇▇▇, no event has occurred and no condition
exists which would result in the revocation of any such determination; (c) no
Employee Benefit Plan is covered by Title IV of ERISA or subject to Section 412
of the Code or Section 302 of ERISA or a multiemployer plan (as described in
Section 3(37) of ERISA); (d) neither the Company nor, any ERISA Affiliate nor to
the Seller's knowledge, any other "disqualified person" or "party in interest"
(as defined in Section 4975(e)(2) of the Code and Section 3(14) of ERISA,
respectively) has engaged in any transactions in connection with any Employee
Benefit Plan that would reasonably be expected to result in the imposition of a
penalty pursuant to Section 502 of ERISA, damages pursuant to Section 409 of
ERISA or a tax pursuant to Section 4975 of the Code which penalty, damage or tax
would be a material liability to the Company; and (e) no litigation or legal or
administrative proceeding has been asserted or commenced or, to the Seller's and
▇▇▇▇▇▇▇'▇ knowledge, threatened, against any Employee Benefit Plan, the assets
of any such plan or the Company or any ERISA Affiliate with respect to any
Employee Benefit Plan, or the plan administrator or fiduciary of any Employee
Benefit Plan with respect to the operation of any such plan (other than routine,
uncontested benefit claims), and to the knowledge of Seller and ▇▇▇▇▇▇▇ there
are no facts or circumstances which would reasonably be expected to form the
basis for any such legal proceeding except to the extent that any such
litigation or proceeding would not reasonably be expected to result in a
material liability to the Company; (f) the Company has no obligations under any
of the Employee Benefit Plans, to provide health or life insurance benefits to
its current or prior employees (or their beneficiaries or dependents) for
periods after termination of employment, except as specifically required by
Section 4980B of the Code or subtitle B, part 6, of Title I of ERISA or similar
state
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continuation coverage law; (g) each Employee Benefit Plan which is a "welfare
benefit plan" under ERISA ss. 3(1) is terminable in accordance with its terms by
the Company at any time without any further obligation thereunder other than to
make payments and/or contributions in respect of benefits theretofore accrued in
accordance with its terms; and (h) all contributions required to have been paid
under any Employee Benefit Plan to the date hereof have been timely made.
With respect to each Employee Benefit Plan, the Company has
delivered to Purchaser a true and correct copy of (i) the annual reports (Form
5500), if any, filed with the IRS for the three recent plan years, (ii) the plan
document and all amendments thereto, along with any current summary plan
description for such Employee Benefit Plan, (iii) each trust agreement, group
annuity contract and insurance policy, if any, relating to such Employee Benefit
Plan and (iv) each determination letter from the IRS relating to such Employee
Benefit Plan which is intended to qualify under Section 401(a) of the Code.
For purposes of this Section 1.17, "material" shall mean any
liability which exceeds $25,000.
1.18 Insurance. Schedule 1.18 attached hereto contains a list of all
policies and contracts for property and casualty insurance maintained by the
Company. All such policies are in full force and effect.
1.19 Brokers or Finder's Fees. No agent, broker, person or firm acting
on behalf of Seller or the Company is, or will be, entitled to any commission or
broker's or finder's fees from any of the parties hereto, or from any Person
controlling controlled by or under common control with any of the parties
hereto, in connection with any of the transactions contemplated herein, except
for Alliance-BRG, Ltd., whose fees and expenses will be paid by Seller.
1.20 Employees. Schedule 1.20 attached hereto sets forth the following
information for each of the officers and employees of the Company: name and job
title; current annualized rate of compensation as of the date of this Agreement
(identifying any guaranteed bonuses separately); and the number of vacation days
such person is entitled to take in each calendar year.
1.21 Labor Relations. The employees of the Company are not covered by
any collective bargaining agreement. To the knowledge of Seller and ▇▇▇▇▇▇▇ (i)
there is no union organization activity currently underway, (ii) the Company is
not engaged in, or has not received any written notice during the current or
preceding year of, any unfair labor practice, and no such complaint is pending
before the National Labor Relations Board or any other agency having
jurisdiction thereof, (b) during the immediately preceding twelve (12) calendar
months there has not been any, and there is no threatened, labor strike, work
stoppage or slowdown pending and (iv) there is no material labor grievance
pending or threatened against or affecting the Company.
1.22 Vehicles. Schedule 1.22 attached hereto contains a list of all
motor vehicles owned or leased by the Company. The two leases identified in
subsection (b) of Schedule 1.22 will be assigned by the Company and assumed by
Seller on the Closing Date.
1.23 Customers. None of the customers which accounted for one percent
or more of the dollar volume of purchases from the Company for the fiscal year
ended November 30, 1999 and for the five (5) months ended April 30, 2000 has
discontinued its relationship with the Company or notified it in writing that it
intends to discontinue its relationship with the Company.
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1.24 Bank Accounts. Schedule 1.24 attached hereto is a list containing
the names and locations of all banks or other financial institutions which are
depositories of funds of the Company, the names of all persons authorized to
draw or sign checks or drafts upon such accounts and the names and locations of
any institutions in which the Company has safe deposit boxes and the names of
the persons having access thereto.
1.25 Accounts Receivable. All of the accounts receivable of the Company
on the Balance Sheet and created since the Balance Sheet Date and prior to the
Closing Date are the result of a bona fide sales or other transactions.
1.26 Accuracy of Information. To the knowledge of Seller and ▇▇▇▇▇▇▇,
no representation or warranty by Seller or ▇▇▇▇▇▇▇ in this Agreement, nor any
statement, document, certificate or schedule furnished or to be furnished in
connection with the transactions contemplated by this Agreement contains or will
contain any untrue statement of material fact or omits or will omit a material
fact necessary to make the statements contained therein too misleading.
1.27 Investment Representations. Seller is acquiring the Nematron Stock
(defined in Section 3.04) for its own account and not with a view to
distribution or resale thereof in any transaction which would be in violation of
the Securities Act of 1933, as amended (the "Securities Act") and rules
promulgated thereunder, or any state securities statute, and agrees not to sell,
hypothecate or otherwise dispose of all or any part of the Nematron Stock unless
such Nematron Stock has been registered under the Securities Act and applicable
state or other securities laws or in the opinion of counsel for the Seller,
which counsel and which opinion are reasonably satisfactory to Purchaser, an
exemption from the registration requirements of the Securities Act and such
state or other laws is available. Seller is an "accredited investor" as defined
in Rule 501 under Regulation D promulgated under the Securities Act. Seller can
bear the economic risk of losing its investment in the Nematron Stock and is
presently able to afford the complete loss of such investment. Seller has such
knowledge and experience in financial and business matters so as to be capable
of evaluating the merits and risks of an investment in the Nematron Stock.
Seller has been furnished with and acknowledges receipt of the Purchaser's Form
10KSB for the year ended December 31, 1999, Form 10QSB for the quarter ended
March 31, 2000 and the proxy statement for the Purchaser's annual meeting of
shareholders held on May 23, 2000 (the "SEC Reports") and acknowledges that it
has been afforded the opportunity (i) to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of Purchaser
concerning the merits and risks of investing in the Nematron Stock and (ii) to
obtain such additional information which Purchaser possesses or can acquire
without unreasonable effort or expense that is necessary to verity the accuracy
and completeness of the information contained in the SEC Reports. Seller
acknowledges that (a) Purchaser has answered all questions and responded to all
inquiries and requests for information to Seller's satisfaction, (b) it has
made, independently and without reliance upon the Purchaser (other than the
representations and warranties of the Purchaser set forth in Article II hereof)
or any agent or representative of the Purchaser and based on its own independent
analysis of the Purchaser and such other documents and information as it has
deemed appropriate, its own investment analysis and its own business decision to
enter into and consummate this Agreement and the transactions contemplated
hereby, (c) Purchaser does not guarantee the value of the Nematron Stock or the
price which Seller may receive upon sale by it of the Nematron Stock and (d) in
connection with the transaction contemplated herein, Seller may have received
nonpublic information about the Purchaser, and Seller will not trade in the
Purchaser's common stock until after Purchaser files its Form 10Q for the
quarter ended June 30, 2000.
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II
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
2.00 Representations of Purchaser. Purchaser represents and warrants to
Seller and ▇▇▇▇▇▇▇ as follows:
2.01 Existence and Good Standing. Purchaser is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Michigan.
2.02 Authority. Purchaser has full corporate power to enter into this
Agreement and to consummate the transactions contemplated herein. This Agreement
has been duly authorized, executed, and delivered by Purchaser and is a valid
and binding obligation of Purchaser in accordance with its terms. Neither the
execution of this Agreement nor the consummation of the transactions
contemplated herein will constitute or cause a breach or violation of the
articles of incorporation or bylaws of Purchaser or of any covenant or
obligation binding upon Purchaser.
2.03 Consents. No approval of or filing with any court, governmental
authority, or administrative agency (domestic or foreign) is required in
connection with the execution and delivery of this Agreement by Purchaser or its
consummation of the transactions contemplated herein.
2.04 Accuracy of Information. The SEC Reports do not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in light of the circumstances under which they were
made, not misleading, nor has there been any material adverse change in the
business, financial condition or results of operations of the Purchaser since
the date of the last of the SEC Reports except as has been disclosed to Seller
and ▇▇▇▇▇▇▇. For purposes of this Section 2.04, "material adverse change" means
any change, individually or in the aggregate, of $25,000 or more.
2.05 Accuracy of Information. To the knowledge of Purchaser, no
representation or warranty by Purchaser in this Agreement nor any statement,
document, certificate or schedule furnished or to be furnished in connection
with the transactions contemplated by this Agreement contains or will contain
any untrue statement of material fact or omits or will omit a material fact
necessary to make the statements contained therein too misleading.
III
PURCHASE AND SALE
3.01 Sale of the Shares. Subject to the terms and conditions of this
Agreement, the Seller agrees to sell, transfer, and convey, and Purchaser hereby
agrees to purchase, the Shares. The closing of such purchase and sale (the
"Closing") shall take place within three business days after the conditions
precedent in Articles V and VI have been satisfied (such date being referred to
as the "Closing Date") and at a location to be agreed upon. Subject to the terms
and conditions of this Agreement, each party agrees to use its reasonable best
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things reasonably necessary, proper, or advisable in order to cause
the timely consummation of the transactions contemplated hereby.
3.02 Delivery of Certificates. At the Closing, the Seller shall deliver
to Purchaser certificates representing all of the Shares, endorsed in blank or
with accompanying stock powers duly signed. The Seller shall also deliver such
other instruments or documents as shall, in the opinion of Purchaser's counsel,
be reasonably required to vest good and marketable title in the Purchaser to the
Shares.
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3.03 Resignations. Contemporaneously with the Closing, all of the
directors and officers of the Company shall resign.
3.04 Purchase Price. The aggregate purchase price hereunder for all of
the Stock (the "Purchase Price") shall consist of $4,000,000, $2,750,000 in cash
and $1,250,000 of unregistered common stock of the Purchaser ("Nematron Stock"),
said cash to be payable and Nematron Stock deliverable to the Seller at Closing.
