EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (hereinafter, this "Agreement"), made as
of this 10th day of July, 1997, by and among CLAREMONT TECHNOLOGY GROUP, INC.,
an Oregon corporation ("Claremont"), CLAREMONT ACQUISITION CORPORATION, an
Oregon corporation and a wholly-owned subsidiary of Claremont ("Subsidiary"),
OPTEX, INC., an Ohio corporation ("OpTex"), MICHAEL L. JOHNSON, MICHAEL A.
GUIDER, JULI A. SHIVLEY, RICHARD E. BROWN, LAURA HENDERSON AND MICHAEL LININGER.
Claremont, Subsidiary and OpTex are sometimes hereinafter collectively referred
to as the "Constituent Corporations."
WITNESSETH:
WHEREAS, Claremont, Subsidiary and OpTex desire to effect a business
combination by means of a merger of Subsidiary with and into OpTex, with OpTex
being the surviving corporation in the merger, all upon the terms and subject to
the conditions of this Agreement; and
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368 (a)(2)(E) of
the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE
THE MERGER; CLOSING; EFFECTIVE TIME
1.1 THE MERGER. Subject to the terms and conditions of this Agreement and
in accordance with the laws of the State of Oregon and the State of Ohio, at the
Effective Time (as defined in Section 1.3 hereof) Subsidiary shall be merged
with and into OpTex and the separate corporate existence of Subsidiary shall
thereupon cease (the "Merger"). OpTex shall be the surviving corporation in the
Merger (sometimes hereinafter referred to as the "Surviving Corporation"). The
Merger shall have the effects specified in Section 1701.82 of the Ohio Revised
Code (the "Ohio Act") and Section 60.497 of the Oregon Business Corporation Act
(the "Oregon Act").
1.2 THE CLOSING. The closing of the Merger (the "Closing") shall take
place at the offices of OpTex at 1:00 p.m. Central Time on July 10, 1997 (or at
such other place, time or date as may be mutually agreed upon by Claremont and
OpTex) (the "Closing Date"). At the Closing, each of the parties shall take all
actions and deliver all such documents, instruments, certificates, agreements,
securities and other items as may be requisite and are within its power to
perform in order to fulfill and observe all covenants, conditions and agreements
on its part to be performed, fulfilled and observed at or prior to the Merger
(and not theretofore accomplished), and/or to cause all conditions precedent to
the other party's obligations hereunder to be satisfied in full.
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1.3 ARTICLES/CERTIFICATE OF MERGER. On the Closing Date, if all of the
conditions to the Merger set forth in Article VII shall have been fulfilled or
waived in accordance herewith and this Agreement shall not have been terminated
in accordance with Article VIII, the parties hereto shall cause Articles of
Merger meeting the requirements of Section 60.494 of the Oregon Act and a
Certificate of Merger meeting the requirements of Section 1701.81 of the Ohio
Act to be properly executed and filed in accordance with such Section 60.494 and
such Section 1701.81. The Merger shall become effective at the time (the
"Effective Time") of the filing of Articles of Merger in accordance with the
Oregon Act and the Ohio Act or at such later time which the parties hereto have
agreed and designated in such Articles of Merger as the effective time of the
Merger.
1.4 FURTHER ASSURANCES. If, at any time after the Effective Time, the
Surviving Corporation shall determine or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any rights, properties
or assets as a result of, or in connection with, the Merger or otherwise to
carry out this Agreement, including without limitation, any and all regulatory
filings required to comply with any statute, rule or regulation enacted or
promulgated by any state or any governmental agency, department, division or
commission, the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver all such deeds, bills of sale, assignments and
assurances and to take and do all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title and
interest in, to and under such rights, properties or assets in the Surviving
Corporation or otherwise to carry out the intent of this Agreement.
ARTICLE II
THE SURVIVING
CORPORATION
2.1 CAPITALIZATION OF THE SURVIVING CORPORATION. The capitalization of
the Surviving Corporation shall be as set forth in the Articles of Incorporation
of OpTex in effect immediately prior to the Effective Time.
2.2 ARTICLES OF INCORPORATION. The Articles of Incorporation of the
Surviving Corporation shall be the Articles of Incorporation of OpTex, as
amended, in effect immediately prior to the Effective Time.
2.3 CODE OF REGULATIONS AND CODE OF BYLAWS. The Code of Regulations and
Code of Bylaws of the Surviving Corporation shall be the Code of Regulations and
Code of Bylaws of OpTex in effect immediately prior to the Effective Time.
2.4 TAX CONSEQUENCES. It is intended that the Merger shall constitute a
tax-free reorganization within the meaning of Section 368 (a)(2)(E) of the Code,
and that this Agreement shall constitute a "plan of reorganization" for the
purposes of Section 368 of the Code.
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2.5 OFFICERS AND DIRECTORS. The officers and directors of the Surviving
Corporation, effective immediately after the Effective Time, will be as listed
on Exhibit 2.5, all of whom shall serve until their resignation or removal or
until their successors are elected and qualified.
ARTICLE III
CONSIDERATION FOR THE MERGER
3.1 CONVERSION. Except as otherwise set forth herein, at the Effective
Time, each share of common stock of OpTex, no par value per share, issued and
outstanding immediately prior to the Effective Time (the "OpTex Shares") shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be cancelled and converted into the right to receive that shareholder's
"Pro Rata Share" (as hereinafter defined) of the "Initial Merger Consideration"
(as hereinafter defined), together with the right to receive that shareholder's
Pro Rata Share of the "Escrowed Merger Consideration" (as hereinafter defined),
subject to the escrow established herein. The following definitions shall
apply:
(a) TOTAL MERGER CONSIDERATION means One Million and 00/100 Dollars
($1,000,000.00) and 240,000 unregistered shares of Claremont common stock, no
par value per share.
(b) INITIAL MERGER CONSIDERATION means One Million and 00/100 Dollars
($1,000,000.00) and 120,000 unregistered shares of Claremont common stock, no
par value per share.
(c) ESCROWED MERGER CONSIDERATION means 120,000 unregistered shares
of Claremont common stock, no par value per share.
(d) PRO RATA SHARE means, with respect to the Initial Merger
Consideration, that amount of such Initial Merger Consideration as is set forth
under the column heading "Initial Merger Consideration" opposite each
Shareholder's name on Exhibit 3.1(d) attached hereto, and with respect to the
Escrowed Merger Consideration, that amount of such Escrowed Merger Consideration
as is set forth under the column heading "Escrowed Merger Consideration"
opposite each Shareholder's name on Exhibit 3.1(d).
3.2 TREASURY SHARES. Each OpTex Share issued and held in OpTex's treasury
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the holder thereof, cease to be outstanding,
shall be cancelled and retired without payment of any consideration therefor,
and shall cease to exist.
3.3 SHAREHOLDER RIGHTS. From and after the Effective Time, the holders of
certificates representing OpTex Shares outstanding immediately prior to the
Effective Time (each, a "Shareholder," and collectively, the "Shareholders")
shall cease to have any rights with respect to such OpTex Shares and their sole
rights shall be those rights which they will have as holders of their
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Pro Rata Share of the Escrowed Merger Consideration, subject to the terms of the
Escrow Agreement, and those which they will have as holders of their Pro Rata
Share of the Initial Merger Consideration.
After the Effective Time, each Shareholder shall be entitled, upon
surrender of a certificate or certificates representing OpTex Shares outstanding
immediately prior to the Effective Time (duly endorsed if required), together
with a properly completed letter of transmittal covering all such shares (with
customary representations and warranties regarding the absence of liens, claims
and encumbrances on such shares), to receive in exchange therefor (i) a
Claremont check payable to such holder together with a certificate or
certificates (as the holder requests) representing that Shareholder's Pro Rata
Share of the Initial Merger Consideration, plus (ii) that Shareholder's Pro
Rata Share of the Escrowed Merger Consideration, subject to the terms of the
Escrow Agreement. Until so surrendered for exchange, each such certificate
representing OpTex Shares outstanding as aforesaid shall be deemed for all
corporate purposes, other than the payment of dividends, to evidence the
ownership of the number of shares of Claremont common stock to be delivered and
distributed in exchange therefor pursuant to this Article III. Unless and until
any such certificate representing OpTex Shares outstanding as aforesaid shall be
so surrendered, no dividend payable to holders of record of Claremont common
stock at or after the Effective Time shall be paid to the holder of such
certificate but upon surrender thereof there shall be paid to the holder of
record immediately prior to the Effective Time of such surrendered certificate
the dividends (without interest) that have theretofore become payable with
respect to the Claremont common stock, deliverable and distributable in exchange
therefor pursuant to this Article III; provided, however, that if by reason of
the escheat or other laws of any state having jurisdiction in the premises,
Claremont is required to pay such state all or any part of such dividends which
have become payable, the amount of dividends which would otherwise be payable
upon surrender of any such certificate representing OpTex Shares outstanding as
aforesaid shall be reduced by the amount so paid pursuant to such escheat or
other laws.
Richard E. Brown hereby agrees that he shall have no right to receive any
portion of the Escrowed Merger Consideration.
Michael A. Guider hereby agrees that he shall have no right to receive any
portion of the Escrowed Merger Consideration.
3.4 FRACTIONAL SHARES. No fractional shares of Claremont common stock
shall be issued in the Merger. In lieu of the issuance of any such fractional
shares, Claremont shall pay to each former shareholder of OpTex who otherwise
would be entitled to receive a fractional share of Claremont's common stock
(after taking into account all Claremont common stock into which such
shareholder's OpTex Shares were converted pursuant to this Article III) an
amount in cash (rounded to the nearest whole cent) determined by multiplying (i)
the fair market value (as hereinafter defined) of a share of Claremont's common
stock by (ii) the fraction of a share of Claremont's common stock which such
holder would otherwise be entitled to receive pursuant to this Article III. The
fair market value of a share of Claremont's common stock shall be the average of
the closing prices over the ten (10) day trading period immediately preceding
the two (2) day period prior to the Closing Date.
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3.5 LOST CERTIFICATES. In the event any certificate representing OpTex
Shares (a "Certificate") shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming such Certificate to
be lost, stolen or destroyed and indemnity against any claim that may be made
against Claremont with respect to such Certificate, and, if required by
Claremont, the posting by such person of a bond in such amount as Claremont may
determine is reasonably necessary in connection with such indemnity, Claremont
will issue in exchange for such lost, stolen or destroyed Certificate the
Claremont common stock, and cash in lieu of any fractional shares, deliverable
in respect thereof pursuant to this Agreement.
3.6 SUBSIDIARY SHARES. Each Share of common stock of Subsidiary that is
issued and outstanding immediately prior to the Effective Time shall be
converted without any action on the part of the holder thereof into one share of
common stock of the Surviving Corporation.
3.7 ESCROW DEPOSIT. Promptly following the Closing, Claremont shall
deposit in escrow pursuant to Article X hereof, the number of shares of
Claremont common stock constituting the Escrowed Merger Consideration. Such
shares shall be issued in the name of each of the Shareholders, other than
Richard E. Brown and Michael A. Guider, for each such Shareholder's Pro Rata
Share of the Escrowed Merger Consideration. In addition, each of the
Shareholders, other than Richard E. Brown and Michael A. Guider, shall deposit
in escrow stock powers endorsed in blank with respect to such Shareholder's Pro
Rata Share of the Escrowed Merger Consideration. Such shares and blank stock
powers shall be held for the purposes described in Article X and the Escrow
Agreement (as hereinafter defined), and released to Claremont and/or the
Shareholders in accordance with the provisions of Article X and the Escrow
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF OPTEX AND THE SHAREHOLDERS. In
order to induce Claremont to enter into this Agreement, OpTex and the
Shareholders jointly and severally represent and warrant to Claremont, except
with regard to the matters set forth in the OpTex Disclosure Schedule (the
"OpTex Disclosure Schedule") delivered herewith, as follows:
(a) ORGANIZATION, GOOD STANDING, POWER, ETC. OpTex is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Ohio. OpTex has all requisite corporate power and authority to own,
operate and lease its properties and to carry on its business as now being
conducted or as proposed to be conducted. OpTex is duly qualified and in good
standing as a foreign corporation in each jurisdiction in which the property
owned, leased or occupied by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to be so qualified
will not, individually or in the aggregate, have a material adverse effect on
the business, properties, assets, condition (financial or otherwise),
liabilities or operations of OpTex taken as a whole, and all such jurisdictions
are set forth in Section 4.1(a) of the OpTex Disclosure Schedule. OpTex has
delivered, or will prior to or on the Closing Date deliver, to Claremont
complete and correct copies of its Articles of Incorporation (certified by the
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Secretary of the State of Ohio) and Code of Regulations and Code of Bylaws
(certified by the Secretary of OpTex), as amended to the Closing Date.
(b) AUTHORIZED CAPITALIZATION. The authorized capital stock of OpTex
consists of 750 shares of common stock, no par value per share. At the date
hereof, there are 200 shares of OpTex common stock issued and outstanding and no
shares are held in OpTex's treasury. All such outstanding shares have been duly
authorized and are validly issued, fully paid and non-assessable, and OpTex has
no liability under the provisions of federal and state securities laws by reason
of the issuance thereof. All shares of OpTex common stock held by the
Shareholders are free and clear of all liens, claims and encumbrances and all
right, title or interest of others.
(c) SUBSIDIARIES. OpTex does not own, and has not during the last
five years owned, any shares of capital stock or other securities of, or any
other interest in, nor does it control or has it controlled during the last five
years, directly or indirectly, any other corporation, association, joint
venture, partnership or other business organization.
(d) OPTIONS, WARRANTS, RIGHTS, ETC. Except as set forth in Section
4.1(d) of the OpTex Disclosure Schedule, there are no outstanding or authorized
subscriptions, options, warrants, calls, rights, commitments or any other
agreements of any character which obligate or may obligate OpTex to issue or
sell any additional shares of its capital stock or any securities convertible
into or evidencing the right to subscribe for any shares of such capital stock.
Section 4.1(d) of the OpTex Disclosure Schedule also contains a description of
the security, option, warrant or other instrument, the exercise price, number of
shares into which it is convertible or for which it is exercisable, vesting
schedule, current conversion or exchange ratio, if applicable, and other
applicable details of such agreements. Except as set forth in Section 4.1(d) of
the OpTex Disclosure Schedule, there are no voting trusts, proxies or any other
agreements or understandings with respect to the voting of the capital stock of
OpTex. OpTex is not obligated, directly, indirectly, or contingently to
purchase or redeem any of its shares of capital stock and has not so redeemed
any shares of its capital stock during the past five years.