The number of shares of Nematron Stock to be issued at Closing shall be
determined by dividing $1,250,000 by the average closing sale price for such
shares of Nematron common stock on the American Stock Exchange for the ten
trading days prior to the two trading days immediately preceding the Closing
Date. The number of shares of Nematron Stock to be delivered at Closing is
604,186, determined as set forth on Schedule 3.04 attached hereto. Seller and
▇▇▇▇▇▇▇ acknowledge and agree with the calculation of the number of shares set
forth on Schedule 3.04. The Purchase Price shall be subject to certain
adjustments described in Section 3.06. The remainder of the Purchase Price shall
be paid in cash by the Purchaser, or the reimbursement of a portion of the
Purchase Price theretofore received by Seller shall be paid in cash, as
appropriate, after the final adjustments to the Purchase Price pursuant to
Section 3.06.
3.05 Repayment of Company Indebtedness. At Closing Purchaser will cause
the Company to pay to ▇▇▇▇▇▇▇ the indebtedness owing from the Company to ▇▇▇▇▇▇▇
in the outstanding principal amount of $2,078,000, plus interest through the
Closing Date, and ▇▇▇▇▇▇▇ will deliver to the Company a receipt and release
acknowledging payment in full of such indebtedness. At Closing Purchaser will
also cause Huntington Bank to release ▇▇▇▇▇▇▇ from any personal guaranties of
the Company's indebtedness to Huntington Bank, and will cause Huntington Bank to
deliver to ▇▇▇▇▇▇▇ documentary evidence of such release.
3.06 Purchase Price Adjustment.
(a) As soon as practicable following the Closing Date (but not later
than 30 days after the Closing Date), Purchaser shall cause the Company to
prepare and deliver to Seller an unaudited balance sheet of the Company as at
June 30, 2000 (the "Closing Balance Sheet"), together with a certificate of the
chief financial officer of the Company, stating that the Closing Balance Sheet
was prepared in accordance with this Section 3.06. The Closing Balance Sheet
shall be prepared so as to present fairly in all material respects the financial
position of the Company at such date and shall be prepared on a basis consistent
with the Balance Sheet.
(b) If the amount determined by subtracting total liabilities from
total assets on the Closing Balance Sheet (the "Closing Adjusted Net Worth")
exceeds the amount determined by subtracting total liabilities from total assets
on the Balance Sheet (the "Most Recent Adjusted Net Worth"), then Purchaser
shall pay to Seller the amount of the excess. If the Most Recent Adjusted Net
Worth exceeds the Closing Adjusted Net Worth, then Seller shall pay to Purchaser
the amount of the excess. Any amounts payable pursuant to this Section 3.06(b)
shall be paid within 2 business days after the Closing Balance Sheet is deemed
final and conclusive pursuant to Section 3.07, by wire transfer in immediately
available funds to an account designated by Seller or Purchaser as the case may
be. In all computations pursuant to this Section 3.06(b), the excess of assets
over liabilities shall include an adjustment to state the amount of
work-in-process and unbilled accounts receivable at the contract rate of
billing, less federal and state taxes thereon, consistent with GAAP accounting.
In addition, the increase in federal and state taxes owing by the Company
arising from such adjustment is the responsibility of Seller; any provision for
taxes as a result of increasing the amount of work-in-process and unbilled
accounts receivable will be offset in the Closing Balance Sheet and the Balance
Sheet by a receivable from the Seller in the amount of the taxes, which
receivable will be deducted from any additional
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payment made by Purchaser or added to any additional payment made by Seller
(provided, that Seller will receive credit for the $156,000 deducted at Closing
pursuant to Section 3.06(e)).
(c) At Closing the Company shall assign to Seller, without
recourse, the Quantum receivable in the amount of $256,898.21 and such amount
will offset against the repayment of the shareholder indebtedness described in
Section 3.05.
(d) At Closing Purchaser will offset against the repayment of the
shareholder indebtedness described in Section 3.05 the amount of $18,000 for
costs and penalties relating to filing of Form 5500 for certain benefit plans of
the Company.
(e) At Closing Purchaser will offset against repayment of the
shareholder indebtedness described in Section 3.05 the amount of $156,000 as an
estimated amount of Seller's tax liability for work in process adjustments
described in Section 3.06(b).
3.07 Dispute and Resolution. (a) In the event Seller does not agree
with the Closing Balance Sheet as prepared by the Company, Seller shall so
inform Purchaser in writing within 30 days of Seller's receipt thereof, such
writing to set forth the objections of Seller in reasonable detail. If Seller
and Purchaser cannot reach agreement as to any disputed matter relating to the
Closing Balance Sheet within 15 days of Purchaser's receipt thereof, they shall
forthwith refer the dispute to the southeastern Michigan office of ▇▇▇▇▇▇ ▇▇▇▇▇
for resolution, with the understanding that such firm shall resolve all disputed
items within 20 days after such disputed items are referred to it. Each of
Purchaser and Seller shall bear one-half of the costs of ▇▇▇▇▇▇ ▇▇▇▇▇. The
decision of ▇▇▇▇▇▇ ▇▇▇▇▇ with respect to all disputed matters relating to the
Closing Balance Sheet shall be deemed final and conclusive and shall be binding
upon Purchaser and Seller. In addition, if Seller does not object to the Closing
Balance Sheet as prepared by the Company within the 30-day period referred to
above, the Closing Balance Sheet as so prepared shall be deemed final and
conclusive and binding upon the Purchaser and Seller.
(b) Until the Closing Balance Sheet is deemed final and conclusive
pursuant to Section 3.07(a), Purchaser shall provide Seller and their
representatives full access to the books, records, facilities and employees of
the Company and shall cooperate fully with Seller. Seller shall also be entitled
to have access to the work papers prepared in connection with the Closing
Balance Sheet and shall be entitled to discuss such work papers with the persons
who prepared them.
3.08 Legend on Nematron Stock. Seller understands that the Nematron
Stock has not been registered under the Securities Act or any state securities
laws, and that it must therefore bear the economic risk of such investment
indefinitely, unless a subsequent disposition thereof is registered under the
Securities Act or is exempt from registration, and that the certificates
representing Nematron Stock will bear substantially the following legend:
"The shares represented by this certificate are "Restricted
Securities". As such they may not be transferred unless (i) such
transfer is effected pursuant to a registration statement which has
been filed under the Securities Act of 1933 (the "1933 Act") and
declared effective by the Securities and Exchange Commission, or (ii)
in the written opinion of counsel, which opinion and counsel are
acceptable to the issuer of these shares, such transfer may be effected
under and is in compliance with Rule 144 under the 1933 Act, as in
effect on the date of such transfer, or is otherwise exempt from the
registration requirements of the 1933 Act."
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Notwithstanding the foregoing, the parties agree to be bound by the
terms of a certain Registration Rights Agreement in the form attached hereto as
Exhibit 3.08.
IV
COVENANTS OF SELLER AND ▇▇▇▇▇▇▇
4.00 Covenants. Except for transactions expressly permitted by this
Agreement, Seller and ▇▇▇▇▇▇▇ covenants and agrees as follows from the date of
this Agreement until the Closing:
4.01 Conduct of Business of the Company. The Company will carry on its
business in the usual and ordinary course, consistent with prior practice, will
not introduce any fundamental new method of management or operation, will
perform in all material respects all obligations to be performed by it pursuant
to each material agreement to which it is bound, and will use its reasonable
best efforts to preserve in all material respects its relationships with
customers, suppliers, employees and others transacting business with it and the
services of all officers, employees, agents and representatives.
4.02 Corporate Existence. The Company will maintain its corporate
existence and good standing in its jurisdiction of incorporation and in each
jurisdiction in which it is qualified to do business, and it will not amend its
charter documents or bylaws.
4.03 Material Transactions. Except for transactions in the usual and
ordinary course of business consistent with past practices, without Purchaser's
consent the Company will not (a) waive a material right, cancel or amend a
material contract, debt, or claim, or assume or enter into a material contract,
lease, license, obligation, indebtedness, commitment, purchase, or sale, (b)
enter into any employment or severance agreement with any person whose total
annual compensation exceeds $35,000 pursuant to which the Company would have any
obligations following the Closing; (c) enter into a guarantee of indebtedness of
any person or entity; (d) sell, lease or otherwise dispose of any material asset
or property; (e) make or guarantee any loan, advance or capital contributions to
or investment in any person or entity; or (f) enter into any collective
bargaining agreement with any union or other collective bargaining
representative. For purposes of this Section 4.03, and without limiting the
generality of the foregoing, all indebtedness for borrowed money or guarantees
thereof and commitments and agreements having a duration in excess of one year
or for amounts in excess of $25,000, are deemed to be material and not in the
usual and ordinary course of business. The Purchaser acknowledges that the
Company will, prior to Closing, enter into subleases for space in the Auburn
Hills building with Quantum and Visioneering, the terms of which subleases will
be acceptable to Purchaser.
4.04 Maintenance of Properties. The Company will (a) duly and timely
file all material reports and returns required to be filed with any governmental
agency and will promptly pay when due all material taxes, assessments, and
governmental charges, including interest and penalties levied or assessed,
unless diligently contested in good faith by appropriate proceedings, (b)
maintain and keep in substantially their current condition all of its buildings,
offices, shops, other structures, and material tangible personal property, and
(c) maintain in full force and effect all material policies of insurance that
are listed on Schedule 1.18.
4.05 Access. The Company will afford Purchaser and Purchaser's
financing sources and their respective representatives (including their
respective counsel, accountants, and other agents) full access at all reasonable
times to all of the plants, offices, properties, and records of the Company, and
will furnish all such other information concerning the business, properties,
financial condition, prospects and results of operations of the Company as
Purchaser and Purchaser's financing sources may reasonably request; provided
that Purchaser and its financing sources will conduct such review in a manner
that does not unreasonably interfere in the conduct of the business of the
Company or result in substantial out-of-pocket costs to Seller or the Company.
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4.06 Noncompete. At Closing ▇▇▇▇▇▇▇ shall enter into an Agreement Not
to Compete in the form attached as Exhibit 6.09 hereto.
4.07 Publicity. Other than the press release announcing the letter of
intent, prior to the Closing, no party will issue or cause the publication of
any press release or other public announcement with respect to this Agreement or
the transactions contemplated hereby without the prior consent of the other
party, which consent will not be unreasonably withheld or delayed; provided,
however, that nothing herein will prohibit any party from issuing or causing
publication of any such press release or public announcement to the extent that
such party determines such action to be required by law or the rules of any
national stock exchange applicable to it or its affiliates, in which event the
party making such determination will, if applicable in the circumstances, use
reasonable efforts to allow the other party reasonable time to comment on such
release or announcement in advance of its issuance. Moreover, nothing herein
shall be construed to prohibit or preclude the Purchaser from disclosing
information regarding the Company or its business or properties to its
professional advisors or potential lenders or other financial participants in
the transaction.
4.08 No-Shop. Neither the Company or any of its officers, employees,
directors, nor ▇▇▇▇▇▇▇ or the Seller or any of their representatives (including
investment bankers, accountants, attorneys, agents or consultants) will take any
action to, directly or indirectly, (i) encourage, initiate or solicit
discussions or negotiations with any person, other than Purchaser (and its
affiliates and representatives), concerning any purchase of any capital stock of
the Company or any merger, asset sale or similar transaction involving the
Company (other than sales of assets in the ordinary course of business
consistent with past practice), or enter into any negotiations or agreement with
any third party with respect to the foregoing (an "Alternative Transaction"), or
(ii) except as may be required by law or legal process, disclose non-public
information relating to the Company or provide access to property, books or
records of the Company to any person, other than Purchaser (and its affiliates
and representatives), in connection with any solicitation, offer or proposal of
an Alternative Transaction. The Seller and ▇▇▇▇▇▇▇ will promptly disclose to
Purchaser the existence or occurrence of any proposal, contract or contact which
they, the Company or any of their representatives described above may receive
after the date hereof in respect of any Alternative Transaction. The Seller and
▇▇▇▇▇▇▇ agree that they will, and will cause the Company and its officers,
employees, directors, agents and representatives to, immediately cease any
activities, discussions or negotiations existing as of the date of this
Agreement with any parties conducted heretofore with respect to any Alternative
Transaction.
V
SELLER'S CONDITIONS PRECEDENT
5.00 Conditions to Seller's Obligations. All of the following shall be
conditions precedent to the Seller's obligation to consummate the transactions
contemplated by this Agreement:
5.01 Representations and Warranties. The representations and warranties
made by Purchaser herein shall be correct in all material respects on and as of
the date when made, and on and as of the Closing Date.
5.02 Performance. Purchaser shall have complied in all material
respects with all of its obligations under this Agreement.
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5.03 No Illegality. There shall not be in effect any statute, rule, or
regulation which makes it illegal for the Sellers to consummate the transactions
contemplated herein, or any order, decree, or judgment which enjoins the Seller
from consummating the transactions contemplated herein.
5.04 No Litigation. No suit, action, or other proceeding shall be
pending or, to the knowledge of Seller and ▇▇▇▇▇▇▇, threatened against Seller
(i) by any governmental authority which challenges or seeks to challenge,
restrain or prohibit the consummation of the transaction contemplated hereby or
(ii) before any court or government agency that Seller reasonably determines
would be materially adverse to them if they consummated the transactions
contemplated hereby.
5.05 Closing Certificate. Seller shall have received a certificate
signed by Purchaser and dated the Closing Date to the effect that the conditions
precedent provided in Sections 5.01, 5.02 and 6.04 have been satisfied. The
delivery of such certificate shall in no way diminish, supersede or enlarge the
representations and warranties of Purchaser made in this Agreement or its
liability in respect thereof pursuant to Article IX.
5.06 Opinion of Counsel. Seller shall have been provided an opinion of
counsel for the Purchaser, in form and substance reasonably acceptable to Seller
and its counsel.
VI
PURCHASER'S CONDITIONS PRECEDENT
6.00 Conditions to Purchaser's Obligations. All of the following shall
be conditions precedent to Purchaser's obligation to consummate the transactions
contemplated by this Agreement:
6.01 Representations and Warranties. Except for the changes expressly
permitted by this Agreement, the representations and warranties made by Seller
herein shall be accurate and correct in all material respects on and as of the
date when made, and on, as of and as if made on the Closing Date. The Schedules
referred to herein and the documents and schedules delivered pursuant hereto
shall likewise be accurate and correct in all material respects on and as of the
date when made, and on, as of and as if made on the Closing Date.
6.02 Performance. Seller shall have complied in all material respects
with all of its obligations under this Agreement.
6.03 No Illegality. There shall not be in effect any statute, rule, or
regulation which makes it illegal for Purchaser to consummate the transactions
contemplated herein, or any order, decree, or judgment which enjoins Purchaser
from consummating the transactions contemplated herein.
6.04 No Litigation. No suit, action, or other proceeding shall be
pending or, to the knowledge of Purchaser, threatened against Purchaser (i) by
any governmental authority which challenges or seeks to challenge, restrain or
prohibit the consummation of the transaction contemplated hereby or (ii) before
any court or government agency that Purchaser reasonably determines would be
materially adverse to it if it consummated the transactions contemplated hereby.
6.05 No Material Adverse Change. During the period from the date hereof
to the Closing, there shall not have been any material adverse change in the
business, properties, financial condition, prospects or results of operations of
the Company (including, without limitation, any loss or damage to its
properties, whether or not insured, which materially affects the ability to
conduct business).
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6.06 Closing Certificate. Purchaser shall have received a certificate
(the "Sellers Closing Certificate") signed by Seller and dated the Closing Date
to the effect that the conditions precedent provided in Sections 5.01, 5.02,
5.04 and 6.05 have been satisfied. The delivery of such certificate shall in no
way diminish, supersede or enlarge the representations and warranties of Seller
made in this Agreement or its liability in respect thereof pursuant to Article
IX.
6.07 Opinion of Counsel. Purchaser shall have been provided an opinion
of counsel for Seller, ▇▇▇▇▇▇▇ and the Company in form and substance reasonably
acceptable to Purchaser and its counsel.
6.08 Employment Agreement. ▇▇▇▇▇▇▇ shall have entered into an
employment agreement with the Company in the form attached hereto as Exhibit
6.08.
6.09 Noncompetition Agreement. ▇▇▇▇▇▇▇ shall have entered into the
agreement not to compete with the Company and Purchaser in the form attached
hereto as Exhibit 6.09.
6.10 Outstanding Indebtedness. The Purchaser shall have been provided
documentary evidence or assurances to the effect that prior to or
contemporaneous with the Closing all of the Company's outstanding indebtedness
(other than the indebtedness to ▇▇▇▇▇▇▇ that shall be repaid to ▇▇▇▇▇▇▇ at
Closing and liabilities resulting from recharacterization of certain equipment
leases as capital purchases on the Closing Balance Sheet), inclusive of
customary trade payables and accrued expenses consistent with past practice,
does not exceed $942,000.
VII
TERMINATION
7.01 Termination by Mutual Agreement. This Agreement may be terminated
at any time prior to the Closing by mutual agreement of Seller and Purchaser.
7.02 Termination as a Result of Breach. Either the Seller or Purchaser
may terminate this Agreement at any time prior to the Closing, by giving the
other party written notice thereof, if the other party is in material breach of
any of its representations, warranties, covenants and other obligations under
this Agreement.
7.03 Purchaser's Right to Terminate. Purchaser may terminate this
Agreement by giving Seller written notice thereof (a) on or before June 30, 2000
if Purchaser (i) is not satisfied with the results of its due diligence review,
or (ii) has not secured reasonable and customary commitments for financing that
would enable Purchaser to consummate the transactions contemplated herein, or
(b) at any time after June 30, 2000 and prior to Closing if the Seller makes a
material change to a Schedule to this Agreement that discloses information that
could, individually or in the aggregate, have a Material Adverse Effect.
7.04 Delay of Closing. Seller or Purchaser may terminate this Agreement
by giving the other party written notice thereof if the Closing has not occurred
on or before the close of business on July 31, 2000; provided that neither party
shall be entitled to terminate this Agreement pursuant to this Section 7.04 if
such party's breach of this Agreement has prevented the Closing.
7.05 Effect of Termination. If this Agreement is terminated as provided in
this Article VII, this Agreement shall forthwith become wholly void and of no
effect, without liability of either party to the other, except for the liability
of any party then in breach and Sections 9.01 and 9.12, which will continue in
force and effect.
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VIII
INDEMNIFICATION
8.01 Indemnification by Seller and ▇▇▇▇▇▇▇. Seller and ▇▇▇▇▇▇▇ shall
jointly and severally indemnify, defend and hold harmless Purchaser, its
affiliates, and their respective officers, directors, employees, members,
partners and shareholders in their capacities as such (including the successors
of any of the foregoing) from, against and with respect to any claim, liability,
obligation, loss, damage, assessment, judgment, cost or expense (including,
without limitation, reasonable attorneys', environmental consultants' and
accountants' fees and costs) of any kind or character ("Damages"), (subject to
Section 8.05), arising out of or in any manner incident, relating or
attributable to (a) any misrepresentation or breach of warranty by Seller or
▇▇▇▇▇▇▇ contained in this Agreement (subject to Section 9.03), (b) any failure
by Seller or ▇▇▇▇▇▇▇ to perform, cause to be performed or observe any covenant
to be performed or observed by Seller or ▇▇▇▇▇▇▇ or the Company under this
Agreement, (c) any guaranty to which the Company is a party and which guarantees
amounts payable by, or obligations of, the Seller, ▇▇▇▇▇▇▇ or any of their
affiliates or related parties, (d) any liability of the Company under any
agreements, contracts, negotiations and other dealings by the Seller with any
third party concerning the sale of the capital stock or business of the Company,
(e) any liability for federal income or state or local income or franchise Taxes
of the Company, the Seller or ▇▇▇▇▇▇▇ that is based upon or measured with
respect to the income of the Company, the Seller or ▇▇▇▇▇▇▇ for any period up
through and including the Closing Date, or resulting from any restatement of the
financial statements (including without limitation the inventory position) of
the Company for any year in order to comply with GAAP, (f) any liability for
federal income or state or local income or franchise Taxes of Seller or ▇▇▇▇▇▇▇
based on income for any post-Closing period, (g) any liability of the Seller,
▇▇▇▇▇▇▇ or the Company for Taxes resulting from the transactions contemplated by
this Agreement, including, without limitation, any Taxes resulting from the
disposition, deemed or actual, of assets or stock contemplated by this
Agreement, (h) any liability of the Company relating to insurance coverage under
Company policies or plans for persons who were not eligible to be covered under
such policies or plans, (i) any liability of the Company under certain
automobile leases assigned to and assumed by ▇▇▇▇▇▇▇ at or prior to the Closing;
(j) any liability for failure of the Company to timely file any reports required
to be filed with any governmental agency with respect to any of the Company's
benefit plans for any period up through and including the Closing Date; (k) any
liability for failure of the Company or any of its benefit plans to comply with
ERISA for any period up through and including the Closing Date; or (l) any
liability of the Company to Alliance-BRG in connection with the transactions
anticipated hereby.
8.02 Limitations. Notwithstanding the provisions of Section 8.01:
(a) Purchaser shall have no right to make a claim for indemnification
for breach by Seller and/or ▇▇▇▇▇▇▇ of representations and warranties under
Section 8.01(a) except for the amount by which the aggregate of all claims with
respect to such matters exceeds $25,000; provided, that the foregoing
limitations shall not apply to any claim for indemnification under Sections
8.01(b), (c), (d), (e), (f), (g), (h), (i), (j), (k) or (l). The provisions of
this Section 8.02(a) shall not apply with respect to claims under Section
8.01(a) for breach by Seller or ▇▇▇▇▇▇▇ of the representations and warranties
set forth in Sections 1.01, 1.02, 1.03 and 1.04.