(e) EFFECT OF AGREEMENT. The execution, delivery and performance of
this Agreement by OpTex and consummation by OpTex of the transactions
contemplated hereby will not require the consent, approval or authorization of
any person or persons or public authority, other than the approval of the
Shareholders. OpTex is not in default under or in violation of any provision of
its Articles of Incorporation or Code of Regulations and Code of Bylaws, or in
default or violation of any restriction, lien, encumbrance, indenture, contract,
agreement, lease, sublease, loan agreement, note or other obligation or
liability to which it is a party or by which it is bound or to which its assets
are subject, which default or violation would have a material adverse effect on
the business, operations or financial condition of OpTex. Neither the execution
and delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) result in the acceleration of, or the creation in
any party of the right to accelerate, terminate, modify or cancel, any
indenture, contract, agreement, lease, sublease, loan agreement, note or other
obligation or liability to which OpTex is a party or by which it is bound or to
which any of its assets are subject, or (ii) conflict with or result in a breach
of or constitute a default under any provision of the Articles of Incorporation
or Code of Regulations and Code of Bylaws of OpTex, or a material default or
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violation of any restriction, lien, encumbrance, indenture, contract, agreement,
lease, sublease, loan agreement, note or other obligation or liability to which
it is a party or by which it is bound or to which its assets are subject, or
result in the creation of any lien or encumbrance upon said assets.
(f) POWER, DUE AUTHORIZATION. Subject only to the approval of this
Agreement and the transactions contemplated hereby by the Shareholders (i) OpTex
has the power and authority to execute and deliver this Agreement and to perform
all of its obligations hereunder in accordance with the terms hereof, and (ii)
all necessary corporate action to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated by this Agreement on the part of OpTex has been duly and
effectively taken, including, without limiting the generality of the foregoing,
the approval thereof by the Board of Directors of OpTex. This Agreement is a
valid and binding obligation of OpTex, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
other laws applicable to creditors' rights and remedies and general principles
of equity. At the Closing, OpTex will deliver to Claremont a certified copy of
the resolutions adopted by OpTex's Board of Directors to authorize the
execution, delivery and performance of this Agreement and the transactions
contemplated hereby.
(g) SECURITIES MATTERS. OpTex does not have and has not had any
outstanding securities registered (or required to be registered) under the
Securities Act of 1933 or the Securities Exchange Act of 1934 or any reporting
obligation thereunder. OpTex has delivered (or will deliver) to Claremont
copies of the proxy statement and all other written materials sent or made
available or to be sent or made available to the holders of its capital stock in
connection with this Agreement and the Merger. The proxy statement notice and
such other material complied with or will comply with the applicable
requirements of the Ohio Act and applicable federal and state securities laws
and did not (or will not) contain any untrue statement of a material fact or
omit to state any material fact necessary, in light of the circumstances, in
order to make the statements therein not misleading.
(h) FINANCIAL STATEMENTS. OpTex has delivered to Claremont the
unaudited balance sheets of OpTex as at December 31, 1996, 1995 and 1994
together with the unaudited statements of profit and loss and cash flows (1996
only) for the three fiscal years then ended, and the unaudited balance sheets of
OpTex as of each of January 30, 1997, February 28, 1997, March 31, 1997, April
30, 1997 and May 31, 1997, and the statement of profit and loss for the months
then ended, all certified by the Chief Financial Officer of OpTex as being true,
accurate and complete. Such financial statements are hereinafter collectively
referred to as the "Financial Statements." The Financial Statements are correct
and complete, have been prepared in accordance with generally accepted
accounting principles and present fairly the financial condition of OpTex at the
dates of said statements and the results of its operations for the periods
covered thereby (except that the unaudited Financial Statements are subject to
normal year-end adjustments and lack footnotes and other presentation items).
OpTex's said balance sheets make full and adequate provision for all debts,
liabilities and obligations (fixed and contingent, including unpaid federal,
state or local taxes) of OpTex as of the date thereof, which are normally shown
on a balance sheet in accordance with generally accepted accounting principles.
Except to the extent reflected or reserved against in such Financial Statements,
there are no material liabilities or obligations of OpTex or related to its
business or operations, of any nature, whether accrued, absolute, contingent or
otherwise, and
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whether due or to become due, other than liabilities which have been incurred in
the ordinary course of business and which are not material in relation to
OpTex's business taken as a whole.
(i) CUSTOMERS. OpTex has no knowledge or reason to know of any
termination, cancellation, limitation, modification or change in the business
relationship of OpTex with any customer or group of customers which individually
or in the aggregate constituted ten percent (10%) or more of OpTex's sales for
OpTex's fiscal year ended December 31, 1996.
(j) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1996,
OpTex has not, except with respect to agreements and transactions with Claremont
in contemplation of this Agreement:
(i) incurred any obligation or liability (contingent or
otherwise) except normal trade or business obligations incurred in the
ordinary course of business;
(ii) discharged or satisfied any lien or encumbrance or paid any
obligation or liability (contingent or otherwise), except current
liabilities of OpTex outstanding on December 31, 1996, and current
liabilities incurred since December 31, 1996, in the ordinary course of
business;
(iii) mortgaged, pledged or subjected to lien, charge, security
interest or to any other encumbrance any of its assets or properties;
(iv) sold, transferred, leased or otherwise disposed of any of
its assets or properties, except for a fair consideration in the ordinary
course of business;
(v) cancelled or compromised any debt or claim, except for
adjustments made in the ordinary course of business which, in the
aggregate, are not material;
(vi) made any capital expenditure (or series of related capital
expenditures) that are material or outside the ordinary course of business;
(vii) suffered the acceleration, termination, modification or
cancellation by another party of any agreement, contract, license, lease or
arrangement (or series of related agreements, contracts, licenses, leases
or arrangements) material to OpTex, to which OpTex is a party or by which
OpTex is bound;
(viii) delayed or postponed the payment of accounts payable or
other liabilities other than in the ordinary course of business;
(ix) waived or released any rights of any material value;
(x) sold, assigned, transferred or granted any concessions,
leases, licenses, agreements, patents, inventions, trademarks, service
marks, trade names, copyrights
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or other intangible assets other than in the ordinary course of business
under or pursuant to contracts with customers, joint venturers, prime
contractors or subcontractors;
(xi) (a) disposed of or permitted to lapse rights for the use of
any patent, trademark, service mark, trade name or copyright, (b) disposed
of or permitted to lapse any of the foregoing items which OpTex had a right
to use pursuant to the terms of a negotiated agreement, or (c) disclosed to
any person not an employee any trade secret, process or know-how not
theretofore a matter of public knowledge without requiring such person to
enter into a nondisclosure agreement;
(xii) entered into any arrangement, agreement or undertaking not
terminable on thirty (30) days' or less notice without cost or liability
(including, without limitation, any payment of or promise to pay any bonus
or special compensation) with employees except in accordance with
established OpTex policies and practices;
(xiii) suffered the occurrence of any event or events which,
individually or in the aggregate, has or have resulted in a material
adverse change in its operations, prospects, earnings, assets, properties
or business, or in its condition, financial or otherwise;
(xiv) declared any dividend or made any payment or distribution to
its shareholders;
(xv) made any loan to or entered into any other transaction with
any officer, director or shareholder of OpTex;
(xvi) granted any increase in the compensation of or bonuses
payable or paid to any of OpTex's employees or directors other than in the
ordinary course of business and as previously disclosed in writing to
Claremont;
(xvii) redeemed, issued or sold or agreed to redeem, issue or sell
any shares of its capital stock or options, warrants, pre-emptive or other
rights to purchase or acquire securities or capital stock of OpTex;
(xviii) entered into any other material transaction, contract or
commitment other than in the ordinary course of business; or
(xix) entered into any binding agreement, arrangement or
commitment to do or take any of the foregoing actions.
(k) TAXES.
(i) OpTex has timely filed all returns, declarations, reports,
estimates, information returns and statements (each, a "Return," and,
collectively the "Returns") required to be filed with respect to any Taxes
(as hereinafter defined) and has timely and properly paid all Taxes that
are due and payable, and has established on its books and
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records reserves that are adequate for the payment of all Taxes accrued but
not yet due and payable. All such Returns were correct and complete.
OpTex has complied with all applicable laws, rules and regulations relating
to the payment and withholding of Taxes and timely and properly withheld
from employee wages and paid over to the proper governmental authorities
all amounts required to be so withheld and paid over under all applicable
laws.
(ii) There are no liens for Taxes on the assets of OpTex except
liens for Taxes not yet due. OpTex has not requested any extension of time
within which to file any Return, which Return has not since been filed. No
deficiency for any Taxes has been proposed, asserted or assessed against
OpTex which has not been resolved and paid in full. There are no
outstanding waivers or consents given by OpTex regarding the application of
the statute of limitations with respect to any Taxes or Returns, and no
federal, state, local or foreign audits or other administrative proceedings
or court proceedings are presently pending with regard to any Taxes or
Returns. Neither Optex, nor its officers or directors, is aware of any
circumstances which may result in the assessment of additional Taxes with
respect to any period for which Returns have been filed.
(iii) OpTex has not filed a consent pursuant to Section 341(f) of
the Code or agreed to have Section 341(f)(2) of the Code applied to any
disposition of a subsection (f) asset (as such term is defined in
Section 341(f)(4) of the Code) owned by OpTex. OpTex is not required to
include in income any adjustment pursuant to Section 481(a) of the Code by
reason of a voluntary change in accounting method initiated by OpTex, nor
does OpTex have any knowledge that the Internal Revenue Service (the "IRS")
has proposed any such adjustment or change in accounting method.
(iv) OpTex has established and will maintain on its books and
records reserves adequate to pay all Taxes accrued but not yet due and
payable in accordance with generally accepted accounting principles, and
such reserves are reflected on the Financial Statements to the extent
required. OpTex is not a party to any agreement, contract or arrangement
that would result, separately or in the aggregate, in the payment of
"excess parachute payments" within the meaning of Section 280G of the Code.
(v) For purposes of this Agreement, "Taxes" means all taxes,
charges, fees, levies or other assessments, including without limitation
all net income, gross income, gross receipts, sales, use, ad valorem,
transfer, franchise, profits, license, withholding, payroll, employment,
excise, severance, stamp, occupation, property or other taxes, customs,
duties, fees, assessments or charges of any kind whatsoever, together with
any interest and penalties, additions to tax or additional amounts imposed
by any taxing authority (domestic or foreign).
(l) LITIGATION. There are no actions, claims, suits, proceedings or
investigations pending or threatened against OpTex, at law or in equity, or
before or by any federal, state, municipal or other governmental or
nongovernmental department, commission, board, bureau, agency or
instrumentality, or any other person, and there are no outstanding or
unsatisfied judgments, orders, decrees or stipulations against OpTex or to which
it may become a party, or
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against any director, officer or employee of OpTex in their capacity or arising
out of their duties as a director, officer or employee of OpTex. OpTex has no
reason to believe that any such action, claim, suit, proceeding or investigation
may be brought or threatened against OpTex, or any of its directors, officers or
employees.
(m) LABOR MATTERS. There are no controversies pending or threatened
between OpTex and any employees of OpTex. OpTex has complied with all laws
relating to the employment of labor, including any provisions thereof relating
to wages, hours, collective bargaining and the payment of withholding and social
security and similar taxes, and OpTex is not liable for any arrears of wages or
any taxes or penalties for failure to comply with any of the foregoing. None of
OpTex's employees is represented by any labor union, and OpTex has no knowledge
of any organizational efforts presently being made or threatened by or on behalf
of any labor unions with respect to employees of OpTex. OpTex has not been
advised by any officer or employee that he is contemplating leaving OpTex as a
result of the Merger or otherwise. A true and complete list of all of OpTex's
officers and employees and their respective salaries, wages, other compensation
and positions is set forth in Section 4.1(m) of the OpTex Disclosure Schedule.
OpTex has paid all salaries, wages, bonuses, commissions and other compensation
OpTex's officers, employees or consultants may have earned or to which they may
have become entitled through the date of this Agreement. All personnel policies
and manuals of OpTex are listed in Section 4.1(m) of the OpTex Disclosure
Schedule and true and complete copies of such documents have been delivered to
Claremont. OpTex has complied in all material respects with all of its
personnel policies, whether oral or written. No employee or consultant of OpTex
shall have the right to receive from the Surviving Corporation or Claremont a
severance payment or other payment in the nature thereof in the event his or her
employment is terminated by the Surviving Corporation following the Merger
(except any such right granted by Claremont or pursuant to any agreement or
policy instituted or adopted by Claremont, including the agreement referred to
in Section 7.1(o) hereof).
(n) INTANGIBLE PROPERTY. OpTex's intangible property consists of
all of the software, trade secrets, know-how, any other confidential or
proprietary information, United States and foreign patents, trade names,
trademarks and service marks and registrations thereof, copyrights and copyright
registrations, and applications for any of the foregoing, currently or formerly
used in or necessary for the conduct of the business of OpTex or created as the
property of OpTex to be licensed to others, as well as rights under any
agreement under which OpTex has access to the confidential information of others
used by OpTex in its business, including without limitation the items set forth
in Section 4.1(n) of the OpTex Disclosure Schedule (collectively, the
"Intangible Property Rights"). To the extent aspects of Intangible Property
Rights are amenable to itemization, Section 4.1(n) of the OpTex Disclosure
Schedule sets forth a true, correct and complete list of all such items of
Intangible Property Rights. Section 4.1(n) of the OpTex Disclosure Schedule
also sets forth all licenses or similar agreements or arrangements to which
OpTex is a party, either as licensee or licensor, with respect to the Intangible
Property Rights. Except as otherwise disclosed in Section 4.1(n) of the OpTex
Disclosure Schedule:
(i) OpTex is the sole and exclusive owner of all right, title
and interest in and to the Intangible Property Rights, free and clear of
all liens, security interests, charges, encumbrances, or other adverse
claims;
11 - AGREEMENT AND PLAN OF MERGER
(ii) OpTex has the right and authority to use the Intangible
Property Rights in connection with the conduct of its business in the
manner presently conducted, and such use does not conflict with, infringe
upon or violate any rights of any third party;
(iii) OpTex has not received notice of, and knows of no basis for,
a pending or threatened claim, interference action or other judicial or
adversarial proceeding against OpTex that any of the operations,
activities, products, services or publications of OpTex infringes or will
infringe any patent, trademark, service mark, trade name, copyright, trade
secret or other property right of a third party, or that it is illegally or
otherwise misusing the trade secrets, formulae or property rights of
others;
(iv) there are no outstanding, nor to the best knowledge of
OpTex, are there any threatened disputes or other disagreements with
respect to any licenses or similar agreements or arrangements described in
Section 4.1(n) of the OpTex Disclosure Schedule or with respect to
infringement by a third party of any of the Intangible Property Rights;
(v) the Intangible Property Rights owned or licensed by OpTex
are sufficient to conduct and continue conducting OpTex's business as
presently conducted;
(vi) OpTex has taken all steps reasonably necessary to protect
the Intangible Property Rights and its continuing right, title and interest
in and to the Intangible Property Rights and its continued use of the
Intangible Property Rights; and
(vii) OpTex knows of no third party infringing upon or otherwise
violating, or threatening to infringe upon or otherwise violate, any of the
Intangible Property Rights in which OpTex has ownership rights, and OpTex
has received no notice of any claim of infringement or misappropriation of
the Intangible Property Rights of any other person or entity or notice that
any other person or entity has any right or interest in any Intangible
Property Rights used by OpTex.
(o) BOOKS AND RECORDS. The books and records of OpTex, including
without limitation, the minute books, stock record books and books of account,
have been and are complete and correct, and accurately reflect the basis for the
financial condition and results of operations of OpTex as set forth in the
Financial Statements.
(p) LICENSES, PERMITS, AUTHORIZATIONS, ETC. OpTex has all approvals,
authorizations, consents, licenses, orders, governmental security clearances and
registrations, permits and certifications of all governmental agencies,
commissions or divisions, whether federal, state or local, United States or
foreign, required to permit the operation of its business as presently conducted
or as proposed to be conducted. All such approvals, authorizations, consents,
licenses, orders, clearances and registrations, permits and certifications are
in full force and effect, no suspension, cancellation or forfeiture thereof has
been threatened, and neither the execution, delivery and performance of this
Agreement nor the transactions contemplated hereby (including without limitation
the Merger and the concomitant change in control) will cause or otherwise result
in any such suspension, cancellation or forfeiture, or in the assessment or
imposition of any penalties or fines,
12 - AGREEMENT AND PLAN OF MERGER
nor is OpTex in violation of or default under any of the foregoing. Further,
the execution, delivery and performance of this Agreement and the transactions
contemplated hereby (including without limitation the Merger and the concomitant
change in control) will not cause or otherwise result in any future refusal to
grant, consent to or otherwise permit or authorize the conduct by OpTex in any
state of any business or activity subject to the jursidiction of any public
utility commission, board, agency or other entity having regulatory oversight in
such state with respect to public utilities. Section 4.1(p) of the OpTex
Disclosure Schedule contains a true, correct and complete list of OpTex's
governmental approvals, authorizations, consents, licenses, orders, clearances,
registrations, permits and certifications. Except as set forth in Section
4.1(p) of the OpTex Disclosure Schedule, Optex is not conducting or otherwise
engaging in any state in any service, activity or line of business that is the
subject of any approval, authorization, consent, license, permit, order,
clearance, registration, permit or certification granted or issued by any public
utility commission, board, agency or other entity having regulatory oversight in
any state with respect to public utilities.
(q) APPLICABLE LAWS. OpTex has complied and is in compliance with
all federal, state, local and foreign laws, rules, regulations, ordinances,
decrees and orders applicable to the operation of its business as presently
conducted and/or its owned or leased properties.
(r) EMPLOYEE BENEFIT PLANS.
(i) EMPLOYEE PLANS. Section 4.1(r) of the OpTex Disclosure
Schedule contains a true, correct and complete list of all pension, profit
sharing, benefit, retirement, deferred compensation, welfare, insurance,
disability, bonus, vacation pay, severance pay and other similar plans,
programs and agreements, whether reduced to writing or not, other than any
"multi-employer plan" as such term is defined in Section 4001(a)(3) of the
Employee Retirement Income Security Act of 1974 ("ERISA"), relating to
OpTex's employees, or maintained at any time since its inception by OpTex
or by any other member (hereinafter, an "Affiliate") of any controlled
group of corporations, group of trades or businesses under common control,
or affiliated service groups (as defined for purposes of Section 414(b),
(c) and (m), respectively, of the Code) (the "Employee Plans") and, except
as set forth in Section 4.1(r) of the OpTex Disclosure Schedule, OpTex has
no obligations, contingent or otherwise, past or present, under the terms
of any Employee Plan or law applicable thereto.
(ii) PROHIBITED TRANSACTIONS. Neither OpTex nor any of its
Affiliates, directors, officers, employees or agents, or any "party in
interest" or "disqualified person," as such terms are defined in Section 3
of ERISA and Section 4975 of the Code, respectively, has, with respect to
any Employee Plan, engaged in or been a party to any nonexempt "prohibited
transaction," within the meaning of Section 4975 of the Code or Section 406
of ERISA, in connection with which, directly or indirectly, OpTex or any of
its Affiliates, directors or employees or any Employee Plan or any related
funding medium could be subject to either a penalty assessed pursuant to
Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code.
13 - AGREEMENT AND PLAN OF MERGER
(iii) COMPLIANCE. With respect to each Employee Plan, OpTex and
its Affiliates are in material compliance with the requirements prescribed
by any and all statutes, orders or governmental rules or regulations
currently in effect, including, but not limited to, ERISA and the Code,
applicable to such Employee Plans. To the best of its knowledge, OpTex and
its Affiliates have performed in all material respects all obligations
required to be performed by them under, and are not in violation of, and
there has been no default or violation by any other party with respect to,
any of the Employee Plans. Except as set forth in Section 4.1(r) of the
OpTex Disclosure Schedule: (A) none of the Employee Plans which is subject
to Title IV of ERISA has been or will be terminated in whole or in part
within the meaning of ERISA or the Code; (B) no liability has been or will
be incurred through, no event or circumstance has occurred and no event or
circumstance will occur prior to, the Closing Date, which could result in
such a liability being asserted by the Pension Benefit Guaranty Corporation
("PBGC") with respect to any Employee Plan (other than the payment of
annual premiums under Section 4007 of ERISA or benefits payable in
accordance with the terms of such Employee Plan); (C) no Employee Plan that
is subject to Part 3 of Subtitle B of Title I of ERISA or Section 412 of
the Code, or both, has incurred any "accumulated funding deficiency" (as
defined in ERISA), whether or not waived; (D) neither OpTex nor any
Affiliate has failed to pay any amounts due and owing as required by the
terms of any Employee Plan; (E) there has been no "reportable event" within
the meaning of Section 4043 of ERISA, or any event described in
Section 4063(a) of ERISA, with respect to any Employee Plan, other than as
disclosed in Section 4.1(r) of the OpTex Disclosure Schedule; (F) neither
OpTex nor any Affiliate has failed to make any payment to an Employee Plan
required under Section 302 of ERISA nor has any lien ever been imposed
under Section 302(f) of ERISA; (G) neither OpTex nor any Affiliate has
adopted an amendment to any Employee Plan which requires the provision of
security under Section 307 of ERISA; and (H) the PBGC has not instituted
any proceedings to terminate an Employee Plan pursuant to Section 4042 of
ERISA.
(iv) MULTI-EMPLOYER PLANS. Section 4.1(r) of the OpTex
Disclosure Schedule lists each and every multi-employer plan as that term
is defined in Section 4001(a)(3) of ERISA ("Multi-employer Plan") to which
OpTex or its Affiliates contribute or are required to contribute or have
ever been required to contribute. No Multi-employer Plan listed in Section
4.1(r) of the OpTex Disclosure Schedule is in "reorganization" (as defined
in Section 4241 of ERISA) or is "insolvent" (as defined in Section 4245 of
ERISA). Neither OpTex nor any Affiliate has withdrawn or is reasonably
expected to withdraw from a Multi-employer Plan in a complete or partial
withdrawal which has resulted or will result in "withdrawal liability," as
defined for purposes of Part I of Subtitle I of Part IV of ERISA, with
respect to any such plan which has not been satisfied in full. OpTex and
its Affiliates have made all contributions to any such plan as are required
through the Closing Date under the terms of any such applicable law; and no
event has occurred, or will occur prior to the Closing Date, which could
give rise to any other liability (other than a continuing obligation to
contribute to such plan(s) under the terms of any applicable collective
bargaining agreements) on the part of OpTex or Claremont, or their
Affiliates, officers, employees or directors with respect to such plan(s).
14 - AGREEMENT AND PLAN OF MERGER
(v) RETIREE BENEFITS. Except as set forth in Section 4.1(r) of
the OpTex Disclosure Schedule, no Employee Plan provides health or life
insurance benefits for retirees. No such plan contains any provisions, and
no commitments or agreements exist, which in any way would limit or
prohibit Claremont from amending any such plan to reduce or eliminate such
retiree benefits.
(vi) COPIES OF EMPLOYEE PLANS AND RELATED DOCUMENTS. OpTex has
previously delivered to Claremont true and complete copies of all Employee
Plans which have been reduced to writing and written descriptions of all
Employee Plans which have not been reduced to writing, all agreements,
including trust agreements and insurance contracts, related to such
Employee Plans, and the Summary Plan Description and all modifications
thereto for each Employee Plan communicated to employees. With respect to
each Employee Plan that is a "defined benefit plan," as such term is
defined in Section 3(35) of ERISA ("Defined Benefit Plan"), true and
complete copies of (A) the annual actuarial valuation reports for the last
five years, (B) the Form 5500 and Schedule A and B thereto, filed for the
last five years and (C) any filing made with the PBGC, Internal Revenue
Service or Department of Labor, or any correspondence with or from such
agencies, regarding the termination of any such defined Benefit Plan, have
been delivered to Claremont.
(vii) QUALIFICATIONS. Each Employee Plan intended to qualify
under Section 401(a) of the Code has been determined by the Internal
Revenue Service to so qualify and continues to so qualify, and the trusts
created thereunder have been determined to be exempt from tax under the
provisions of Section 501(a), and continue to be so exempt. Each Employee
Plan which is a funded welfare benefit plan intended to be exempt from tax
under the provisions of Section 501(c)(9) of the Code has been determined
by the Internal Revenue Service to be so exempt and continues to be so
exempt. Copies of all determination letters with respect to each such
Employee Plan have been previously delivered by OpTex to Claremont, and
nothing has occurred, or will occur prior to the Closing Date, which might
cause the loss of such qualification or exemption, no such Employee Plan
has been operated in a manner which would cause it to be disqualified in
operation, and all such Employee Plans have been administered in compliance
with and consistent with all applicable requirements of the Code and ERISA,
including, without limitation, all reporting, notice, and disclosure
requirements.
(viii) FUNDING STATUS, ETC.
(A) Except as set forth in Section 4.1(r) of the OpTex
Disclosure Schedule, neither OpTex nor any corporation or trade or business
(whether or not incorporated) which would be treated as a member of the
controlled group of OpTex under Section 4001(a)(14) of ERISA would be liable for
(1) any amount pursuant to Section 4062, 4063, 4064, 4068 or 4069 of ERISA if
any of the Employee Plans which are subject to Title IV of ERISA were to
terminate or (2) any amount pursuant to Section 4201 of ERISA if a complete or
partial withdrawal from any Multi-employer Plan listed in Section 4.1(r) of the
OpTex Disclosure Schedule occurred before the Closing Date. Except as set forth
in Section 4.1(r) of the OpTex Disclosure Schedule, all Employee Plans which are
subject to Title IV of ERISA have no amount of unfunded benefit liabilities, as
15 - AGREEMENT AND PLAN OF MERGER
defined in Section 4001(a)(18) of ERISA. There is no unpaid contribution due
with respect to the plan year of any Defined Benefit Plan ended prior to the
Closing Date, as required under the minimum funding requirements of Section 412
of ERISA.
(B) With respect to each Employee Plan which is a qualified
defined contribution pension, profit-sharing or stock bonus plan, as defined in
ERISA, all employer contributions accrued for plan years ending prior to the
Closing Date under the plan terms and applicable law have been made by OpTex.
(C) All premiums or other payments required by the terms of
any group or individual insurance policies and programs maintained by OpTex and
covering any present or former employees of OpTex with respect to all periods up
to and including the Closing Date have been fully paid for the length of the
obligation.
(ix) CLAIMS AND LITIGATION. Except as set forth in Section
4.1(r) of the OpTex Disclosure Schedule, there are no pending, and to the
best knowledge of OpTex, threatened claims, suits or other proceedings by
present or former employees of OpTex or its Affiliates, plan participants,
beneficiaries or spouses of any of the above, the Internal Revenue Service,
the PBGC, the Department of Labor, or any other person or entity (including
claims against the assets of any trust) involving any Employee Plan, or any
rights or benefits thereunder, other than ordinary and usual claims for
benefits by participants or beneficiaries, including claims pursuant to
domestic relations orders.
(x) NO IMPLIED RIGHTS. Nothing expressed or implied herein
shall confer upon any past or present employee of OpTex or its Affiliates,
his or her representatives, beneficiaries, successors and assigns, or upon
any collective bargaining agent, any rights or remedies of any nature,
including, without limitation, any rights to employment or continued
employment with OpTex, Claremont, or any successor or affiliate.
(s) ENVIRONMENTAL LAWS AND REGULATIONS.
(i) CERTAIN DEFINITIONS. For purposes of this Agreement:
(A) "Hazardous Substance" means any chemical, pollutant,
contaminant, waste (including, without limitation, toxic, hazardous, infectious,
sanitary, solid, radioactive and petroleum waste, collectively, "Waste"), toxic
substance, hazardous substance, extremely hazardous substance, hazardous
material, radioactive material, oil and petroleum product, as such terms, or any
similar terms, are or shall be used under any applicable federal, state, local
and foreign laws, regulations, rules, ordinances, permits (including, without
limitation, authorizations, approvals, registrations and licenses, collectively,
"Permits"), administrative orders, judicial decisions or the like (collectively,
"Laws") relating to pollution or protection of the environment, natural
resources or human health.
(B) "Environmental Laws" means any and all Laws relating to
(1) pollution or protection of the environment, natural resources or human
safety and health from
16 - AGREEMENT AND PLAN OF MERGER
any Hazardous Substance or (2) nuisance, trespass or "toxic tort," so called,
including, without limitation, laws relating to emissions, discharges, releases
or threatened releases of any Hazardous Substance or otherwise relating to the
manufacture, processing, importation, distribution, use, generation, treatment,
storage, disposal, transportation or handling of any Hazardous Substance.
Environmental Laws include, but are not limited to, the Clean Air Act, the
Federal Water Pollution Control Act as amended by the Clean Water Act of 1977,
the Safe Drinking Water Act, the Occupational Safety and Health Act of 1970
("OSHA Act"), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), the Superfund Amendments and Reauthorization
Act of 1986 ("SARA"), the Solid Waste Disposal Act as amended by the Resource
Conservation and Recovery Act of 1976 ("RCRA"), the Hazardous and Solid Waste
Amendments of 1984, the Medical Waste Tracking Act, the Hazardous Materials
Transportation Act, and the Toxic Substances Control Act of 1976 ("TSCA"), and
any rules and regulations promulgated thereunder.
(C) "Environmental Claim" means any civil, criminal or
investigative action, suit, litigation, hearing, communication (written or
oral), demand, claim, citation, notice or notice of violation, warning, consent
decree, judgment or order by any person or entity alleging, claiming, concerning
or finding liability or potential liability (including, without limitation,
liability or potential liability for investigatory costs, cleanup costs,
governmental response or oversight costs, natural resources damages, property
damages, penalties, personal injuries, death or any other damages or costs,
including, without limitation, litigation and settlement costs and consultants'
and attorneys' fees) arising out of, based on or resulting from, in whole or in
part, the actual or alleged presence, threatened release, release, emission,
disposal, storage, treatment, transportation, generation, manufacture or use of
any Hazardous Substance at or from any location.
(ii) PERMITS. OpTex possesses and is in compliance with all
Permits required under applicable Environmental Laws in connection with
OpTex's business and operations or its assets and properties, and each of
such Permits is listed in Section 4.1(s) of the OpTex Disclosure Schedule.