(b) The right of indemnification provided in Section 8.03 is solely for
the benefit of the parties referred to therein, and such right will not be
extended, either directly or indirectly, to any other
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person except for assignees of Purchaser permitted by Section 9.05 hereof or
consented to by Seller and ▇▇▇▇▇▇▇. Except as set forth in the Agreement Not to
Compete, the right of indemnification in Section 8.01 is the sole remedy which
Purchaser has against Seller and ▇▇▇▇▇▇▇ for any breach of a representation or
warranty hereunder or for any other claim with respect to, or arising in any
matter from, the transactions contemplated hereunder.
(c) If a condition precedent stated in Section 6.01 is not satisfied,
the Seller's Closing Certificate specifies the representation or warranty which
is not correct in all material respects and identifies the reason and underlying
facts therefor in reasonable details (such facts, the "Down-Date Facts"), and
Purchaser at any time thereafter proceeds with the Closing notwithstanding such
unsatisfied condition or incorrectness, then Seller and ▇▇▇▇▇▇▇ shall have no
liability to Purchaser or any other party indemnified pursuant to Section 8.01
with respect to the Down-Date Facts to the extent so described.
8.03 Purchaser's Indemnification. (a) Subject to clause (b) below,
Purchaser agrees to indemnify, defend, and hold harmless Seller and ▇▇▇▇▇▇▇
from, against, and with respect to any Damages (subject to Section 8.05) arising
out of or in any manner incident, relating, or attributable to (1) any
misrepresentation or breach of warranty by Purchaser contained in this
Agreement, (2) any failure by Purchaser to perform or observe any covenant to be
performed or observed by Purchaser under this Agreement, (3) any obligation or
liability relating to any matter as to which Purchaser or the Company is
responsible and which is not then subject to indemnification by Seller and
▇▇▇▇▇▇▇ hereunder or, (4) any liability for federal income or state or local
income or franchise taxes of the Company for any post-Closing period.
(b) The right of indemnification provided in Section 8.03 is solely for
the benefit of the parties referred to therein, and such right will not be
extended, either directly or indirectly, to any other person. The right of
indemnification in Section 8.03 is the sole remedy which Seller and ▇▇▇▇▇▇▇ have
against Purchaser for any breach of a representation or warranty hereunder or
for any other claim with respect to, or arising in any manner from, the
transactions contemplated hereunder.
8.04 Procedure. The party requesting indemnification under this Article
VIII (the "indemnified party") shall give the party from whom indemnification is
requested (the "indemnifying party") prompt notice of, and shall reasonably
cooperate with the indemnifying party (including, without limitation, by making
relevant personnel and records available to the indemnifying party at all
reasonable times free of charge) in connection with any claim for which the
indemnified party may seek indemnification from the indemnifying party under
Article VIII, but the failure to give such notice will not affect the
indemnifying party's liability hereunder, except and to the extent it is
actually prejudiced thereby. The indemnifying party shall at its own expense and
with counsel of its choice assume the defense of all third party claims for
which it is obligated to indemnify the indemnified party. The indemnified party
may also at its own expense employ its own counsel to participate in the defense
of any such third party claim. The indemnifying party shall have the absolute
right to settle at its expense any such third party claim; provided, however,
that such settlement shall also require the prior written consent of the
indemnified party where criminal liability is admitted or where any action other
than the payment of money is required or which does not include an unconditional
release of all indemnified parties.
8.05 Amount. The amount of Damages for which indemnification is
provided (i) under this Article VIII will be computed net of any insurance
proceeds received by the indemnified party in connection with such Damages,
reduced by all costs and expenses related thereto and any premium increase or
expense resulting therefrom and (ii) by Seller and ▇▇▇▇▇▇▇ under Section 8.01(a)
will be reduced to the extent such Damages relate to and do not exceed any
applicable reserve or accrual with respect to such Damages provided for or
reflected in the Closing Balance Sheet.
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IX
GENERAL
9.01 Expenses. Except for the services of Alliance-BRG, the cost and
expenses of which Seller will pay, and the services of Urban "▇▇▇▇▇" MacDonald,
the cost and expenses of which Purchaser will pay, each party represents and
warrants to the other party that the services of a broker, finder, or financial
advisor have not been used by the representing party in connection with any of
the matters pertaining to the transactions contemplated herein. Each party will
indemnify the other party, its affiliates, and the respective officers,
directors, employees, and shareholders of the foregoing (other than the
indemnifying party) in their capacities as such from and against any claim for
broker's, finder's, or financial advisor's fees, including costs or expenses
incurred in connection with the defense of any suit claiming such fees, or in
any other manner pertaining to claims for such fees, which may become payable by
reason of the acts or omissions of the indemnifying party.
9.02 Governing Law. This Agreement shall be construed and interpreted,
and the rights of the parties shall be determined, in accordance with the laws
of the State of Michigan, without giving effect to the principles of conflict of
laws of such state.
9.03 Survival. The representations and warranties contained herein
shall continue in full force and effect after the Closing (a) without
termination in the case of those contained in Sections 1.01, 1.02, 1.03, 1.04,
2.01 and 2.02, (b) until 30 days after the expiration of the statute of
limitations (including any extensions) applicable to Returns relating to any
period prior to or including the Closing, in the case of those contained in
Section 1.12, (c) until the date which is five years after the Closing Date in
the case of those contained in Section 1.15, (d) until the expiration of the
statute of limitations (including any extensions) contained in ERISA, in the
case of those contained in Section 1.17 which relate to compliance with ERISA,
and (e) until two (2) years after the Closing Date in the case of all other
representations and warranties contained herein. No claim for indemnity may be
made on account of the incorrectness of any representation or warranty contained
herein unless prior to the expiration of the applicable survival period the
party claiming indemnity has given proper notice to the party against whom
indemnification is sought. Any claim timely and properly made prior to such
expiration shall be subject to indemnification hereunder notwithstanding any
subsequent expiration.
9.04 Entire Agreement. This Agreement (which term, as used in this
Agreement, includes the Schedules referred to herein) constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations, and discussions, whether oral or written, of the parties including
the letter of intent, and there are no representations, warranties, covenants or
other obligations between the parties in connection with the subject matter
hereof except as set forth specifically herein. No amendment, supplement,
modification, waiver or termination of this Agreement shall be implied or be
binding (including, without limitation, any alleged waiver based on a party's
knowledge of a breach or inaccuracy in any representation or warranty contained
herein except as set forth in Section 8.02(b) above) unless in writing and
signed by the party against which such amendment, supplement, modification,
waiver or termination is asserted. No waiver of a provision of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly therein provided.
9.05 Successors and Assigns. All of the terms and provisions of this
Agreement by or for the benefit of the parties shall be binding upon and inure
to the benefit of their successors, permitted assigns,
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heirs and personal representatives. The rights and obligations provided by this
Agreement shall not be assignable and, except as expressly provided herein,
nothing herein is intended to confer upon any person, other than the parties and
their successors, any rights or remedies under or by reason of this Agreement.
Notwithstanding the foregoing, Purchaser may assign its rights as collateral
security to the Purchaser's lenders without the consent of Seller; provided that
the foregoing will not release Purchaser of any of its obligations under this
Agreement.
9.06 Schedules. All instruments or documents to be delivered by any
party to this Agreement shall be in form and content reasonably satisfactory to
the counsel for the party receiving such instrument or document. Seller shall
have the right to amend and update the Schedules referred to in this Agreement
at any time or from time to time prior to Closing. Each Schedule has been
identified by a cover page, and an officer or counsel for each party has
initialed each such cover page for purposes of identification. Each Schedule is
deemed an integral part of this Agreement.
9.07 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same Agreement.
9.08 Notices. All notices, requests, demands, and other communications
hereunder shall be in writing and shall be deemed to have been duly given
(except as may otherwise be specifically provided herein to the contrary) if
delivered by hand and receipted for by the party to whom said notice or other
communication shall have been directed, if mailed by certified or registered
mail with postage prepaid, if sent by facsimile with receipt confirmed, or if
shipped and receipted by express courier service, charges prepaid by shipper, in
all such cases addressed as follows (or to such other address as may be
designated by notice given pursuant hereto), but in any event shall be deemed to
have been duly given no earlier than actual receipt following delivery by any
method:
(a) If to Seller ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇
with a copy to:
--------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Spilkin, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P C
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Purchaser Nematron Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
--------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ PLLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
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9.09 Knowledge. For purposes of this Agreement, the "knowledge of
Seller and ▇▇▇▇▇▇▇", "Seller's and ▇▇▇▇▇▇▇'▇ knowledge" or any phrase of similar
import will be deemed to mean the actual knowledge, after reasonable inquiry, of
the individuals whose names are listed on Schedule 9.09.
9.10 Post-Closing Access. Each party will retain the books and records
relating to the businesses of the Company for a period of five years after the
Closing, and will not destroy such books and records without providing the other
party at least 30 days prior written notice. Each party shall afford to the
other reasonable access thereto, and provide reasonable assistance, as may be
necessary for purposes of preparing tax returns, financial statements, or for
such other purposes as such other party may reasonably request. Each party will
have the right to make copies, at its own expense, of such books and records for
any proper purpose.
9.11 Further Assurances. After the Closing, each of the parties will
execute and deliver from time to time at the request of the other party all such
other instruments as are necessary or appropriate to evidence or effectuate the
transactions contemplated by this Agreement.
9.12 Expenses. Except as provided in Sections 8.01, 8.05 and 9.01,
regardless of whether the transactions contemplated by this Agreement are
consummated, each party shall pay all fees and expenses incurred by such party
in connection therewith.
9.13 Filing of Returns. (a) Seller and ▇▇▇▇▇▇▇ shall prepare and timely
file, or cause to be prepared and timely filed, all Returns that include income
of the Company that are due with respect to any taxable year or other taxable
period ending on or prior to the Closing Date. Seller and ▇▇▇▇▇▇▇ shall
determine the manner in which any items of income, gain, deduction, loss or
credit arising out of the respective income, properties and operations of the
Company will be reported or disclosed in such returns; provided, however, that
such Returns will be prepared by treating items on such returns in a manner
consistent with the past practice with respect to such items, unless otherwise
required by law. Seller and Purchaser will provide to each other drafts of all
Tax Returns required to be prepared and filed by it under this Section 9.13 as
soon as reasonably practicable prior to the due date for the filing of such
Returns (including any extensions). As soon as reasonably practicable prior to
the due date for the filing of such Returns (including any extensions), Seller
and Purchaser will notify the other of the existence of any objection it
(specifying in reasonable detail the nature and basis of such objection) may
have to any items set forth on such draft returns. Purchaser and Seller agree to
consult and resolve in good faith any such objection.
(b) Purchaser shall prepare or cause to be prepared and file or cause
to be filed any Returns of the Company for tax periods which begin before the
Closing Date and end after the Closing Date. The Seller will be liable for the
payment of all Taxes (and entitled to Tax refunds and the deposit with the IRS
pursuant to ss. 444 of the Internal Revenue Code) of the Company which are
attributable to any pre-Closing tax period, whether shown on any original return
or amended return for the period referred to therein. Nothing herein is to be
construed as superseding the terms of paragraph 3.06(b) with respect to Seller's
liability for taxes resulting from work-in-process and unbilled accounts
receivable adjustments. The Company will be liable for the payment of all Taxes
which are attributable to any post-Closing tax period. All transfer,
documentary, sales, use, stamp, registration, value added and other such Taxes
and fees (including any penalties and interest), imposed on the Purchaser or the
Company which are incurred in connection with this Agreement will be borne and
paid by Seller and ▇▇▇▇▇▇▇, when due, and Seller and ▇▇▇▇▇▇▇ will, at their own
expense, cause to be filed all necessary returns and other documentation with
respect to all such Taxes and fees.