(iii) COMPLIANCE WITH ENVIRONMENTAL LAWS. (A) OpTex is, and its
business, operations, assets and properties are, in compliance with all
Environmental Laws; (B) neither the real property owned, leased, operated
or controlled, directly or indirectly, by OpTex, nor, to the best knowledge
of OpTex, any other real property contiguous thereto, is or has been
designated by any state, local or federal agency or body as a hazardous
waste disposal site or a site or location requiring investigation
concerning, or management, cleanup or removal of, any Hazardous Substance;
(C) to the best knowledge of OpTex, there has never been any release or
threatened release, emission, disposal, storage, transportation,
generation, manufacture or use of any Hazardous Substance from or on any
real property owned, leased, operated or controlled, directly or
indirectly, by OpTex, nor any other real property contiguous thereto, in
violation of any Environmental Laws; and (D) to the best knowledge of
OpTex, there are no actions, activities, circumstances, conditions, events,
incidents, practices, plans or proposed Environmental Laws that may
interfere with or prevent OpTex's future conduct of OpTex's business and
operations or use of OpTex's assets
17 - AGREEMENT AND PLAN OF MERGER
and properties at their maximum potential production or operational
capacity in full compliance with all applicable Environmental Laws.
(iv) ENVIRONMENTAL CLAIMS. There are no Environmental Claims
pending or, to the best knowledge of OpTex, threatened against OpTex or
against any person or entity whose liability for any Environmental Claim
OpTex has retained or assumed either contractually or by operation of law.
(v) POTENTIAL ENVIRONMENTAL CLAIMS. There are no past or
present actions, activities, circumstances, conditions, events, incidents
or practices, including, without limitation, the release, threatened
release, emission, discharge, disposal, storage, treatment, transportation,
generation, manufacture or use of any Hazardous Substance that could form
the basis of any Environmental Claim against OpTex or, to the best
knowledge of OpTex, against any person or entity whose liability for any
Environmental Claim OpTex has retained or assumed either contractually or
by operation of law.
(vi) WASTE. All Waste or Waste generated in connection with
OpTex's business, operations, assets and properties related thereto has
been (A) treated, stored or disposed of by or at facilities duly licensed
pursuant to applicable Environmental Laws and (B) transported to such
facilities by transporters duly licensed pursuant to applicable
Environmental Laws. OpTex has maintained true and complete records
relating to the generation, transportation, treatment, storage and disposal
of Waste generated in connection with OpTex's business, operations, assets
and properties.
(vii) OPTEX'S HAZARDOUS SUBSTANCES. Each Hazardous Substance
used, manufactured, imported, processed, stored, treated, transported,
released or disposed of in connection with OpTex's business, operations,
assets or properties is listed in Section 4.1(s) of the OpTex Disclosure
Schedule.
(viii) ASBESTOS, PCBS AND STORAGE TANKS. Except as listed in
Section 4.1(s) of the OpTex Disclosure Schedule, without in any way
limiting the generality of the foregoing, there is no asbestos contained in
or forming part of any building, building component, structure, improvement
or office space owned, operated, leased or controlled, directly or
indirectly, by OpTex; no polychlorinated biphenyls (PCBs) are used or
stored at any property owned, operated, leased or controlled, directly or
indirectly, by OpTex; and no storage tanks (above or below ground) exist at
any property owned, operated, leased or controlled, directly or indirectly,
by OpTex.
(ix) ENVIRONMENTAL REPORTS. OpTex has delivered to Claremont all
environmental inspection reports ("Environmental Reports") prepared by any
person or entity concerning compliance with applicable Environmental Laws
of OpTex's business, operations, assets or properties and the use,
manufacture, importation, processing, storage, treatment, transportation,
release or disposal therefrom, therein or thereon of any Hazardous
Substance. All such Environmental Reports are listed in Section 4.1(s) of
the OpTex Disclosure Schedule.
18 - AGREEMENT AND PLAN OF MERGER
(t) INSURANCE. OpTex has and shall maintain in full force and effect
policies of insurance of the types and in the amounts customarily carried by
comparable businesses in OpTex's circumstances. OpTex is the sole owner of each
of such policies, and all premiums due thereon have been paid. Copies of such
insurance policies have previously been delivered by OpTex to Claremont, and
nothing has occurred, or will occur prior to the Closing Date, which might cause
any insurer to cancel or otherwise terminate any such policy.
(u) TITLE TO REAL AND PERSONAL PROPERTIES, ABSENCE OF LIENS AND
ENCUMBRANCES; CONDITION OF PROPERTIES.
(i) Except as described in the following sentence, OpTex has
good and marketable title to, and owns outright, all of its real and
personal properties and assets (including, but not limited to, the assets
reflected in OpTex's balance sheet as of December 31, 1996), except for
those disposed of in the ordinary course of business, and none of such
assets is encumbered by any mortgage, lien, claim or encumbrance except
liens, claims or encumbrances reflected in said balance sheet or (where
required) in the notes thereto, and liens for taxes which are not yet due
and payable. All leases or subleases pursuant to which OpTex leases any
real or personal property are valid and binding in accordance with their
respective terms, and there is not under any such lease any existing
default by OpTex, event of default or event which, with notice and/or lapse
of time, would constitute a default.
(ii) All buildings and material fixtures and equipment owned or
used by OpTex have been properly maintained and are in good operating order
and repair, ordinary wear and tear excepted, and are in compliance with all
zoning, building and fire codes and all other laws, rules, regulations and
requirements of governmental authorities and the fire insurance rating
association having jurisdiction. All leases of real or personal property
to which OpTex is a party are fully effective and afford OpTex peaceful and
undisturbed possession of the subject matter of the lease. To the best
knowledge of OpTex, the buildings, plant, structures and equipment of OpTex
are structurally sound with no known defects and are in good operating
condition and repair and are adequate for the uses to which they are being
put, and none of such buildings, plant, structures or equipment is in need
of maintenance or repairs except for ordinary, routine maintenance and
repairs that are not material in nature or cost.
(iii) To the best knowledge of OpTex, neither the whole nor any
portion of the real or personal property used or owned by OpTex is subject
to any decree or order of a governmental body to be sold or is being
condemned, expropriated or otherwise taken by any governmental body or
other person with or without payment of compensation thereof, nor has any
such condemnation, expropriation or taking been proposed.
(v) INVENTORY. All inventory of OpTex, whether or not reflected
in the Financial Statements, consists of a quality and quantity usable and
salable in the ordinary course of business, except for obsolete items and items
of below standard quality, all of which have been written off or written down or
reserved to be written off or written down to net realizable value in the
Financial Statements. All inventories not written off or written down have been
priced at the
19 - AGREEMENT AND PLAN OF MERGER
lower of average cost or market. The quantities of each type of inventory are,
in the reasonable judgment of OpTex's management, not excessive, but are
reasonable and warranted in the present circumstances of OpTex. All work in
process and finished goods inventory is free of any known defect or other
deficiency.
(w) MATERIAL CONTRACTS. Section 4.1(w) of the OpTex Disclosure
Schedule lists all material contracts, instruments, agreements or commitments
(whether oral or written) relating to the conduct of the business of OpTex.
OpTex has made available to Claremont true and correct copies of each document
and a written description, accurate in all material respects, of each oral
arrangement so listed. Without limiting the generality of the foregoing, the
aforesaid list includes all contracts, agreements, instruments of the following
types to which OpTex is a party:
(i) any contract which involves or may involve future
expenditures or obligations on the part of OpTex of more than $10,000 or
any such contract continuing over a period of more than six months from its
date, or any contract for the sale of products or rendering of services not
in the ordinary course of business;
(ii) any contract for the employment of any individual and any
consulting agreement with an individual or an entity;
(iii) any bonus, incentive, deferred compensation, severance pay,
pension, profit sharing, retirement, death benefit, employee stock
purchase, stock option, employee benefit, employee incentive, fringe
benefit, medical or dental insurance or plan, life insurance, vacation pay,
or similar or like plan, agreement or arrangement, together with a list of
all employees or former employees currently receiving benefits thereunder;
(iv) any collective bargaining agreement or other agreement with
any labor union or other organization (OpTex hereby represents that no
other such agreement has been requested by, or is under discussion by
management with, any group of employees or others);
(v) any lease of any real or personal property or deeds or other
instruments representing ownership of any real property;
(vi) any mortgage, security agreement, chattel mortgage or
conditional sales agreement or any similar instrument or agreement;
(vii) any agreement, indenture or other instrument relating to the
borrowing of money, or the guaranty of any obligation including, without
limitation, for the borrowing of money and a list of all bank accounts
identifying authorized signatories;
(viii) any joint venture, partnering, strategic alliance or other
similar agreement;
(ix) any sales representative or distributorship agreement;
20 - AGREEMENT AND PLAN OF MERGER
(x) any dealer, reseller, OEM, value added reseller, agency or
franchise agreement;
(xi) any agreement not made in the ordinary and normal course of
business;
(xii) any agreement of any nature with officers, directors,
shareholders or other affiliates of OpTex whether any such person's
interest is direct or indirect;
(xiii) any agreement which requires prior approval in connection
with a change in control of OpTex or which will be in default or which
gives rise to termination rights following a change in control of OpTex;
(xiv) any agreement which provides, initially or contingently, for
the escrow or release to a third party of any source code of OpTex;
(xv) any agreement which commissions the creation of intangible
property or which otherwise relates to the purchase of intangible property;
(xvi) any agreement which involves the licensing by or to OpTex of
any software or other technology, know-how, trade secret, confidential or
proprietary information, which is necessary to the conduct of, or material
to, the business of OpTex;
(xvii) any non-competition agreement, confidentiality/non-disclosure
or assignment of inventions agreement (both
for the benefit of and/or restricting OpTex);
(xviii) any property, casualty, director and officer liability and
other forms of insurance; and
(xix) any agreements which in any material way limit the freedom
of OpTex from competing in any geographic area, business or product line or
with any person or entity.
All documents, rights, obligations, contracts, agreements and commitments
referred to in Section 4.1(w) of the OpTex Disclosure Schedule are in full force
and effect, are valid and enforceable in accordance with their respective terms
for the periods stated therein, and except as disclosed in Section 4.1(w) of the
OpTex Disclosure Schedule, there are not under any of them existing defaults,
events of default or events which with notice and/or lapse of time would
constitute defaults.
(x) LOANS, NOTES, ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE. The
loans, notes and accounts receivable of OpTex reflected in the balance sheet of
OpTex as at December 31, 1996, and all loans, notes and accounts receivable
arising after December 31, 1996, and prior to the Closing Date arose, and will
arise, from bona fide transactions in the ordinary course of business of OpTex
and have been collected or will be collected within payment periods that are
both usual and expected in OpTex's industry and no longer than OpTex's past
experience, and at the aggregate
21 - AGREEMENT AND PLAN OF MERGER
recorded amount thereof. The accounts payable of OpTex reflected on such
balance sheet and all accounts payable arising after December 31, 1996, and
prior to the Closing Date arose, and will arise, from bona fide transactions in
the ordinary course of business of OpTex. The method of computing all reserves
as at the Closing Date will not change from the method of computing said
reserves on December 31, 1996. On the Closing Date, OpTex shall have no
accounts or loans receivable from any person, firm or corporation with which it
is affiliated, or from any of its directors, officers or employees except for
customary advances to personnel incurred in the ordinary course of business and
except as disclosed in Section 4.1(x) of the OpTex Disclosure Schedule.
(y) TRANSACTIONS WITH RELATED PARTIES. Except as set forth in
Section 4.1(y) of the OpTex Disclosure Schedule, no officer, director, or person
known to OpTex to own more than one percent (1%) of OpTex's common stock (each,
a "Related Party," and, collectively, the "Related Parties") was, during the
year ended December 31, 1996, or thereafter, or is presently, a party, directly
or indirectly to any transaction or presently proposed transaction with OpTex.
Except as set forth in Section 4.1(y) of the OpTex Disclosure Schedule;
(i) since December 31, 1996 there have been no transactions between OpTex and
any Related Party or any payment (however characterized) by OpTex to any Related
Party or by any Related Party to OpTex (other than payments in the ordinary
course and consistent with past practice in respect of salary, wages or
reimbursable expenses); (ii) there is no lease, agreement or commitment between
OpTex and any Related Party; (iii) no Related Party has any interest in any
property, real or personal, tangible or intangible, used in or pertaining to the
business of OpTex; (iv) no Related Party is indebted to OpTex; and (v) OpTex is
not indebted to any Related Party.
(z) FULL DISCLOSURE. All information furnished by OpTex to Claremont
pursuant to or in connection with this Agreement and all instruments and
agreements executed in connection herewith, taken together as a whole, is, and
will be on the Closing Date, accurate and complete and does and will on the
Closing Date include all material facts required to be stated therein or
necessary to make the statements therein not misleading. All documents
furnished by OpTex to Claremont pursuant to or in connection with this Agreement
are true and correct copies, and there are no amendments or modifications
thereto except as otherwise set forth in such documents. As of the date of this
Agreement, OpTex has disclosed to Claremont all events, conditions and facts
known to it materially affecting the business and prospects of OpTex. OpTex has
not withheld knowledge of any such events, conditions or facts which it knows,
or which it has reasonable grounds to know, may reasonably affect the business
and prospects of OpTex.
(aa) BANKING RELATIONSHIPS. Section 4.1(aa) of the OpTex Disclosure
Schedule sets forth the names and locations of all banks, trust companies,
savings and loan associations and other financial institutions at which OpTex
maintains safe deposit boxes or accounts of any nature and the names of all
persons authorized to have access thereto, draw thereon or make withdrawals
therefrom. At the Closing, OpTex will deliver to Claremont copies of all
records, including all signatures or authorization cards, pertaining to such
safe deposit boxes and bank accounts.
(ab) ABSENCE OF CERTAIN COMMERCIAL PRACTICES. OpTex and its directors
and officers, and, to the best knowledge of OpTex, its other employees, agents
or other persons acting on its behalf have not (i) given or agreed to give any
gift or similar benefit of more than nominal
22 - AGREEMENT AND PLAN OF MERGER
value to any customer, supplier, or governmental employee or official or any
other person which is or may be in a position to help or hinder OpTex or assist
OpTex in connection with any proposed transaction, which gift or similar
benefit, if not given in the past, could have materially adversely affected the
assets, business, prospects, condition (financial or otherwise) or results of
operations of OpTex, or which, if not continued in the future, could materially
adversely affect the assets, business, prospects, condition (financial or
otherwise) or results of operations of OpTex, or (ii) used any corporate or
other funds for unlawful contributions, payments, gifts or entertainment, or
made any unlawful expenditures relating to political activity to government
officials or otherwise or established or maintained any unlawful or unrecorded
funds which would be in violation of Section 30A of the Securities Exchange Act
of 1934, as amended, were that provision applicable. OpTex and its directors
and officers or, to the best knowledge of OpTex, its employees, other agents or
other persons acting on its behalf have not accepted or received any unlawful
contributions, payments, gifts or expenditures.