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(c) In connection with the preparation of Returns, audit examinations
and any administrative or judicial proceedings relating to the Tax liabilities
imposed on the Company for all pre-Closing tax periods, Purchaser and Seller
will cooperate fully with each other, including, but not limited to, the
furnishing or making available during normal business hours of records,
personnel (as reasonably required), books of account, powers of attorney or
other materials necessary or helpful for the preparation of such Returns, the
conduct of audit examinations or the defense of claims by Tax authorities as to
the imposition of Taxes.
(d) Purchaser will promptly notify Seller in writing upon receipt by
Purchaser or any affiliate of Purchaser (including the Company after the Closing
Date) of written notice of any inquiries, claims, assessments, audits or similar
events with respect to Taxes relating to a pre-Closing tax period for which
Seller and ▇▇▇▇▇▇▇ may be liable under this Agreement (any such inquiry, claim,
assessment, audit or similar event, a "Tax Matter"). Seller and ▇▇▇▇▇▇▇ at their
sole expense, will have the exclusive authority to represent the interests of
the Company with respect to any Tax Matter before the IRS, any other Taxing
authority, any other governmental agency or authority or any court and will have
the sole right to extend or waive the statute of limitations with respect to a
Tax Matter and to control the defense, compromise or other resolution of any Tax
Matter, including responding to inquiries, filing Tax Returns and settling
audits; provided, however, that Seller and ▇▇▇▇▇▇▇ will not enter into any
settlement of or otherwise compromise any Tax Matter that affects or may affect
the Tax liability of Purchaser or the Company or any affiliate of the foregoing
for any post-Closing tax period, including the portion of a period beginning
before the Closing Date and ending after the Closing Date, without the prior
written consent of Purchaser. Seller and ▇▇▇▇▇▇▇ will keep Purchaser fully and
timely informed with respect to the commencement, status and nature of any Tax
Matter. Seller and ▇▇▇▇▇▇▇ will, in good faith, allow Purchaser to consult with
Seller regarding the conduct of or positions taken in any such proceeding.
(e) Seller and ▇▇▇▇▇▇▇ will not file or cause or permit to be filed any
amended Tax Return for any pre-Closing tax period (of the Company or relating to
amounts for which the Company may be liable) without the prior written consent
of Purchaser, which consent will not be unreasonably withheld or delayed.
Purchaser will not file or cause to be filed any amended return covering any
period or adjusting any Taxes for any pre-Closing tax period without the prior
written consent of Seller, which consent will not be unreasonably withheld or
delayed.
(f) Effective as of the Closing Date, Seller will terminate any Tax
sharing agreement to which the Company is a party, and the Company will not have
any further obligations thereunder.
(g) Seller shall remit to Purchaser that portion of any Tax refund any
of them receives for any loss carryback attributable to any post-Closing period
of the Company. Purchaser will forward to Seller that portion of any Tax refunds
received by Purchaser or the Company that are attributable to Taxes assumed or
retained and paid by Seller pursuant to this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
SELLER:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as Trustee
of the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Revocable
Trust dated March 14, 1990, as amended
▇▇▇▇▇▇▇:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
NEMATRON CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President - Finance and Administration
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SCHEDULES (OMITTED)
Schedule 1.1 Exceptions to Transferability
Schedule 1.2 Jurisdictions where Qualified to Do Business
Schedule 1.5 Material Adverse Change
Schedule 1.6 Exceptions to Title
Schedule 1.8 Leases
Schedule 1.9 Material Contracts
Schedule 1.10 Violations
Schedule 1.11 Litigation
Schedule 1.12 Exceptions to Taxes
Schedule 1.13 Conduct of Business
Schedule 1.14 Intellectual Property
Schedule 1.15 Environmental Exceptions
Schedule 1.16 Compliance with Laws Exceptions
Schedule 1.17 Employee Benefit Plans
Schedule 1.18 Insurance
Schedule 1.20 Employees
Schedule 1.22 Vehicles
Schedule 1.24 Bank Accounts
Schedule 3.04 Calculation of Number of Shares of Nematron Stock
Schedule 9.09 Knowledge
Omitted Schedules will be furnished upon request.
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EXHIBIT 5.06
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is made this 30th day
of June, 2000, by and between the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, TRUSTEE OF ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ REVOCABLE TRUST DATED MARCH 14, 1990, AS AMENDED ("Holder"), having an
address of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and NEMATRON CORPORATION,
a Michigan corporation, with offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Company").
The Company and the Holder are parties to a Stock Purchase Agreement of
even date herewith pursuant to which the Holder, in connection with the sale of
A-OK Controls Engineering, Inc. to the Company, is receiving 604,186 shares of
the Company's Common Stock, no par value per share ("Common Stock"). In
connection with the issuance of the Common Stock, the Company has agreed to
provide the Holder with the certain registration rights.
1. CERTAIN DEFINITIONS. As used in this Agreement, the
following capitalized terms shall have the following respective meanings:
"COMMISSION" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"REGISTRABLE SECURITIES" shall mean the 604,186 shares of the
Company's Common Stock issued to the Holder, and any securities issued in
respect of such shares upon any conversion, stock split, stock dividend,
recapitalization or similar event, which have not been sold to the public
pursuant to a Registration.
The terms "REGISTER, "REGISTERED" AND "REGISTRATION" shall
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and applicable rules and
regulations promulgated thereunder, and the declaration or ordering of the
effectiveness of such registration statement.
"REGISTRATION EXPENSES" shall mean all expenses incurred by
the Company in compliance with Section 2 hereof, including, without limitation,
all Registration and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, blue sky fees and expenses, and the
expenses of any special audits incident to or required by any such Registration
but shall not include Selling Expenses, fees and disbursements of counsel for
the Holders.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"SELLING EXPENSES" shall mean all underwriting discounts,
selling commissions and stock transfer fees applicable to the sale of
Registrable Securities and all fees and disbursements of counsel for the Holder.
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2. COMPANY REGISTRATION.
2.1 NOTICE OF REGISTRATION. If at any time or from time
to time the Company shall determine to Register any of its capital stock or
other issued securities, either for its own account or the account of a security
holder or holders (other than the Holder), other than (x) a Registration
relating solely to employee benefit plans, or (y) a Registration relating solely
to a Commission Rule 145 transaction, or (z) a Registration on any Registration
form which does not permit secondary sales or does not include substantially the
same information as would be required to be included in a Registration statement
covering the sale of Registrable Securities, the Company shall:
2.1.1. promptly give to the Holder written notice thereof;
and
2.1.2. use its best efforts to include in such Registration
(and any related qualification under blue sky laws or other compliance) and in
any underwriting involved therein, all the Registrable Securities specified in a
written request or requests made by the Holder within ten (10) days after the
Holder's receipt of the written notice from the Company described in Section
2.1.1 above, except as set forth in Section 2.2 below.
2.2 UNDERWRITING. If the Registration of which the
Company gives notice is for a Registered public offering involving an
underwriting, the Company shall so advise the Holder as a part of the written
notice given pursuant to Section 2.1.1. In such event the right of the Holder to
Registration pursuant to this Section 2 shall be conditioned upon the Holder's
participation in such underwriting and the inclusion of the Holder's Registrable
Securities in the underwriting to the extent provided herein. The Holder, if
proposing to distribute its securities through such underwriting, shall
(together with the Company and the other holders of securities of the Company
with registration rights to participate therein, distributing their securities
through such underwriting), enter into an underwriting agreement in customary
form with the managing underwriter selected for underwriting by the Company.
Notwithstanding any other provision of this Section 2, if the managing
underwriter advises the Company in writing that marketing factors require a
limitation on the number of shares to be underwritten, the underwriter may
(subject to the allocation priority set forth below), exclude all Registrable
Securities from or limit the number of Registrable Securities to be included in
the Registration and underwriting. If a limitation on the number of Registrable
Securities is required as a result of these limits, the number of Registrable
Securities that may be included in the Registration and underwriting shall be
allocated among all such holders requesting to participate in such Registration
in proportion, as nearly as practicable, to the respective amounts of
registrable securities which they had requested to be included in such
Registration at the time of filing the Registration statement. No Registrable
Securities excluded from the underwriting by reason of the managing.
underwriter's marketing limitation shall be included in such Registration.
3. EXPENSES OF REGISTRATION. All Registration Expenses incurred
in connection with any Registration, qualification or compliance pursuant to
this Agreement shall be borne by the Company, and all Selling Expenses shall be
borne by the holders of the securities so Registered pro rata on the basis of
the number of their shares so Registered.
4. REGISTRATION PROCEDURES. In the case of each Registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will keep the Holder, if participating therein, advised in writing
as to the initiation of each Registration, qualification or compliance and as to
the completion thereof. At its expense, the Company will use its best efforts
to:
4.1. Except for offerings pursuant to Rule 145 or
successors thereto under the Securities Act, the Company will keep such
Registration, qualification or compliance effective and current for a period of
one hundred twenty (120) days or until the Holder has completed the distribution
described in the Registration statement relating thereto, whichever first
occurs.
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4.2 The Company will furnish such number of prospectuses
and other documents incident thereto as the Holder from time to time may
reasonably request.
4.3 The Company will notify the Holder, if Registrable
Securities are covered by a Registration statement, at any time when a
prospectus relating thereto covered by such Registration statement is required
to be delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such Registration statement includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of circumstances then existing.
5. INDEMNIFICATION.
5.1 The Company will indemnify the Holder, its trustee,
and each person controlling (within the meaning of the Securities Act) the
Holder and the Holder's legal counsel and independent accountants, with respect
to which Registration, qualification or compliance has been effected pursuant to
this Agreement, against all expenses, claims, losses, damages and liabilities
(or actions in respect thereof) including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular or other document (including any
related registration statement, notification or the like) incident to any such
Registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Company of the Securities Act or any rule or regulation thereunder or any state
securities law applicable to the Company and relating to action or inaction
required of the Company in connection with any such Registration, qualification
or compliance, and will reimburse the Holder, its trustee and each person
controlling the Holder, for any legal and any other expenses reasonably incurred
in connection with investigating, defending any such claim, loss, damage,
liability, or action, provided that the Company will not be liable in any case
to the extent that any such claim, loss, damage liability or expense arises out
of or is based on any untrue statement or omission based upon written
information furnished to the Company by such Holder and stated to be
specifically for use therein. It is agreed that the indemnity agreement contain
in this Section 5.1 shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if settlement is effected without the
consent of the Company (which consent has not been unreasonably withheld).