(ac) BROKERS. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the Merger
or the transactions contemplated by this Agreement based upon arrangements made
by or on behalf of OpTex.
(ad) TAX-FREE REORGANIZATION. OpTex has no reason to believe that the
Merger will not qualify as a tax-free reorganization within the meaning of
Section 368(a)(2)(E) of the Code.
4.2 REPRESENTATIONS AND WARRANTIES OF CLAREMONT AND SUBSIDIARY. In order
to induce OpTex and the Shareholders to enter into this Agreement, Claremont and
Subsidiary jointly and severally represent and warrant to OpTex and the
Shareholders, subject to the matters set forth in the Claremont Disclosure
Schedule delivered herewith, as follows:
(a) ORGANIZATION, GOOD STANDING, POWER, ETC. Each of Claremont and
Subsidiary is a corporation duly incorporated and validly existing under the
laws of the State of Oregon, has all requisite corporate power and authority to
own, operate and lease its properties and to carry on its business as now being
conducted, and is duly qualified and in good standing in each jurisdiction in
which the property owned, leased or occupied by it or the nature of the business
conducted by it makes such qualification necessary, except where the failure to
be so qualified will not, individually or in the aggregate, have a material
adverse effect on the business, properties, assets, condition (financial or
otherwise), liabilities or operations of Claremont and Subsidiary taken as a
whole.
(b) MERGER STOCK. The shares of common stock of Claremont to be
issued to the Shareholders in connection with the Merger have been duly
authorized by all necessary corporate action by Claremont and, when issued and
delivered by Claremont pursuant to this Agreement, will be validly issued, fully
paid and non-assessable.
(c) POWER, DUE AUTHORIZATION. Each of Claremont and Subsidiary has
the power and authority to execute and deliver this Agreement and to perform all
of its obligations hereunder in accordance with the terms hereof, and all
necessary corporate action to authorize the consummation of the transactions
contemplated by this Agreement on the part of each of Claremont
23 - AGREEMENT AND PLAN OF MERGER
and Subsidiary has been duly and effectively taken, including, without limiting
the generality of the foregoing, the approval thereof by the Boards of Directors
of Claremont and Subsidiary and by Claremont as the sole shareholder of
Subsidiary.
(d) NO CONFLICT. Neither the execution and delivery of this
Agreement nor the performance of Claremont's or Subsidiary's obligations
hereunder will (i) violate any provision of the Articles of Incorporation or
Bylaws of Claremont or Subsidiary, (ii) violate any material provision of any
applicable statute or law or any judgment, decree, order, regulation or rule of
any court or governmental body applicable to Claremont or Subsidiary, or
(iii) constitute a material breach or default (or an event which, with notice or
lapse of time or both, would constitute a material default) under any material
contract, commitment, agreement, lease or other obligation to which Claremont or
Subsidiary is a party.
(e) BROKERS. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the Merger
or the transactions contemplated by this Agreement based upon arrangements made
by or on behalf of Claremont.
(f) TAX-FREE REORGANIZATION. Claremont has no reason to believe that
the Merger will not qualify as a tax-free reorganization within the meaning of
Section 368(a)(2)(E) of the Code.
(g) ADDITIONAL INFORMATION. Claremont represents and warrants that
the information contained in the following documents, which Claremont has
furnished to OpTex or will furnish if requested by OpTex prior to the Closing,
is or will be true and correct in all material respects as of the respective
filing dates:
(i) Claremont's Annual Report on Form 10-K for the year ended
June 30, 1996 (without exhibits unless specifically requested);
(ii) Claremont's Quarterly Report on Form 10-Q for the quarters
ended September 30, 1996, December 31, 1996 and March 31, 1997 (without
exhibits unless specifically requested); and
(iii) Claremont's Current Reports on Form 8-K filed with the
Securities and Exchange Commission (the "SEC") since March 31, 1997, if
any.
(h) NO MATERIAL CHANGE. As of the date hereof, there has been no
material adverse change in Claremont's financial condition, results of
operations, business or prospects since March 31, 1997.
(i) SEC REPORTS.
(i) Claremont has filed with the SEC all reports (the "SEC
Reports") required to be filed by it under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). All of the SEC Reports filed by
Claremont complied in all material
24 - AGREEMENT AND PLAN OF MERGER
respects with the requirements of the Exchange Act. None of the SEC
Reports contained as of the respective dates thereof, any untrue statement
of a material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not misleading
in light of the circumstances under which they were made. All financial
statements contained in the SEC Reports have been prepared in accordance
with generally accepted accounting principles consistently applied
throughout the applicable periods. Each consolidated balance sheet
included in the SEC Reports presents fairly in accordance with generally
accepted accounting principles the consolidated financial position of
Claremont as of the date of such balance sheet, and each consolidated
statement of operations, shareholders' equity and cash flows presents
fairly in accordance with generally accepted accounting principles the
consolidated results of operations, shareholders' equity and cash flow of
Claremont for the periods then ended.
(ii) No event has occurred since March 31, 1997 which requires
the filing of an SEC Report that has not heretofore been filed and
furnished to OpTex.
ARTICLE V
OPTEX'S COVENANTS
5.1 SHAREHOLDER'S MEETING. OpTex shall, as promptly as practicable, but
in no event later than July ___, 1997, take any and all action necessary in
accordance with applicable law and its Articles of Incorporation and Code of
Regulations and Code of Bylaws (i) to convene a meeting of its shareholders to
consider and vote upon the approval of this Agreement, or (ii) to obtain the
unanimous written consent of its shareholders thereto. Immediately upon setting
a record date, if applicable, for the shareholders entitled to vote at such
meeting and immediately upon any subsequent change thereof, OpTex shall send
written notice thereof to Claremont. The Board of Directors of OpTex shall,
subject to its fiduciary duty to the Shareholders, recommend such approval and
shall take all lawful action to solicit such approval.
5.2 CONDUCT OF OPTEX PRIOR TO THE CLOSING DATE. During the period from
the date hereof through the later of (i) the Closing Date, and (ii) the
Effective Time, OpTex shall conduct its business and affairs as follows:
(a) OPERATION OF BUSINESS. OpTex will operate its business only in
the usual, regular and ordinary manner so as to maintain the goodwill it
presently enjoys, will make no material changes in its operations, and, to the
extent consistent with such operation, will use its best efforts to (i) preserve
intact its present business organization, (ii) preserve its present
relationships with its customers, suppliers, distributors, value added
resellers, consultants, joint venturers, strategic partners and others with
which it has business dealings, including without limitation, government
agencies, commissions and divisions, and (iii) keep in its employ substantially
all of its key personnel.
25 - AGREEMENT AND PLAN OF MERGER
(b) MAINTAIN PROPERTIES. OpTex will maintain all of its properties
in good repair, order and condition, reasonable wear and use excepted, and will
maintain insurance upon all of its properties and with respect to the conduct of
its business in such amounts and of such kinds as are in effect on the date of
this Agreement or as the same may be added to by mutual agreement of OpTex and
Claremont.
(c) SALARIES. OpTex will not pay any bonuses to, nor increase the
salary, wages, fringe benefits or perquisites of any employee, officer, director
or agent without the prior written approval of Claremont.
(d) BOOKS AND RECORDS. OpTex will maintain its books, accounts and
records in the usual, regular and ordinary manner, on a basis consistent with
prior years.
(e) ENCUMBRANCES. OpTex will not encumber or mortgage any of its
property or assets except in the usual and ordinary course of business or enter
into any contract or commitment which by reason of its size or otherwise is not
in the usual and ordinary course of business, and OpTex will not, other than in
the usual and ordinary course of its business, dispose of, sell, or convey or
acquire any assets or property. OpTex shall not enter into any transaction
which if effected before the date of this Agreement would constitute a breach of
the representations, warranties or agreements contained herein.
(f) COMPLIANCE. OpTex will comply with the provisions of all laws,
regulations, ordinances, judicial decrees, approvals, authorizations, consents,
licenses, orders, registrations, permits and certifications applicable to it or
the conduct of its business, the failure to comply with which might materially
adversely affect its operations, prospects, earnings, assets, properties or
business.
(g) NO SOLICITATION. OpTex will not, nor will it permit any of its
officers, directors, employees, agents, or representatives (including, without
limitation, investment bankers, attorneys and accountants), directly or
indirectly to, (i) initiate, contract with, solicit or encourage any inquiries
or proposals by, or (ii) enter into any discussions or negotiations with, or
disclose directly or indirectly any information concerning its business and
properties to, or afford any access to its properties, books, and records to,
any corporation, partnership, person, or other entity or group in connection
with any possible proposal (an "Acquisition Proposal") regarding a sale of
OpTex's capital stock or a merger, consolidation, or sale of all or a
substantial portion of its assets, or any similar transaction. OpTex will
provide written notice to Claremont immediately if any discussions or
negotiations are sought to be initiated, any inquiry or proposal is made, or any
such information is requested with respect to an Acquisition Proposal or
potential Acquisition Proposal or if any Acquisition Proposal is received or
indicated to be forthcoming.
(h) ACTIONS WITH RESPECT TO CHARTER DOCUMENTS, CAPITAL STOCK. OpTex
will not, without the prior written approval of Claremont: (i) amend or
otherwise change its Articles of Incorporation or Code of Regulations and Code
of Bylaws, as each such document is in effect on the date hereof; (ii) issue or
sell, or authorize for issuance or sale, additional shares of any class of its
capital stock or options, warrants or other securities exercisable for or
convertible into such capital
26 - AGREEMENT AND PLAN OF MERGER
stock, other than to Michael A. Guider, Laura Henderson and Michael Lininger
pursuant to the terms and conditions of Incentive Stock Options previously
granted by OpTex to the foregoing individuals; (iii) declare, set aside, make or
pay any dividend or other distribution with respect to its capital stock or
options, warrants or other securities exercisable for or convertible into such
capital stock; (iv) redeem, purchase or otherwise acquire, directly or
indirectly, any of its capital stock; (v) take any action to change the number
of directors of its Board of Directors or to change the members of its Board of
Directors; or (vi) take any action to accelerate the vesting of any option to
purchase its capital stock.
(i) ACCESS. OpTex will afford Claremont and its officers, employees,
counsel, accountants and other authorized representatives access, during normal
business hours, to all of the properties, books, contracts, commitments and
records of OpTex and will furnish promptly to Claremont all other information
concerning its business, properties and personnel as Claremont may reasonably
request, provided that no investigation pursuant to this Section 5.2(i) shall
affect or be deemed to modify any representation or warranty made by OpTex, or
the conditions to the obligations of OpTex to consummate the Merger.
(j) NOTIFICATION OF CERTAIN MATTERS. OpTex shall give prompt notice
to Claremont of: (i) the occurrence of, or any communication relating to, a
default or event which, with notice or lapse of time or both would become a
default under any agreement, indenture or instrument material to the financial
condition, properties, business or results of operations of OpTex, to which
OpTex is a party or is subject; (ii) any notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement; and
(iii) any material adverse change in the financial condition, properties,
business, results of operations or prospects of OpTex, or the occurrence of any
event which, so far as reasonably can be foreseen at the time of its occurrence,
would result in any such change.
5.3 PUBLICITY. OpTex shall not issue any press release or otherwise make
any public statement with respect to the transactions contemplated hereby
without the prior written approval of Claremont.
ARTICLE VI
MUTUAL COVENANTS
6.1 BEST EFFORTS. Subject to the terms and conditions hereof each party
to this Agreement agrees to fully cooperate with the others and the others'
counsel, accountants and representatives in connection with any steps required
to be taken as part of its obligations under this Agreement. Each party to this
Agreement agrees that it will use its reasonable best efforts (without incurring
material expense) to cause all conditions to its obligations under this
Agreement to be satisfied as promptly as possible, and will not knowingly
undertake a course of action inconsistent with this Agreement or which would
make any of its representations, warranties, agreements or
27 - AGREEMENT AND PLAN OF MERGER
covenants in this Agreement untrue in any material respect or any conditions
precedent to its obligations under this Agreement unable to be satisfied at or
prior to the Closing.
6.2 FILINGS; OTHER ACTION. Subject to the terms and conditions hereof,
Claremont and OpTex shall (a) cooperate with one another in (i) determining
which filings are required to be made prior to the Effective Time with, and
which consents, approvals, permits or authorizations are required to be obtained
prior to the Effective Time from, governmental or regulatory authorities of the
United States, the several states, foreign jurisdictions and third parties in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and (ii) timely make all
such filings and timely seek all such consents, approvals, permits or
authorizations; and (b) use all reasonable efforts to take, or cause to be
taken, all other actions and do, or cause to be done, all other things
necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, including without limitation, any and all regulatory
filings required to comply with any statute, rule or regulation enacted or
promulgated by any state or any governmental agency, department, division or
commission, the proper officers and/or directors of OpTex and Claremont shall
take all such necessary action.
6.3 TAX-FREE REORGANIZATION. From and after the Effective Time, neither
Claremont nor the Surviving Corporation shall take or permit to be taken any
action which will cause the Merger not to constitute a tax-free reorganization
within the meaning of Section 368(a)(2)(E) of the Code.
6.4 FURTHER ACTION. Subject to the fulfillment or waiver, at or before
the Effective Time, of each of the conditions of performance set forth herein,
each party hereto shall perform such further acts and execute such documents as
may be reasonably required to effectuate the Merger.
ARTICLE VII
CONDITIONS
7.1 CONDITIONS TO OBLIGATIONS OF CLAREMONT AND SUBSIDIARY. The
obligations of Claremont and Subsidiary to effect the Merger are also subject to
the satisfaction or waiver by Claremont and Subsidiary at or prior to the
Effective Time of the following conditions:
(a) OPTEX SHAREHOLDER APPROVAL. This Agreement, the Merger and the
other transactions contemplated hereby shall have been approved and adopted by
the unanimous vote of the Shareholders in accordance with the Ohio Act and
OpTex's Articles of Incorporation and Code of Regulations and Code of Bylaws.
Claremont shall have received a certificate signed on behalf of OpTex by the
Secretary of OpTex to such effect.
(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of OpTex and the Shareholders set forth in this Agreement shall be
true and correct as of the Closing
28 - AGREEMENT AND PLAN OF MERGER
Date as though made on and as of the Closing Date (except to the extent such
representations and warranties speak as of an earlier date). Claremont shall
have received a certificate signed on behalf of OpTex by the Chairman of the
Board and Treasurer of OpTex to such effect.
(c) PERFORMANCE OF OBLIGATIONS BY OPTEX AND THE SHAREHOLDERS. OpTex
and the Shareholders shall have performed all obligations required to be
performed by them under this Agreement at or prior to the Closing Date, and
Claremont shall have received a certificate signed on behalf of OpTex by the
Chairman of the Board and Treasurer of OpTex to such effect.
(d) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No order, injunction
or decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Merger or any of the
other transactions contemplated by this Agreement (an "Order") shall be in
effect. No statute, rule, regulation, order, injunction or decree shall have
been enacted, entered, promulgated or enforced by any governmental entity which
prohibits, restricts or makes illegal consummation of the Merger.