5.2. The Holder, if Registrable Securities held by him are
included in the securities as to which such Registration, qualification or
compliance is being effected, will indemnify the Company and each of its
directors and officers each person who controls the Company within the meaning
of the Securities Act and the rules and regulations thereunder, each other such
holder participating in such Registration, and each of their officers, directors
and partners, and each person controlling such Holder and the legal counsel and
independent accountants of the foregoing persons against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering circular or
other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company and such holders,
directors, officers, partners, persons or control persons for any legal or any
other expenses reasonable incurred in connection with investigating or
defending. any such claim, loss, damage, liability or action, in each case to
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company and stated to be
specifically for use therein; provided,
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however, that the liability and obligations of the Holder hereunder shall be
limited to any amount equal to the gross proceeds received by the Holder of
Registrable Securities sold as contemplated therein.
5.3 Each party entitled to indemnification under this
Section 5 ("Indemnified Party") shall give notice to the party required to
provide indemnification ("Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought, and
shall permit the Indemnifying Party to assume the defense of any such claim or
any litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld). The Indemnified Party may participate in such defense
at such party's expense; provided, however, the Indemnifying Party shall bear
the expenses of such defense of the Indemnified Party (including the fees and
disbursements of one additional counsel to all Indemnified Parties which shall
be selected by the Indemnified Parties) if representation of both parties by the
same counsel would be inappropriate due to actual or potential conflicts of
interest. The omission by any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this
Section 5 except to the extent the omission results in a failure of actual
notice to the Indemnified Party and such Indemnified Party is damaged solely as
a result of the failure to give notice. No Indemnifying Party, in the defense of
any such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting therefrom.
If the indemnification provided for in this Section 5 is held by a
court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage, or expense referred to therein,
then the Indemnifying Party, in lieu of indemnifying such Indemnified Party
hereunder, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage, or expense as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by the Indemnified
Party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control.
6. INFORMATION BY HOLDER. The Holder, if any of the Registrable
Securities are included in any Registration, shall furnish to the Company such
information regarding the Holder and the distribution proposed by the Holder as
the Company may reasonably request in writing and as shall be reasonably
required in connection with any Registration, qualification or compliance
referred to in this Agreement. Such information shall be furnished to the
Company by an instrument duly executed by the Holder and stated to be
specifically for use therein.
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7. TRANSFER OR ASSIGNMENT OF REGISTRATION RIGHTS. The rights to
cause the Company to Register securities granted under Section 2 may be
transferred or assigned by the Holder to one or more permitted transferees or
assignees of at least one-third of the total number of Registrable Securities,
provided that (i) such transfer may otherwise be effected in accordance with
applicable securities laws, (ii) the Company is given written notice by the
Holder thirty (30) days prior to said transfer or assignment, stating the name
and address of each transferee or assignee and identifying the securities with
respect to which such Registration rights are being transferred or assigned and
the Company consents to the transfer or assignment (which consent will not be
unreasonably withheld), and (iii) that the transferee or assignee of such rights
assumes the obligations of the Holder under this Agreement and executes and
delivers an assumption agreement reasonably satisfactory to the Company to that
effect.
8. "MARKET STAND-OFF" AGREEMENT. The Holder agrees, if requested
by the Company and an underwriter of Common Stock (or other securities) of the
Company, not to sell or otherwise transfer or dispose of any Common Stock. (or
other securities) of the Company held by the Holder during the one hundred fifty
(150) day period following the effective date of a Registration statement of the
Company filed under the Securities Act, provided that all officers and directors
of the Company enter into similar agreements. The Company may impose
stop-transfer instructions with respect to the securities subject to the
foregoing restriction until the end of such one hundred fifty (150) day period.
9. SUSPENSION OF REGISTRATION RIGHTS. The registration rights
granted pursuant to Sections 2 hereof shall not be exercisable by the Holder
during the period in which the Holder has the ability to sell all of the
Registrable Securities held by the Holder under Rule 144 or Rule 144A during a
single ninety (90) day period.
10. DELAY OF REGISTRATION. The Holder shall not have any
right to take any actions to restrain, enjoin or otherwise delay any
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Agreement.
11. GENERAL.
11.1 GOVERNING LAW. This agreement shall be governed in
all respects by the laws of the State of Michigan without giving effect to any
conflicts of laws principles.
11.2. REMEDIES. Any person having rights under any
provisions of this Agreement will be entitled to enforce such rights
specifically, to recover damages caused by reason of any breach of any provision
of this Agreement and to exercise all other rights granted by law.
11.3. ENTIRE AGREEMENT, AMENDMENTS AND WAIVERS. This
Agreement constitutes the entire agreement of the parties hereto with respect to
the subject matter hereof and supersedes all previous agreements with respect to
such subject matter. Except as otherwise provided herein, the provisions of this
Agreement may be amended in a writing signed by the Company and the Holder.
11.4. SUCCESSORS AND ASSIGNS. All covenants and
agreements in this Agreement by or on behalf of any of the parties hereto will
bind and inure to the benefit of the respective successors and assigns of the
parties hereto.
11.5. NOTICES AND OTHER COMMUNICATIONS. All notices and
other communications required or permitted hereunder shall be in writing and
shall be mailed by first-class mail, postage pre paid, or delivered by hand,
addressed (i) if to the Holder, at its address set forth in the preamble of this
Agreement or at such other address as the Holder shall have furnished to the
Company in writing, and (ii) if to the Company, at its address set forth at the
beginning of this Agreement, or at such other address as the Company shall have
furnished to the Holder in writing.
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11.6. TITLE AND SUBTITLES. The titles of the sections
and. paragraphs of this Agreement are for convenience of reference only and are
not to, be considered in construing this Agreement.
11.7. COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused this Agreement to be executed by their respective officers, thereunto
duly authorized, as of the day and year first above written.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, TRUSTEE OF ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ REVOCABLE TRUST DATED
MARCH 14, 1990, AS AMENDED
By:
---------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee
NEMATRON CORPORATION
By:
---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Vice President, Finance and Administration
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EXHIBIT 6.08
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), is made this 30th day of
June, 2000, by and between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("Employee") and A-OK CONTROLS
ENGINEERING INC., a Michigan corporation (the "Company").
WHEREAS, pursuant to that certain Stock Purchase Agreement (the
"Purchase Agreement") dated as of June 30, 2000 by and among Nematron
Corporation ("Nematron"), the Employee and the shareholder of the Company,
Nematron acquired (the "Acquisition") all of the issued and outstanding stock of
the Company;
WHEREAS, as a condition precedent to the consummation of the
Acquisition, the Purchaser has required Employee and the Company to enter into
this Agreement to ensure the continued employment of Employee by the Company;
WHEREAS, the consummation of the transactions contemplated by the
Purchase Agreement is also a condition precedent to the effectiveness of this
Agreement;
WHEREAS, the Company is engaged in the business of providing automation
control system solutions (including controls design, engineering, programs and
system support) to automotive OEMs, Tier 1 and Tier 2 supplier base of
automation systems and machine tools (the "Business"); and
WHEREAS, the Company desires to employ Employee, and Employee desires
to be employed by the Company upon the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
obligations contained herein, and intending to be legally bound, the parties,
subject to the terms and conditions set forth herein, agree as follows:
1. Employment and Term. The Company hereby employs Employee, and
Employee hereby accepts employment with the Company as its President (the
"Position") for a period commencing on the date hereof and continuing for a
period of three (3) years, subject to earlier termination pursuant to the
provisions of Section 10 hereof (the "Term").
2. Duties. During the Term, Employee shall serve the Company faithfully
and to the best of his ability and shall devote his full attention, skill and
efforts to the performance of the duties required by or appropriate for his
Position, shall use his best skill and abilities to promote the interest of the
Company, and shall work with other officers and employees of the Company in a
competent and professional manner. Employee agrees to assume such duties and
responsibilities as are commensurate with his Position. Employee shall report
directly to the President of Nematron.
3. Other Business Activities. During the Term, Employee will not,
without the prior approval of the Board of Directors, directly or indirectly
engage in any other business activities or pursuits which may interfere with the
performance of his responsibilities and obligations pursuant to this Agreement.
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4. Compensation. The Company shall pay Employee, and Employee hereby
agrees to accept, as compensation for all services rendered hereunder and for
Employee's covenant not to compete provided for in Section 9 hereof, an initial
base salary of Two Hundred Thousand Dollars ($200,000), less applicable
withholdings, commencing upon closing of the Acquisition (the "Base Salary"),
payable in a manner and at such times as is consistent with the payroll
practices of the Company or Nematron. The Employee shall also be entitled to
participate in such incentive bonus or long-term incentive programs as may be
established from time to time by the board of directors of the Company or
Nematron, upon terms established by such board, and, to the extent and upon the
terms determined by Nematron's board of directors, in Nematron's Gainsharing
Program. The Company shall also cause Nematron to grant to Employee options to
purchase 30,000 shares of the common stock of Nematron pursuant to Nematron's
Long-Term Incentive Plan at a price per share equal to the closing price of
Nematron's common stock on the date of the Acquisition, which options will vest
at a rate of 33 1/3% per completed year from the grant date.
5. Other Benefits. Employee shall be entitled to those employee
benefits which the Company, as determined by the board of directors, may from
time to time generally makes available to its senior executives ("Benefits").
The Benefits shall initially include, without limitation, health insurance, life
insurance, use of a vehicle owned by the Company (with appropriate annual
reimbursement by Employee to the Company for personal use of such Company
vehicle, consistent with past practice), and such other benefits as the board of
directors may determine from time to time.
6. Reimbursement of Expenses. Subject to such conditions as the
Company may from time to time determine, Employee shall be reimbursed for
ordinary and reasonable documented expenses incurred by him in the performance
of his duties under this Agreement.
7. Confidentiality. Employee recognizes and acknowledges that the
Proprietary Information (as hereinafter defined) is a valuable, special and
unique asset of the Business of the Company. As a result, both during the Term
and thereafter, Employee shall not, without the prior written consent of the
Company, for any reason, either directly or indirectly divulge to any
third-party or use for his own benefit or for any purpose other than the
exclusive benefit of the Company any confidential, proprietary, business or
technical information or trade secrets of the Company or of any subsidiary or
affiliate of the Company ("Proprietary Information") revealed, obtained or
developed in the course of his employment with the Company. Such Proprietary
Information shall include, but shall not be limited to, the intangible personal
property described in Section 8(b) hereof, any information relating to methods
of production, manufacture, service, research, computer codes or instructions
(including source and object code listings, program logic algorithms,
subroutines, modules or other subparts of computer programs and related
documentation, including program notation), computer processing systems and
techniques, concepts, layouts, flowcharts, specifications, know-how any
associated user or service manuals or other like textual materials (including
any other data and materials used in performing the Employee's duties), all
computer inputs and outputs (regardless of the media on which stored or
located), hardware and software configurations, designs, architecture,
interfaces, plans, sketches, blueprints, any other materials prepared by
Employee in the course of, relating to or arising out of his employment by the
Company or prepared by any other Company employee or contractor for the Company
or its customers, costs, business studies, business procedures, finances,
marketing data, methods, plans and efforts, the identities of customers,
contractors and suppliers and prospective customers, contractors and suppliers,
the terms of contracts and agreements with customers, contractors and suppliers,
the Company's relationship with actual and prospective customers, contractors
and suppliers and the needs and requirements of, and the Company's course of
dealing with, any such actual or prospective customers, contractors and
suppliers, personnel information, customer and vendor credit information and any
other materials that have not been made available to the general public;
provided, that nothing herein contained shall restrict Employee's ability to
make such disclosures during the course of his employment as may be necessary or
appropriate to the effective and efficient discharge of the duties required by
or appropriate for his
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Position or as such disclosures may be required by law; and further provided,
that nothing herein contained shall restrict Employee from divulging or using
for his own benefit or for any other purpose any Proprietary Information that is
readily available to the general public so long as such information did not
become available to the general public as a direct or indirect result of
Employee's breach of this Section 7. Failure by the Company to ▇▇▇▇ any of the
Proprietary Information as confidential or proprietary shall not affect its
status as Proprietary Information under the terms of this Agreement.