(e) PROCEEDINGS AND LITIGATION. On the Closing Date, no action or
proceeding shall be threatened, instituted or pending by or before any court or
any governmental or other regulatory or administrative body requesting or
looking toward an order, judgment or decree which (i) questions the validity of
or seeks to restrain or prohibit the consummation of the transactions
contemplated hereby; (ii) seeks to compel Claremont to hold separate all or a
material portion of OpTex's business or assets as a result of the transactions
contemplated hereby; or (iii) in the reasonable judgment of Claremont, would
have a material adverse effect on the business or financial condition of OpTex
or Claremont.
(f) EMPLOYEE RETENTION. At the Effective Time, the employees
identified in Exhibit 7.1(f) attached hereto shall continue to be employed by
OpTex and shall not have indicated either to Claremont or OpTex an intention to
terminate their employment with the Surviving Corporation following consummation
of the Merger.
(g) RESIGNATIONS. All directors and officers of OpTex whose
resignation shall have been requested by Claremont not less than two days before
the Closing Date shall have submitted their resignations effective as of the
Closing Date, and copies of such resignations shall have been provided to
Claremont prior to Closing.
(h) OPINION LETTER OF COUNSEL FOR OPTEX AND THE SHAREHOLDERS.
Claremont shall have received an opinion letter of Jones, Troyan, Pappas &
Perkins, counsel for OpTex and the Shareholders, dated the Closing Date, in form
and substance satisfactory to Claremont and its counsel, to the effect set forth
in Exhibit 7.1(h) attached hereto.
(i) DISSENTING SHAREHOLDERS. No holders of the issued and
outstanding shares of OpTex capital stock shall have filed written objection to
the Merger with OpTex prior to the taking of the vote of the Shareholders with
respect thereto.
29 - AGREEMENT AND PLAN OF MERGER
(j) INVESTMENT REPRESENTATIONS. All Shareholders who have voted in
favor of the Merger and this Agreement shall have entered into agreements in the
form of Exhibit 7.1(j) attached hereto with respect to the Claremont Shares to
be issued to them hereunder, which agreements shall become effective on the
Closing Date.
(k) NO MATERIAL ADVERSE CHANGE. Since December 31, 1996, there shall
have been no material adverse change in the operations, prospects, earnings,
assets, properties, business, or condition (financial or otherwise) of OpTex;
nor shall there exist any condition that, to the best knowledge of OpTex, could
reasonably be expected to result in such a material adverse change, and
Claremont shall have received a certificate signed on behalf of OpTex by the
Chairman of the Board and Treasurer of OpTex to such effect.
(l) FILINGS AND CONSENTS. On the Closing Date, other than the filing
of Articles of Merger in Oregon and Certificate of Merger in Ohio, all filings
required to be made prior to the Effective Time by OpTex and the Shareholders
with, and all consents, approvals and authorizations required to be obtained
prior to the Effective Time by OpTex and the Shareholders from, governmental
authorities and other persons in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
shall have been made or obtained, as the case may be.
(m) PROCEEDINGS SATISFACTORY TO COUNSEL. All proceedings taken by
OpTex and all instruments executed and delivered by OpTex in connection with the
Merger at or prior to the Closing Date shall be reasonably satisfactory in form
and substance to counsel for Claremont.
(n) PROPRIETARY INFORMATION AGREEMENTS. There shall have been
delivered to Claremont Proprietary Information Agreements, substantially in the
form attached hereto as Exhibit 7.1(n), executed by the following persons:
Laura Henderson, Robert J. Zeigler and David Zelle.
(o) EMPLOYMENT AGREEMENT. There shall have been delivered to
Claremont an Employment Agreement, substantially in the form attached hereto as
Exhibit 7.1(o), executed by Michael L. Johnson.
(p) PRIVATE PLACEMENT EXEMPTION. Claremont shall have received
evidence reasonably satisfactory to it that the issuance and exchange of shares
of Claremont common stock for the OpTex Shares pursuant to the terms of this
Agreement are exempt from the registration requirements of the Securities Act
(as hereinafter defined) pursuant to Section 4(2) of the Securities Act.
(q) NO ENCUMBRANCES. Claremont shall have received evidence
satisfactory to it that the OpTex Shares to be surrendered at the Closing to
Claremont for exchange in connection with the Merger are free and clear of all
liens, claims and encumbrances and all right, title and interest of others.
30 - AGREEMENT AND PLAN OF MERGER
(r) ESCROW AGREEMENT. Claremont, the Escrow Agent (as hereinafter
defined) and the Shareholder Representative (as hereinafter defined) shall have
entered into an Escrow Agreement (as hereinafter defined) in form and substance
satisfactory to Claremont, which Escrow Agreement shall become effective upon
the Effective Time.
(s) TERMINATION OF BONUS PLAN. OpTex shall have terminated its
Employee Bonus Plan and shall have paid to its employees any bonuses such
employees had earned or otherwise become entitled to thereunder through the
Closing Date. Claremont shall have received a certificate signed on behalf of
OpTex by the Chairman of the Board of OpTex to such effect.
(t) CONSENT OF COMMERCE NATIONAL BANK. There shall have been
delivered to Claremont a consent to the Merger executed by Commerce National
Bank (the "Bank") pursuant to the terms and conditions of certain commercial
loan agreements, promissory notes and security agreements by and among OpTex,
the Bank and the U.S. Small Business Administration.
(u) DISCHARGE OF INDEBTEDNESS/TERMINATION OF SECURITY INTEREST.
There shall have been delivered to Claremont satisfactory evidence of the
discharge in full of OpTex's indebtedness to LCI International Telecom Corp.
(including without limitation OpTex's original promissory note issued to LCI
International Telecom Corp. marked cancelled), and termination of the security
interest granted by OpTex to LCI International Telecom Corp. in connection with
such indebtedness.
(v) TERMINATION OF CLOSE CORPORATION AGREEMENT. There shall have
been delivered to Claremont satisfactory evidence of the termination of the
Close Corporation Agreement dated December 3, 1993, by and among OpTex and the
Shareholders.
7.2 CONDITIONS TO OBLIGATIONS OF OPTEX. The obligation of OpTex to effect
the Merger is also subject to the satisfaction or waiver by OpTex at or prior to
the Effective Time of the following conditions:
(a) OPTEX SHAREHOLDER APPROVAL. This Agreement, the Merger and the
other transactions contemplated hereby shall have been unanimously approved and
adopted by the the Shareholders in accordance with the Ohio Act and OpTex's
Articles of Incorporation and Code of Regulations and Code of Bylaws.
(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Claremont and Subsidiary set forth in this Agreement shall be true
and correct in all material respects as of the Closing Date as though made on
and as of the Closing Date (except to the extent such representations and
warranties speak as of an earlier date). OpTex shall have received a
certificate signed on behalf of Claremont by the Chief Executive Officer and the
Chief Financial Officer of Claremont to such effect.
(c) PERFORMANCE OF OBLIGATIONS BY CLAREMONT AND SUBSIDIARY.
Claremont and Subsidiary shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or prior to
the Closing Date, and OpTex shall have received a
31 - AGREEMENT AND PLAN OF MERGER
certificate signed on behalf of Claremont by the Chief Executive Officer and the
Chief Financial Officer of Claremont to such effect.
(d) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No Order shall be in
effect. No statute, rule, regulation, order, injunction or decree shall have
been enacted, entered, promulgated or enforced by any governmental entity which
prohibits, restricts or makes illegal consummation of the Merger.
(e) OPINION LETTER OF COUNSEL FOR CLAREMONT AND SUBSIDIARY. OpTex
shall have received an opinion letter of Ater Wynne Hewitt Dodson & Skerritt,
LLP, counsel for Claremont and Subsidiary, dated the Closing Date, in form and
substance satisfactory to OpTex and its counsel to the effect set forth in
Exhibit 7.2(e) attached hereto.
(f) ESCROW AGREEMENT. Claremont, the Escrow Agent and the
Shareholder Representative shall have entered into a Escrow Agreement in form
and substance satisfactory to OpTex and the Shareholder Representative, which
Escrow Agreement shall become effective upon the Effective Time.
(g) PROCEEDINGS AND LITIGATION. On the Closing Date, no action or
proceeding shall be threatened, instituted or pending by or before any court or
any governmental or other regulatory or administrative body requesting or
looking toward an order, judgment or decree which (i) questions the validity of
or seeks to restrain or prohibit the consummation of the transactions
contemplated hereby; or (ii) in the reasonable judgment of OpTex, would have a
material adverse effect on the business or financial condition of Claremont.
(h) FILINGS AND CONSENTS. On the Closing Date, other than the filing
of Articles of Merger in Oregon and Certificate of Merger in Ohio, all filings
required to be made prior to the Effective Time by Claremont and Subsidiary
with, and all consents, approvals and authorizations required to be obtained
prior to the Effective Time by Claremont and Subsidiary from, governmental
authorities and other persons in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
shall have been made or obtained, as the case may be.
(i) PROCEEDINGS SATISFACTORY TO COUNSEL. All proceedings taken by
Claremont and all instruments executed and delivered by Claremont in connection
with the Merger at or prior to the Closing Date shall be reasonably satisfactory
in form and substance to counsel for OpTex.
(j) EMPLOYMENT AGREEMENT. There shall have been delivered to Michael
L. Johnson an Employment Agreement, substantially in the form attached hereto as
Exhibit 7.1(o), executed by an authorized officer of Claremont or Subsidiary, as
applicable.
32 - AGREEMENT AND PLAN OF MERGER
ARTICLE VIII
TERMINATION
8.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated and
the Merger abandoned at any time prior to the Effective Time, before or after
the approval of this Agreement by the shareholders of OpTex, by the mutual
consent of OpTex and Claremont.
8.2 TERMINATION BY EITHER OPTEX OR CLAREMONT. This Agreement may be
terminated and the Merger abandoned by either OpTex or Claremont at any time
prior to the Effective Time, before or after the approval of this Agreement by
the shareholders of OpTex if: (a) the Merger shall not have become effective by
August 1, 1997, or such later date as shall have been approved by the Boards of
Directors of OpTex and Claremont; (b) a final and nonappealable Order shall be
in effect; or (c) any statute, rule or regulation shall have been enacted or
promulgated by any government or governmental agency which makes consummation of
the Merger illegal.
8.3 TERMINATION BY CLAREMONT. This Agreement may be terminated by
Claremont, and the Merger abandoned at any time prior to the Effective Time,
before or after the approval of this Agreement by the shareholders and/or
directors of the Constituent Corporations, if: (a) any of the representations or
warranties made by OpTex in this Agreement shall not be correct or accurate at
and as of the time the Closing is scheduled to take place hereunder with the
same effect as if made at such time; or (b) OpTex shall have failed to comply
with or perform any of the covenants, conditions or agreements contained in this
Agreement to be complied with or performed by OpTex at or prior to the Closing.
8.4 TERMINATION BY OPTEX. This Agreement may be terminated by OpTex, and
the Merger abandoned at any time prior to the Effective Time, before or after
the approval of this Agreement by the shareholders and/or directors of the
Constituent Corporations, if (a) any of the representations and warranties made
by Claremont and Subsidiary in this Agreement shall not be correct or accurate
in all material respects at and as of the time the Closing is scheduled to take
place hereunder with the same effect as if made at such time; or (b) Claremont
or Subsidiary shall have failed to comply with or perform any of the covenants,
conditions or agreements contained in this Agreement to be complied with or
performed by Claremont or Subsidiary at or prior to the Closing in any material
respect.
8.5 NOTICE OF TERMINATION. In the event of any termination pursuant to
this Article VIII (other than pursuant to Section 8.1 hereof), written notice
setting forth the reasons therefor shall forthwith be given by the terminating
party to the other party hereto.
8.6 EFFECT OF TERMINATION AND ABANDONMENT. In the event of termination of
this Agreement and abandonment of the Merger pursuant to this Article VIII,
except as provided herein, no party hereto (or any of its directors or officers)
shall have any liability or further obligation to any other party to this
Agreement, except that nothing herein will relieve any party from liability for
any breach of this Agreement. Notwithstanding the foregoing, in the event of
the termination of this Agreement due to the failure of any party to consummate
the Merger for any reason other than the
33 - AGREEMENT AND PLAN OF MERGER
failure of any condition to Closing specified in Article VII, the defaulting
party shall reimburse the non-defaulting party for all its expenses incident to
preparing for and entering into this Agreement, including, without limitation,
legal and accounting fees and expenses.
ARTICLE IX
CERTAIN RIGHTS AND LIMITATIONS
REGARDING THE MERGER STOCK
9.1 RESTRICTIONS ON SALE OR TRANSFER OF SHARES; LEGEND. The Claremont
common stock to be issued hereunder will not have been registered under the
Securities Act of 1933, as amended (the "Securities Act") or the blue sky laws
of any state by reason of their contemplated issuance in a transaction exempt
from the registration and prospectus delivery requirements of the Securities Act
and of such state laws. Such shares may not be sold, transferred, or otherwise
disposed of without registration under the Securities Act and such state laws or
an exemption therefrom and an opinion of counsel to such effect and satisfactory
to Claremont shall have been delivered to Claremont. The certificates
representing the Claremont common stock shall contain substantially the
following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
UNDER ANY STATE SECURITIES LAWS. NEITHER SUCH SHARES NOR
ANY PORTION THEREOF OR INTEREST THEREIN MAY BE SOLD,
ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
UNLESS THE SAME IS REGISTERED UNDER SAID ACT AND APPLICABLE
STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE AND THE CORPORATION SHALL HAVE
RECEIVED EVIDENCE OF SUCH EXEMPTION SATISFACTORY TO THE
CORPORATION (WHICH MAY INCLUDE, AMONG OTHER THINGS, AN
OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION)."
ARTICLE X
RIGHTS TO ESCROW FUND
10.1 AGREEMENT FOR INDEMNIFICATION.
(a) As used in this Article X:
34 - AGREEMENT AND PLAN OF MERGER
(i) "Damages" means claims, damages, losses, liabilities,
judgments, settlements, costs and expenses, including, without limitation,
all reasonable fees and disbursements of counsel incident to the
investigation or defense of any claim or proceeding or threatened claim or
proceeding;
(ii) "Indemnified Party" means each of Claremont and Subsidiary;
(iii) "Shareholder Representative" means Michael L. Johnson in his
role as representative of the Shareholders in administering the Escrow Fund
established under this Agreement and to be administered under this
Agreement and under the Escrow Agreement to be executed at or before the
Closing (the "Escrow Agreement"), or in the event of Michael L. Johnson's
resignation, death or incapacity, such replacement for the Shareholder
Representative as may be designated by a majority of the Shareholders,
provided such substitute Shareholder Representative shall be bound to the
same duties and commitments as the original Shareholder Representative;
(iv) "First Issue Date" means that day which is 60 days after the
expiration of the 12-month period commencing upon the Effective Time; and
(v) "Second Issue Date" means that day which is 60 days after
the expiration of the 24-month period commencing upon the Effective Time.