8. Inventions and Property.
(a) All right, title and interest in and to Proprietary Information
shall be and remain the sole and exclusive property of the Company. During the
Term, Employee shall not remove from the Company's offices or premises any
documents, records, notebooks, files, correspondence, reports, memoranda or
similar materials of, or containing, Proprietary Information or other materials
or property of any kind belonging to the Company, unless necessary or
appropriate in accordance with the duties and responsibilities required by or
appropriate for his Position, and, in the event that such materials or property
are removed, all of the foregoing shall be returned to their proper files or
places of safekeeping as promptly as possible after the removal shall serve its
specific purpose. Employee shall not make, retain, remove and/or distribute any
copies of any of the foregoing for any reason whatsoever, except as may be
necessary in the discharge of his assigned duties, and shall not divulge to any
third person the nature of and/or contents of any of the foregoing or of any
other oral or written information to which he may have access or with which for
any reason he may become familiar, except as disclosure shall be necessary in
the performance of his duties. Upon the termination of Employee's employment
with the Company, he shall leave with or return to the Company all originals and
copies of the foregoing then in his possession, whether prepared by Employee or
by others.
(b) (i) Employee agrees that all right, title and interest in and
to any innovations, designs, systems, analyses, ideas for marketing programs,
customer contacts, and all copyrights, patents, trademarks and trade names, or
similar intangible personal property which have been or are developed or created
in whole or in part by Employee (A) at any time and at any place during the
Employee's employment with the Company and which, in the case of any or all of
the foregoing, are related to and used in connection with the Business of the
Company, (B) as a result of tasks assigned to Employee by the Company or (C)
from the use of premises or personal property (whether tangible or intangible)
owned, leased or contracted for by the Company (collectively, the "Intellectual
Property"), shall be and remain forever the sole and exclusive property of the
Company. The Employee shall promptly disclose to the Company all Intellectual
Property and the Employee shall have no claim for additional compensation for
the Intellectual Property.
(ii) The Employee acknowledges that all the Intellectual
Property that is copyrightable shall be considered a work made for hire under
United States Copyright Law. To the extent that any copyrightable Intellectual
Property may not be considered a work made for hire under the applicable
provisions of the United States Copyright Law, or to the extent that,
notwithstanding the foregoing provisions, the Employee may retain an interest in
any Intellectual Property that is not copyrightable, the Employee hereby
irrevocably assigns and transfers to the Company any and all right, title, or
interest that the Employee may have in the Intellectual Property under
copyright, patent, trade secret and trademark law, in perpetuity or for the
longest period otherwise permitted by law, without the necessity of further
consideration. The Company shall be entitled to obtain and hold in its own name
all copyrights, patents, trade secrets, and trademarks with respect thereto.
(iii) Employee further agrees to reveal promptly all
information relating to the same to an appropriate officer of the Company and
to cooperate with the Company and execute such documents as may be necessary or
appropriate (A) in the event that the Company desires to seek
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copyright, patent or trademark protection, or other analogous protection,
thereafter relating to the Intellectual Property, and when such protection is
obtained, to renew and restore the same, and (B) to defend any opposition
proceedings in respect of obtaining and maintaining such copyright, patent or
trademark protection, or other analogous protection.
(iv) In the event the Company is unable after
reasonable effort to secure Employee's signature on any of the documents
referenced in Section 8(b)(iii) hereof, whether because of Employee's physical
or mental incapacity or for any other reason whatsoever, Employee hereby
irrevocably designates and appoints the Company and its duly authorized officers
and agents as Employee's agent and attorney-in-fact, to act for and in his
behalf and stead to execute and file any such documents and to do all other
lawfully permitted acts to further the prosecution and issuance of any such
copyright, patent or trademark protection, or other analogous protection, with
the same legal force and effect as if executed by Employee.
9. Covenant Not to Compete. The Employee shall not, during the Term
and for a period of one (1) year thereafter (such period, the "Restricted
Period"), do any of the following directly or indirectly, within the continental
United States, without the prior written consent of the Company:
(a) engage or participate in any business activity competitive
with the Business of the Company;
(b) become interested in (as owner, stockholder, lender, partner,
co-venturer, director, officer, employee, agent, consultant or otherwise) any
person, firm, corporation, association or other entity engaged in any business
that is competitive with the Business of the Company. Notwithstanding the
foregoing, (i) Employee may hold not more than one percent (1%) of the
outstanding securities of any class of any publicly-traded securities of a
company that is engaged in activities referenced in Section 9(a) hereof, and
(ii) Employee's ownership of 44,628 shares of stock in Systems Integration
Specialists Company ("▇▇▇▇▇") which shares are subject to a redemption
agreement, shall not constitute a breach of this provision so long as Employee
does not acquire any additional shares of ▇▇▇▇▇ after the date of this
Agreement;
(c) solicit or call on, either directly or indirectly, in
connection with any business which is competitive with the Business of the
Company, any (i) customer with whom the Company shall have dealt at any time or
(ii) any distributor, supplier or other contracting party with whom the Company
shall have dealt;
(d) influence or attempt to influence any supplier, distributor,
customer or potential customer of the Company to terminate or modify any written
or oral agreement or course of dealing with the Company; or
(e) except in his capacity as an employee of the Company,
influence or attempt to influence any person to either (i) terminate or modify
his employment, consulting, agency, distributorship or other arrangement with
the Company or (ii) employ or retain, or arrange to have any other person or
entity employ or retain, any person who has been employed or retained by the
Company as an employee, consultant, agent or distributor of the Company at any
time during the two year period immediately preceding the termination of
Employee's employment hereunder.
10. Termination. Employee's employment hereunder may be terminated
during the Term upon the occurrence of any one of the events described in
this Section 10. Upon termination, Employee shall be entitled only to such
compensation and benefits as described in this Section 10.
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10.1. Termination by Death or Permanent Disability.
(a) In the event of Employee's death or Permanent
Disability (as defined below) during the Term, Employee's employment hereunder
shall be terminated thereby and the Company shall pay to Employee or Employee's
executors, legal representatives or administrators an amount equal to the vested
or accrued and unpaid portion of his Base Salary, Benefits and other forms of
compensation and benefits payable or provided in accordance with the terms of
any then existing compensation or benefit plan or arrangement ("Other
Compensation").
(b) Except as specifically set forth in this Section 10.1,
the Company shall have no liability or obligation hereunder to Employee's
executors, legal representatives, administrators, heirs or assigns or any other
person claiming under or through him by reason of Employee's death or Permanent
Disability, except that Employee's executors, legal representatives or
administrators will be entitled to receive the payment prescribed under any
death or disability benefits plan in which he is a participant as an employee of
the Company and to exercise any rights afforded under any compensation or
benefit plan then in effect. For the purposes of this Agreement, "Permanent
Disability" shall have the same meaning as such phrase is given under the long
term disability plan sponsored by the Company or, in the absence of such policy,
as determined by a physician selected by the Company and reasonably satisfactory
to Employee or his personal representative.
10.2. Termination for Cause.
(a) The Company may terminate Employee's
employment hereunder at any time for "cause" upon written notice to Employee.
For purposes of this Agreement, "cause" shall mean, in each case as reasonably
determined by a majority of the Board of Directors: (i) any breach by Employee
of any of his material obligations under this Agreement (other than as a result
of incapacity due to physical or mental illness), in each case if such breach is
not cured within thirty (30) calendar days after written notice thereof to
Employee by Company, (ii) commission of a felony or a crime involving moral
turpitude or other commission of any act or omission of Employee involving
dishonesty, fraud, embezzlement, theft, substance abuse or sexual misconduct
with respect to the Company or any of its affiliates or subsidiaries or any of
their employees, vendors, suppliers, distributors or customers, (iii) Employee's
substantial neglect of duties or failure to follow a lawful directive of the
Board of Directors within the scope of his employment after written notice from
the Board of Directors of such neglect or failure has not been cured within
thirty (30) days after the Employee receives such notice, (iv) the Employee's
misappropriation of funds or assets of the Company or one of its affiliates or
subsidiaries for personal use, or (v) the Employee's gross negligence or willful
misconduct in the performance of his duties.
(b) In the event of a termination of Employee's
employment hereunder pursuant to Section 10.2(a), Employee shall be entitled
to receive all vested or accrued but unpaid (as of the effective date of such
termination) Base Salary, Benefits and Other Compensation. All Base Salary,
Benefits and Other Compensation shall cease at the time of such termination,
subject to the terms of any benefit or compensation plan then in force and
applicable to Employee. Except as specifically set forth in this Section 10.2,
the Company shall have no liability or obligation hereunder by reason of
Employee's termination pursuant to this Section 10.2.
10.3. Termination for Good Reason.
(a) Employee may terminate his employment for "Good
Reason." For purposes of this Agreement, "Good Reason" means any material breach
of this Agreement by Company in its payment obligations or its obligations to
provide benefits under this Agreement that is
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not remedied by Company within ten (10) days' after receipt of written notice
thereof from the Employee, and any other material breach by Company of any of
its other obligations under this Agreement that is not remedied by the Company
within thirty (30) days after receipt of notice from the Employee, which notice,
in either event shall set forth in reasonable detail the specific conduct of
Company that constitutes Good Reason and the specific provisions of this
Agreement on which the Employee relies. Upon an event constituting "Good
Reason", termination of employment by the Employee for Good Reason shall be
effectuated upon the expiration of the aforesaid 10 or 30 day periods without
further notice.
(b) In the event of termination of Employee's
employment hereunder for Good Reason, Employee shall be entitled to receive all
accrued, but unpaid (as of the effective date of such termination) Base Salary,
Benefits and Other Compensation, plus an amount equal to Ten percent (10%) of
the Employee's annual Base Salary (as of the date of termination), and the
covenant not to compete contained in Section 9 of this Agreement shall be of no
further force and effect.
10.4. Termination by Employee without Good Reason.
(a) Employee may terminate his employment for any
reason upon ninety (90) days' written notice to Company.
(b) In the event of termination of Employee's
employment hereunder pursuant to Section 10.4(a), Employee shall be entitled to
receive all accrued but unpaid (as of the effective date of such termination)
Base Salary, Benefits and Other Compensation. All Base Salary, Benefits and
Other Compensation shall cease at the time of such termination, subject to the
terms of any benefit or compensation plan then in force and applicable to
Employee.
11. Indemnification. The Company shall indemnify Employee and shall
save and hold Employee harmless from, against, for, and in respect of, any and
all damages, losses, obligations, deficiencies, costs and expenses, including,
without limitation, reasonable attorneys' fees and other costs and expenses,
incident to, or arising out of, any threatened, pending or completed suit,
action, claim or proceeding, whether civil, criminal, administrative or
investigative, suffered, incurred or required to be paid by Employee by reason
of being a director, officer, employee or agent of the Company or by reason of
service, at the request of the Company, as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise (whether or not Employee continues to be a director, officer,
employee or agent of the Company or such corporation, partnership, joint
venture, trust or other enterprise at the time such action, suit or proceeding
is brought or threatened) if the Board of Directors reasonably determines that
Employee's act or omission was taken or made in good faith and in a manner
reasonably believed to be in, or not inconsistent with, the best interests of
the Company; provided, that such act or omission did not constitute gross
negligence, willful misconduct or fraud. The foregoing right of indemnification
shall be in addition to any rights to which Employee may otherwise be entitled
and shall inure to the benefit of Employee's heirs, executors or administrators.
If authorized under the circumstances by the Board of Directors of the Company,
the Company may pay the expenses incurred by Employee (including without
limitation reasonable attorneys' fees) in defending any action, suit or
proceeding upon receipt of an undertaking by Employee to repay such payment if
there shall be a final adjudication or determination that it is not entitled to
indemnification as provided herein.
12. Other Agreements. Employee represents and warrants to the
Company that:
(a) There are no restrictions, agreements or understandings
whatsoever to which Employee is a party which would prevent or make unlawful
Employee's execution of this Agreement or Employee's employment hereunder, or
which is or would be inconsistent or in conflict with this Agreement or
Employee's employment hereunder, or would prevent, limit or impair in any way
the performance by Employee of his obligations hereunder;
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(b) That Employee's execution of this Agreement and
Employee's employment hereunder shall not constitute a breach of any contract,
agreement or understanding, oral or written, to which Employee is a party or by
which Employee is bound;
(c) That Employee is free to execute this Agreement and to
enter into the employ of the Company pursuant to the provisions set forth
herein; and
(d) That Employee shall disclose the existence and terms of
the restrictive covenants set forth in this Agreement to any employer that the
Employee may work for during the term of this Agreement (which employment is
not hereby authorized) or after the termination of the Employee's employment at
the Company.
13. Survival of Provisions. The provisions of this Agreement set
forth in Sections 7, 8, 9 (except as expressly provided herein upon termination
for Good Reason), 11 and 22 hereof shall survive the termination of Employee's
employment hereunder.
14. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Company and Employee and their respective
successors, executors, administrators, heirs and/or permitted assigns; provided,
however, that neither Employee nor the Company may make any assignment of this
Agreement or any interest herein, by operation of law or otherwise, without the
prior written consent of the other party hereto, except that, without such
consent, the Company may assign this Agreement to any successor to all or
substantially all of its assets and business by means of liquidation,
dissolution, merger, consolidation, transfer of assets, or otherwise, provided
that such successor entity assumes in writing all of the obligations of the
Company under this Agreement. Except as provided in this Section 14, this
Agreement is not intended to, and shall not, confer any rights upon any third
parties.
15. Notice. Any notice or communication required or permitted
under this Agreement shall be made in writing and sent by certified or
registered mail, return receipt requested, addressed as follows:
If to Employee:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Company:
A-OK Controls Engineering, Inc.
c/o Nematron Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as either party may from time to time duly specify by
notice given to the other party in the manner specified above.
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16. Entire Agreement; Amendments. This Agreement, contains the
entire agreement and understanding of the parties hereto relating to the subject
matter hereof, and merge and supersede all prior and contemporaneous
discussions, agreements and understandings of every nature between the parties
hereto relating to the employment of Employee with the Company. This Agreement
may not be changed or modified, except by an Agreement in writing signed by each
of the parties hereto.
17. Waiver. The waiver of the breach of any term or provision of
this Agreement shall not operate as or be construed to be a waiver of any other
or subsequent breach of this Agreement.
18. Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Michigan.
19. Waiver of Jury Trial. Each of the parties hereto hereby
irrevocably waives any and all right to trial by jury of any claim or cause of
action in any legal proceeding arising out of or related to this Agreement or
the transactions or events contemplated hereby or any course of conduct, course
of dealing, statements (whether verbal or written) or actions of any party
hereto. The parties hereto each agree that any and all such claims and causes of
action shall be tried by a court trial without a jury. Each of the parties
hereto further waives any right to seek to consolidate any such legal proceeding
in which a jury trial has been waived with any other legal proceeding in which a
jury trial cannot or has not been waived.
20. Invalidity. In case any one or more of the provisions contained
in this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect the validity of any other provision of this Agreement, and such
provision(s) shall be deemed modified to the extent necessary to make it
enforceable.
21. Section Headings. The section headings in this Agreement are
for convenience only, and form no part of this Agreement and shall not affect
its interpretation.
22. Specific Enforcement: Extension of Period.
(a) Employee acknowledges that the restrictions contained
in Sections 7, 8, and 9 hereof are reasonable and necessary to protect the
legitimate interests of the Company and its affiliates and that the Company
would not have entered into this Agreement in the absence of such restrictions.
Employee also acknowledges that any breach by him of Sections 7, 8, and 9 hereof
will cause continuing and irreparable injury to the Company for which monetary
damages would not be an adequate remedy. The Employee shall not, in any action
or proceeding to enforce any of the provisions of this Agreement, assert the
claim or defense that an adequate remedy at law exists. In the event of such
breach by Employee, the Company shall have the right to enforce the provisions
of Sections 7, 8 or 9 of this Agreement by seeking injunctive or other relief in
any court, and this Agreement shall not in any way limit remedies of law or in
equity otherwise available to the Company. If an action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to recover, in addition to any other relief, reasonable
attorneys' fees, costs and disbursements. In the event that the provisions of
Sections 7, 8 or 9 hereof should ever be adjudicated to exceed the time,
geographic, or other limitations permitted by applicable law in any applicable
jurisdiction, then such provisions shall be deemed reformed in such jurisdiction
to the maximum time, geographic, or other limitations permitted by applicable
law.
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(b) In the event that Employee shall be in breach of any of
the restrictions contained in Section 9 hereof, then the Restricted Period shall
be extended for a period of time equal to the period of time that Employee is in
breach of such restriction.
22. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed the day and year first written above.
A-OK CONTROLS ENGINEERING, INC.
By:
---------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President - Finance and
Administration
EMPLOYEE
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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EXHIBIT 6.09
AGREEMENT NOT TO COMPETE
AGREEMENT NOT TO COMPETE (the "Agreement"), dated as of June 30, 2000
between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") having an address at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and A-OK Controls Engineering, Inc. (the
"Company") having an address at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and
Nematron Corporation ("Nematron") having an address at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
WHEREAS, ▇▇▇▇▇▇▇, a shareholder (through a personal revocable trust),
officer and key employee of Company entered into an agreement of even date
herewith (the "Stock Purchase Agreement") to sell all of the issued and
outstanding stock of the Company to Nematron;
WHEREAS, ▇▇▇▇▇▇▇ has acquired significant expertise in the business and
operations of the Company and in the business of providing automation control
system solutions (including controls design, engineering, programs and system
support) (the "Business") to automotive OEMs, Tier 1 and Tier 2 supplier base of
automation systems and machine tools, and other relevant customers;
WHEREAS, the Company and Nematron desire that ▇▇▇▇▇▇▇ not engage in
competition or use his expertise to compete or assist others in competition with
the Company;
NOW THEREFORE, in consideration of the execution of the Stock Purchase
Agreement, the mutual agreements contained herein and therein and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
▇▇▇▇▇▇▇ agrees for the benefit of the Company and Nematron that, during
the period commencing on the closing date of the Stock Purchase Agreement (the
"Closing Date") and ending on the fifth (5th) anniversary of the Closing Date,
he will not:
(a) engage or participate in any business activity
competitive with the Business of the Company;
(b) become interested in (as owner, stockholder, lender,
partner, co-venturer, director, officer, employee, agent, consultant or
otherwise) any person, firm, corporation, association or other entity engaged in
any business that is competitive with the Business of the Company.
Notwithstanding the foregoing, (i) ▇▇▇▇▇▇▇ may hold not more than one percent
(1%) of the outstanding securities of any class of any publicly-traded
securities of a company that is engaged in activities competitive with the
Business of the Company; and (ii) ▇▇▇▇▇▇▇'▇ ownership of 44,628 shares of stock
in Systems Integration Specialists Company ("▇▇▇▇▇") which shares are subject to
a redemption agreement, shall not constitute a breach of this provision so long
as Employee does not acquire any additional shares of ▇▇▇▇▇ after the date of
this Agreement
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(c) solicit or call on, either directly or indirectly, in
connection with any business which is competitive with the Business of the
Company, any (i) customer with whom the Company shall have dealt at any time or
(ii) any distributor, supplier or other contracting party with whom the Company
shall have dealt;
(d) influence or attempt to influence any supplier,
distributor, customer or potential customer of the Company to terminate or
modify any written or oral agreement or course of dealing with the Company; or
(e) except in his capacity as an employee of the Company,
influence or attempt to influence any person to either (i) terminate or modify
his employment, consulting, agency, distributorship or other arrangement with
the Company or (ii) employ or retain, or arrange to have any other person or
entity employ or retain, any person who has been employed or retained by the
Company as an employee, consultant, agent or distributor of the Company at any
time during the two year period immediately preceding the termination of
Employee's employment hereunder.
The foregoing shall not apply to ▇▇▇▇▇▇▇'▇ activities as an employee of
the Company after the Closing Date.
Notwithstanding anything herein, this Agreement will terminate and be
of no further force and effect upon a termination by ▇▇▇▇▇▇▇ for "Good Reason"
of that certain Employment Agreement of even date herewith between ▇▇▇▇▇▇▇ and
the Company.
▇▇▇▇▇▇▇ agrees that a monetary remedy for a breach of the agreements
set forth in this Agreement will be inadequate and impracticable and further
agrees that such a breach would cause the Company irreparable harm, and that the
Company will be entitled to temporary and permanent injunctive relief without
the necessity of proving actual damages. In the event of such a breach, ▇▇▇▇▇▇▇
agrees that the Company will be entitled to such injunctive relief, including
temporary restraining orders, preliminary injunctions and permanent injunctions,
as a court of competent jurisdiction may determine.
If any provision of this Agreement is held invalid in part, it will be
curtailed, both as to time and location, to the minimum extent required for its
validity and will be binding and enforceable with respect to ▇▇▇▇▇▇▇ as so
curtailed.
This Agreement shall be construed an interpreted, and the rights of the
parties shall be determined in accordance with the laws of the State of Michigan
without giving effect to the principles of conflict of laws of such state.
Terms used herein but not defined shall be defined by reference to the
Stock Purchase Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date and year first above written.
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
A-OK CONTROLS ENGINEERING, INC.
By:
-------------------------------
Its: Vice President - Finance and
Administration
NEMATRON CORPORATION
By:
-------------------------------
Its: Vice President - Finance and
Administration
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