(b) From, out of, and to the extent of the resources represented by
the Escrow Fund (as hereinafter defined), the Indemnified Party shall be held
harmless from, against and in respect of, any and all Damages incurred by the
Indemnified Party arising from or in connection with any breach of any
representation or warranty made by OpTex and the Shareholders in Article IV of
this Agreement and not disclosed on the OpTex Disclosure Schedule; provided,
however, that the Indemnified Party shall be held harmless from, against and in
respect of, any and all Damages incurred by the Indemnified Party arising from
or in connection with any breach of the representations and warranties contained
in Section 4.1(p) of this Agreement without regard to any disclosure contained
or set forth on the OpTex Disclosure Schedule. Each such breach of a
representation or warranty as referred to in this Section 10.1(b) shall be
deemed collectively "Claims". Richard E. Brown and Michael A. Guider shall have
no liability for any Claim(s). The liability of each of Juli A. Shivley, Laura
Henderson and Michael Lininger for any Claim(s) shall be limited to each of
their Pro Rata Share of the Escrowed Merger Consideration. The liability of
Michael L. Johnson for any Claim(s) shall be unlimited.
(c) The representations and warranties set forth in Article IV shall,
for purposes of this Article X, be deemed to have survived the Effective Time
notwithstanding any contrary terms of this Agreement, and whenever such
representations and warranties are referred to in this Article X, the text of
the same as set forth in Article IV shall be deemed to be set forth in their
entirety herein, and the same are hereby incorporated herein by such references.
Each such representation and warranty shall be deemed to have been relied upon
by the party or parties to which made, notwithstanding any investigation or
inspection made by or on behalf of such party or parties, and shall not be
affected in any respect by any such investigation or inspection.
35 - AGREEMENT AND PLAN OF MERGER
(d) Claremont shall deposit the Escrowed Merger Consideration in
escrow under the Escrow Agreement in four (4) certificates representing 100% of
the Escrowed Merger Consideration (the "Escrow Fund"), together with the related
blank stock powers. Upon the expiration of the indemnity obligations in
accordance with the provisions of Section 10.2 of this Agreement, and subject to
the provisions of Section 10.6(a) of this Agreement and the terms of the Escrow
Agreement, that number of shares of the Claremont common stock in the Escrow
Fund equal to the sum of the 1998 Revenue Shares (as hereinafter defined) and
the 1998 Operating Profit Shares (as hereinafter defined) shall be transferred
to the Shareholders according to their Pro Rata Share of such Claremont common
stock, except for any Claremont common stock which may be necessary under the
remainder of this Section 10.1(d). Subject to the remainder of this Section
10.1(d), Claremont shall execute and deliver any instructions to the Escrow
Agent (as defined in the Escrow Agreement) required by the Escrow Agent to
effect such transfer. If, on the First Issue Date, there exists any Claim which
was timely asserted by the Indemnified Party but which is not then finally
resolved and discharged, there shall remain in the Escrow Fund an aggregate
number of shares of Claremont common stock with an aggregate fair market value
(determined as of the Closing Date) equal to the reasonable estimate (determined
in accordance with Section 10.3) of the amount of Damages asserted to be caused
by such Claim. Subject to the provisions of Section 10.6(a) of this Agreement,
upon the final resolution and discharge of any such Claim, Claremont shall
execute and deliver any instructions to the Escrow Agent required by the Escrow
Agent to effect the transfer of any shares of Claremont common stock remaining
in the Escrow Fund (less the number of shares required to satisfy any Claim(s))
up to that number of such shares equal to the sum of the 1998 Revenue Shares and
the 1998 Operating Profit Shares to the Shareholders according to their Pro Rata
Share thereof. Upon the Second Issue Date, subject to the provisions of
Sections 10.6(b) and 10.6(c) of this Agreement and the terms of the Escrow
Agreement, that number of shares of the Claremont common stock in the Escrow
Fund equal to the sum of the 1999 Revenue Shares (as hereinafter defined) and
the 1999 Operating Profit Shares (as hereinafter defined) shall be transferred
to the Shareholders according to their Pro Rata Share of such Claremont common
stock. Claremont shall execute and deliver any instructions to the Escrow Agent
required by the Escrow Agent to effect the such transfer.
10.2 LIMITATIONS OF CLAIMS AGAINST ESCROW FUND. The indemnity obligations
under Section 10.1(b) of this Agreement shall expire on the First Issue Date;
provided, however, that the indemnity obligations for Claims timely asserted by
the Indemnified Party in the manner provided in this Agreement shall continue
until such Claims are finally resolved and discharged.
10.3 NOTICE OF CLAIM. An Indemnified Party shall promptly notify the
Shareholder Representative in writing of any Claim asserted against or imposed
upon or incurred by it that might give rise to any indemnity obligation
hereunder (a "Notice of Claim"), specifying the basis and, if possible, a
reasonable estimate of the amount (as determined in good faith by the Board of
Directors of the Indemnified Party), of Damages sought by such Indemnified Party
on account thereof and in reasonable detail such information as the Indemnified
Party may have with respect to the matter that is the subject of the Notice of
Claim (including copies of any summons, complaint or other pleading that may
have been served on it and any written claim, demand, invoice, billing or other
document evidencing or asserting the same). An Indemnified Party shall not be
entitled to give a Notice of Claim after the First Issue Date. The date of a
Notice of Claim shall mean (a) the date of the
36 - AGREEMENT AND PLAN OF MERGER
postmark on the registered or certified mail containing the Notice of Claim, or
(b) if the Notice of Claim is transmitted by courier, the date of its delivery
to the courier by the Indemnified Party or (c) if the Notice of Claim is
personally delivered, the date of such personal delivery.
10.4 DEFENSE AND SETTLEMENT OF CLAIMS. The Shareholder Representative
shall have the right (without prejudice to the right of the Indemnified Party to
participate at its own expense through counsel of its own choosing) to defend
against any Claim that is the subject of a Notice of Claim and to pay the
expenses thereof (including the expenses of counsel of their own choosing), and
to control such defense if they provide written notice of their intention to do
so within 15 business days of receipt of the Notice of Claim. The Indemnified
Party shall cooperate fully in the defense of such Claim and shall make
available to the Shareholder Representative or his counsel all pertinent
information under its control relating thereto. The Indemnified Party shall
have the right to elect to settle any such Claim; provided, however, there shall
be no indemnification obligation with respect to any monetary payment to any
third party required by such settlement unless the Shareholder Representative
shall have consented thereto, which consent shall not be unreasonably withheld.
The Shareholder Representative shall have the right to elect to settle any such
Claim subject to the consent of Claremont, which consent shall not be
unreasonably withheld.
10.5 JURISDICTION. Claremont, OpTex and the Shareholder Representative
hereby irrevocably submit exclusively to the personal jurisdiction of the state
courts of the State of Oregon and to the personal jurisdiction of the United
States District Court for the District of Oregon, and all courts from which an
appeal may be taken, solely for the purpose of any suit, action, or other
proceeding arising out of or based upon this Agreement, and hereby waive to the
extent not prohibited by law, and agree not to assert, by way of motion, as a
defense, or otherwise, in any such proceeding, any claim that it or they are not
subject personally to the jurisdiction of the above-named courts for such
proceedings.
10.6 ESCROW FOR "EARN-OUT".
(a) Subject to Section 10.1(d) of this Agreement, upon the First
Issue Date, the Shareholders shall be entitled to receive their Pro Rata Share
of those shares of Claremont common stock in the Escrow Fund equal to the sum of
the 1998 Revenue Shares and the 1998 Operating Profit Shares. The "1998 Revenue
Shares" means that number of shares of Claremont common stock which is equal to
36,000 multiplied by a fraction, the numerator of which is the Surviving
Corporation's fiscal year 1998 "Revenue" (as defined in Exhibit 10.6(a) attached
hereto) less Four Million and 00/100 Dollars ($4,000,000.00), and the
denominator of which is Six Million and 00/100 Dollars ($6,000,000.00). For
clarification purposes and by way of example ONLY, if the Surviving
Corporation's fiscal year 1998 Revenue is Eight Million and 00/100 Dollars
($8,000,000.00), the Shareholders would be entitled to receive 24,000 shares of
Claremont's common stock. ((8,000,000 less 4,000,000, divided by
6,000,000)36,000 = 24,000.) The "1998 Operating Profit Shares" means that
number of shares of Claremont common stock which is equal to 84,000 multiplied
by a fraction, the numerator of which is the Surviving
37 - AGREEMENT AND PLAN OF MERGER
Corporation's fiscal year 1998 "Operating Profit" (as defined in Exhibit 10.6(a)
attached hereto) less Six Hundred Thousand and 00/100 Dollars ($600,000.00), and
the denominator of which is Nine Hundred Thousand and 00/100 Dollars
($900,000.00). For clarification and by way of example ONLY, if the Surviving
Corporation's fiscal year 1998 Operating Profit is One Million and 00/100
Dollars ($1,000,000.00), the Shareholders would be entitled to receive 37,333
shares of Claremont's common stock. ((1,000,000 less 600,000, divided by
900,000)84,000 = 37,333).
(b) Upon the Second Issue Date, the Shareholders shall be entitled to
receive their Pro Rata Share of those shares of Claremont common stock in the
Escrow Fund, if any, equal to the sum of the 1999 Revenue Shares and the 1999
Operating Profit Shares. The "1999 Revenue Shares" means that number of shares
of Claremont common stock which is equal to 36,000 less the 1998 Revenue Shares,
multiplied by a fraction, the numerator of which is the Surviving Corporation's
fiscal year 1999 Revenue less the greater of Four Million and 00/100 Dollars
($4,000,000.00) or the Surviving Corporation's fiscal year 1998 Revenue, and the
denominator of which is Ten Million and 00/100 Dollars ($10,000,000.00) less the
Surviving Corporation's fiscal year 1998 Revenue. For clarification purposes
and by way of example ONLY, if the Surviving Corporation's fiscal year 1999
Revenue is Ten Million and 00/100 Dollars ($10,000,000.00) and the Surviving
Corporation's fiscal year 1998 Revenue was Eight Million and 00/100 Dollars
($8,000,000.00), the Shareholders would be entitled to receive 12,000 shares of
Claremont's common stock. ((10,000,000 less 8,000,000, divided by 10,000,000
less 8,000,000)36,000 - 24,000 = 12,000). The "1999 Operating Profit Shares"
means that number of shares of Claremont common stock which is equal to 84,000
less the 1998 Operating Profit Shares, multiplied by a fraction, the numerator
of which is the Surviving Corporation's fiscal year 1999 Operating Profit less
the greater of Six Hundred Thousand and 00/100 Dollars ($600,000.00) or the
Surviving Corporation's fiscal year 1998 Operating Profit, and the denominator
of which is One Million Five Hundred Thousand and 00/100 Dollars ($1,500,000.00)
less the Surviving Corporation's fiscal year 1998 Operating Profit. For
purposes of clarification and by way of example ONLY, if the Surviving
Corporation's fiscal year 1999 Operating Profit is One Million Three Hundred
Thousand and 00/100 Dollars ($1,300,000.00) and the Surviving Corporation's
fiscal year 1998 Operating Profit was One Million and 00/100 Dollars
($1,000,000.00), the Shareholders would be entitled to receive 28,000 shares of
Claremont's common stock. ((1,300,000 less 1,000,000, divided by 1,500,000 -
1,000,000)84,000 - 37,333 = 28,000).
(c) The sum of the 1998 Revenue Shares and the 1999 Revenue Shares
shall not exceed 36,000. The sum of the 1998 Operating Profit Shares and the
1999 Operating Profit Shares shall not exceed 84,000. In the event that the
1998 Revenue Shares equal 36,000, before taking into account any Claim(s) timely
asserted by the Indemnified Party, the Shareholders will not be entitled to the
1999 Revenue Shares. In the event that the 1998 Operating Profit Shares equal
84,000, before taking into account any Claim(s) timely asserted by the
Indemnified Party, the Shareholders will not be entitled to the 1999 Operating
Profit Shares.
(d) Notwithstanding the foregoing provisions of this Section 10.6, in
the event that a Change in Control of Claremont (as defined hereinafter) occurs
on or after the First Issue Date, the Shareholders will be entitled to receive
their Pro Rata Share of the shares of Claremont common stock in the Escrow Fund,
subject to any Claims that have been timely asserted by the Indemnified Party in
the manner provided in this Agreement. In the event that a Change in Control of
Claremont occurs prior to the First Issue Date, the Shareholders will be
entitled to receive their Pro Rata Share of the shares of Claremont common stock
in the Escrow Fund, subject to any Claims
38 - AGREEMENT AND PLAN OF MERGER
that have been timely asserted by the Indemnified Party in the manner provided
in this Agreement, promptly after the First Issue Date. For the purposes of
this Section 10.6(d), a "Change in Control of Claremont" means the occurrence of
one or more of the following events: (i) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all or
substantially all of the assets of Claremont; (ii) Claremont's shareholders
approve any plan or proposal for the liquidation or dissolution of Claremont;
(iii) the acquisition in one or more transactions of "beneficial ownership"
(within the meaning of Rule 13d-3 and 13d-5 promulgated under the Securities
Exchange Act of 1934, as amended) by (x) any person or entity or (y) or any
group, of any capital stock of Claremont such that, as a result of such
acquisition, such person, entity or group of related persons or entities either
(I) beneficially owns, directly or indirectly, more than 50% of the combined
voting power of Claremont's then outstanding securities entitled to vote for a
majority of Claremont's Board of Directors, or (II) otherwise has the ability to
elect, directly or indirectly, a majority of the members of Claremont's Board of
Directors.
ARTICLE XI
MISCELLANEOUS
11.1 CONDITIONAL CLOSING. In each state whose statutes, rules or
regulations require that the Merger must by approved by such state's public
utility commission (or similar entity) prior to the effective consummation of
the Merger, the Closing of the Merger shall be subject to and contingent upon
such approval, and shall be deemed not to have been effected in such state until
receipt by OpTex and Claremont of such approval.
11.2 COOPERATION. The parties agree that each of them will fully cooperate
with the other and with the other's counsel and accountants in connection with
any steps required to be taken as part of its obligations under this Agreement.
Each party agrees that it will use its best efforts to cause all conditions to
this Agreement to be satisfied as promptly as possible, and each party agrees
that it will not undertake any course of action inconsistent with this Agreement
or which would make any representations, warranties or agreements made by it in
this Agreement untrue or any conditions precedent to this Agreement unable to be
satisfied at or prior to the Closing Date.
11.3 PAYMENT OF EXPENSES. Whether or not the Merger shall be consummated,
except as otherwise provided under Section 8.6 hereof, each party hereto shall
pay its own expenses incident to preparing for, entering into and carrying out
this Agreement and the consummation of the Merger.
11.4 SURVIVAL. The representations, warranties and agreements of the
parties contained in Article III (but only to the extent that such provision
expressly relate to actions to be taken after the Effective Time), Article IV,
Article X and Sections 1.4, 11.3 and 11.4 shall survive the consummation of the
Merger. The agreements of the parties contained in Sections 8.6 and 11.2 shall
survive the termination of this Agreement. All other representations,
warranties, agreements and covenants in this Agreement shall be deemed to be
conditions of the Merger, as provided herein, and shall not survive the
consummation of the Merger.
39 - AGREEMENT AND PLAN OF MERGER
11.5 MODIFICATION OR AMENDMENT. At any time (before or after approval
hereof by the shareholders of the Constituent Corporations) prior to the
Effective Time, the parties hereto may, by written agreement, make any
modification or amendment of this Agreement approved by their respective Boards
of Directors, provided such modification or amendment does not reduce the total
consideration to be paid in the Merger. This Agreement shall not be modified or
amended except pursuant to an instrument in writing executed and delivered on
behalf of each of the parties hereto.
11.6 WAIVER OF CONDITIONS. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law. No waiver of one such condition shall constitute a waiver of
any other such condition.
11.7 CERTIFICATION OF SHAREHOLDER VOTE AND DISSENTERS. Promptly following
the shareholder meeting or obtainment of the written consent of the Shareholders
referred to in Section 5.1, but in any event no later than five (5) days prior
to the Merger Date, OpTex shall deliver to Claremont a certificate of its
Secretary setting forth (i) the number of shares of its capital stock
outstanding and entitled to vote, the number of shares of its stock voted in
favor of or consenting to and the number of shares voted against adoption and
approval of this Agreement, (ii) the names of all of its shareholders not voting
in favor of this Agreement who filed with OpTex written objection to the Merger
before the taking of the vote on the Agreement and (iii) a definitive list of
common shareholders and the number of shares of such shareholders to be tendered
to Claremont in the Merger.
11.8 COUNTERPARTS. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
11.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Oregon, without giving effect to its
conflicts of laws principles.
11.10 NOTICES. Any notice, request, instruction or other document to be
given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid as follows:
If to Claremont:
Claremont Technology Group, Inc.
70 West Red Oak Lane, 4th Floor
White Plains, New York 10604
Attention: Dennis M. Goett, Chief Financial Officer
40 - AGREEMENT AND PLAN OF MERGER
With a copy to:
Claremont Technology Group, Inc.
One Elm Square
Andover, Massachusetts 01810
Attention: Elise P. Caffrey, Vice President
And to:
Ater Wynne Hewitt Dodson & Skerritt, LLP
Suite 1800
222 S.W. Columbia
Portland, OR 97201-6618
Attention: Brenda L. Meltebeke, Esquire
If to OpTex:
OpTex, Inc.
4880 Blazer Memorial Pkwy
Dublin, Ohio 43015
Attention: Michael L. Johnson, Chief Executive Officer
With a copy to:
John R. Perkins, Jr., Esquire
Jones, Troyan, Pappas & Perkins
1472 Manning Parkway
Powell, OH 43065
If to the Shareholder Representative:
Michael L. Johnson
6065 Glenbarr Place
Dublin, OH 43017
11.11 ENTIRE AGREEMENT. This Agreement and the other agreements, exhibits
and schedules referenced herein or attached hereto (a) constitute the entire
agreement and supersede all other prior agreements and understandings, both
written and oral, among the parties, with respect to the subject matter hereof
and thereof, (b) are not intended to confer upon any person other than the
parties hereto and thereto any rights or remedies hereunder and thereunder, and
(c) shall not be assignable by operation of law or otherwise.
11.12 CAPTIONS. The Article, Section and paragraph captions herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
11.13 SEVERABILITY. Should a court or other body of competent jurisdiction
determine that any provision of this Agreement is excessive in scope or
otherwise invalid or unenforceable, such provision shall be adjusted rather than
voided, if possible, so that it is enforceable to the maximum extent possible,
and all other provisions of this Agreement shall be deemed valid and enforceable
to the extent possible.
41 - AGREEMENT AND PLAN OF MERGER
11.14 CONFIDENTIALITY. On and at all times after the execution of this
Agreement and until the consummation of the transactions contemplated hereby,
the Parties agree to continue to be bound by the provisions of the Letter
Agreement dated March 4, 1997 by and between OpTex and Claremont (the "Letter
Agreement") with respect to information obtained by or provided to either Party
in connection with the transactions contemplated by this Agreement. However,
each Party may disclose information to its employees and financial and legal
advisors on a strict need-to-know-basis and under obligations of confidentiality
similar to those contained in the Letter Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
intending it to be effective as of the date first hereinabove written.
CLAREMONT TECHNOLOGY GROUP, INC.
By:____________________________________
Elise P. Caffrey, Vice President
CLAREMONT ACQUISITION CORPORATION
By:____________________________________
Terry D. Murphy, President
OPTEX, INC.
By:____________________________________
Michael L. Johnson, Chairman of the
Board
_______________________________________
MICHAEL L. JOHNSON
_______________________________________
MICHAEL A. GUIDER
_______________________________________
JULI A. SHIVLEY
_______________________________________
RICHARD E. BROWN
42 - AGREEMENT AND PLAN OF MERGER
_______________________________________
LAURA HENDERSON
_______________________________________
MICHAEL LININGER
FOR PURPOSES OF ARTICLE X HEREOF ONLY
_______________________________________
MICHAEL L. JOHNSON, in his capacity
as Shareholder Representative
43 - AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CLAREMONT TECHNOLOGY GROUP, INC.,
CLAREMONT ACQUISITION CORPORATION,
OPTEX, INC.,
MICHAEL L. JOHNSON, MICHAEL A. GUIDER
JULI A. SHIVLEY, RICHARD E. BROWN,
LAURA HENDERSON
AND
MICHAEL LININGER
DATED
July 10, 1997
TABLE OF CONTENTS
Page
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ARTICLE I THE MERGER; CLOSING; EFFECTIVE TIME . . . . . . . . . . . . . . 1
1.1 THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 THE CLOSING.. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 ARTICLES OF MERGER. . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 FURTHER ASSURANCES. . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II THE SURVIVING CORPORATION . . . . . . . . . . . . . . . . . . . 2
2.1 CAPITALIZATION OF THE SURVIVING CORPORATION. . . . . . . . . . . 2
2.2 ARTICLES OF INCORPORATION.. . . . . . . . . . . . . . . . . . . . 2
2.3 CODE OF REGULATIONS AND CODE OF BYLAWS. . . . . . . . . . . . . . 2
2.4 TAX CONSEQUENCES. . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 OFFICERS AND DIRECTORS. . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III CONSIDERATION FOR THE MERGER . . . . . . . . . . . . . . . . . . 3
3.1 CONVERSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 TREASURY SHARES.. . . . . . . . . . . . . . . . . . . . . . . . . 3
3.3 SHAREHOLDER RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . 3
3.4 RICHARD E. BROWN'S RIGHTS.. . . . . . . . . . . . . . . . . . . . 4
3.5 FRACTIONAL SHARES.. . . . . . . . . . . . . . . . . . . . . . . . 5
3.6 LOST CERTIFICATES.. . . . . . . . . . . . . . . . . . . . . . . . 5
3.7 SUBSIDIARY SHARES.. . . . . . . . . . . . . . . . . . . . . . . . 5
3.8 ESCROW DEPOSIT. . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE IV REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 5
4.1 REPRESENTATIONS AND WARRANTIES OF OPTEX
AND THE SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . . . 5
(a) ORGANIZATION, GOOD STANDING, POWER, ETC. . . . . . . . . . . 5
(b) AUTHORIZED CAPITALIZATION. . . . . . . . . . . . . . . . . . 6
(c) SUBSIDIARIES.. . . . . . . . . . . . . . . . . . . . . . . . 6
(d) OPTIONS, WARRANTS, RIGHTS, ETC.. . . . . . . . . . . . . . . 6
(e) EFFECT OF AGREEMENT. . . . . . . . . . . . . . . . . . . . . 6
(f) POWER, DUE AUTHORIZATION.. . . . . . . . . . . . . . . . . . 7
(g) SECURITIES MATTERS.. . . . . . . . . . . . . . . . . . . . . 7
(h) FINANCIAL STATEMENTS.. . . . . . . . . . . . . . . . . . . . 7
-i-
(i) CUSTOMERS. . . . . . . . . . . . . . . . . . . . . . . . . . 8
(j) ABSENCE OF CERTAIN CHANGES OR EVENTS.. . . . . . . . . . . . 8
(k) TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(l) LITIGATION.. . . . . . . . . . . . . . . . . . . . . . . . . 10
(m) LABOR MATTERS. . . . . . . . . . . . . . . . . . . . . . . . 11
(n) INTANGIBLE PROPERTY. . . . . . . . . . . . . . . . . . . . . 11
(o) BOOKS AND RECORDS. . . . . . . . . . . . . . . . . . . . . . 12
(p) LICENSES, PERMITS, AUTHORIZATIONS, ETC.. . . . . . . . . . . 12
(q) APPLICABLE LAWS. . . . . . . . . . . . . . . . . . . . . . . 13
(r) EMPLOYEE BENEFIT PLANS. . . . . . . . . . . . . . . . . . . 13
(s) ENVIRONMENTAL LAWS AND REGULATIONS.. . . . . . . . . . . . . 16
(t) INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . 19
(u) TITLE TO REAL AND PERSONAL PROPERTIES, ABSENCE OF
LIENS AND ENCUMBRANCES; CONDITION OF PROPERTIES. . . . . . 19
(v) INVENTORY. . . . . . . . . . . . . . . . . . . . . . . . . . 19
(w) MATERIAL CONTRACTS.. . . . . . . . . . . . . . . . . . . . . 20
(x) LOANS, NOTES, ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE.. . . 21
(y) TRANSACTIONS WITH RELATED PARTIES. . . . . . . . . . . . . . 22
(z) FULL DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . 22
(aa) BANKING RELATIONSHIPS. . . . . . . . . . . . . . . . . . . . 22
(ab) ABSENCE OF CERTAIN COMMERCIAL PRACTICES. . . . . . . . . . . 22
(ac) BROKERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(ad) TAX-FREE REORGANIZATION. . . . . . . . . . . . . . . . . . . 23
4.2 REPRESENTATIONS AND WARRANTIES OF CLAREMONT AND SUBSIDIARY. . . . 23
(a) ORGANIZATION, GOOD STANDING, POWER, ETC. . . . . . . . . . . 23
(b) MERGER STOCK.. . . . . . . . . . . . . . . . . . . . . . . . 23
(c) POWER, DUE AUTHORIZATION.. . . . . . . . . . . . . . . . . . 23
(d) NO CONFLICT. . . . . . . . . . . . . . . . . . . . . . . . . 24
(e) BROKERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(f) ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . .24
(g) ADDITIONAL INFORMATION.. . . . . . . . . . . . . . . . . . . 24
(h) NO MATERIAL CHANGE.. . . . . . . . . . . . . . . . . . . . . 24
(i) SEC REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE V OPTEX'S COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 25
5.1 SHAREHOLDER'S MEETING.. . . . . . . . . . . . . . . . . . . . . . 25
5.2 CONDUCT OF OPTEX PRIOR TO THE CLOSING DATE. . . . . . . . . . . . 25
(a) OPERATION OF BUSINESS. . . . . . . . . . . . . . . . . . . . 25
(b) MAINTAIN PROPERTIES. . . . . . . . . . . . . . . . . . . . . 26
(c) SALARIES.. . . . . . . . . . . . . . . . . . . . . . . . . . 26
(d) BOOKS AND RECORDS. . . . . . . . . . . . . . . . . . . . . . 26
(e) ENCUMBRANCES.. . . . . . . . . . . . . . . . . . . . . . . . 26
(f) COMPLIANCE.. . . . . . . . . . . . . . . . . . . . . . . . . 26
(g) NO SOLICITATION. . . . . . . . . . . . . . . . . . . . . . . 26
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(h) ACTIONS WITH RESPECT TO CHARTER DOCUMENTS, CAPITAL STOCK.. . 26
(i) ACCESS.. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(j) NOTIFICATION OF CERTAIN MATTERS. . . . . . . . . . . . . . . 27
5.3 PUBLICITY.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VI MUTUAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . .27
6.1 BEST EFFORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.2 FILINGS; OTHER ACTION.. . . . . . . . . . . . . . . . . . . . . . 28
6.3 TAX-FREE REORGANIZATION.. . . . . . . . . . . . . . . . . . . . . 28
6.4 FURTHER ACTION. . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VII CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.1 CONDITIONS TO OBLIGATIONS OF CLAREMONT AND SUBSIDIARY.. . . . . . 28
(a) OPTEX SHAREHOLDER APPROVAL.. . . . . . . . . . . . . . . . . 28
(b) REPRESENTATIONS AND WARRANTIES.. . . . . . . . . . . . . . . 28
(c) PERFORMANCE OF OBLIGATIONS BY OPTEX AND THE SHAREHOLDERS.. . 29
(d) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY.. . . . . . . . . . 29
(e) PROCEEDINGS AND LITIGATION.. . . . . . . . . . . . . . . . . 29
(f) EMPLOYEE RETENTION.. . . . . . . . . . . . . . . . . . . . . 29
(g) RESIGNATIONS.. . . . . . . . . . . . . . . . . . . . . . . . 29
(h) OPINION LETTER OF COUNSEL FOR OPTEX AND THE SHAREHOLDERS.. . 29
(i) DISSENTING SHAREHOLDERS. . . . . . . . . . . . . . . . . . . 29
(j) INVESTMENT REPRESENTATIONS.. . . . . . . . . . . . . . . . . 30
(k) NO MATERIAL ADVERSE CHANGE.. . . . . . . . . . . . . . . . . 30
(l) FILINGS AND CONSENTS.. . . . . . . . . . . . . . . . . . . . 30
(m) PROCEEDINGS SATISFACTORY TO COUNSEL. . . . . . . . . . . . . 30
(n) PROPRIETARY INFORMATION AGREEMENTS.. . . . . . . . . . . . . 30
(o) EMPLOYMENT AGREEMENT.. . . . . . . . . . . . . . . . . . . . 30
(p) PRIVATE PLACEMENT EXEMPTION. . . . . . . . . . . . . . . . . 30
(q) NO ENCUMBRANCES. . . . . . . . . . . . . . . . . . . . . . . 30
(r) ESCROW AGREEMENT.. . . . . . . . . . . . . . . . . . . . . . 31
(s) TERMINATION OF BONUS PLAN. . . . . . . . . . . . . . . . . . 31
(t) CONSENT OF COMMERCE NATIONAL BANK. . . . . . . . . . . . . . 31
(u) DISCHARGE OF INDEBTEDNESS/TERMINATION OF SECURITY INTEREST.. .31
(v) TERMINATION OF CLOSE CORPORATION AGREEMENT . . . . . . . . . .31
7.2 CONDITIONS TO OBLIGATIONS OF OPTEX. . . . . . . . . . . . . . . . 31
(a) OPTEX SHAREHOLDER APPROVAL.. . . . . . . . . . . . . . . . . 31
(b) REPRESENTATIONS AND WARRANTIES.. . . . . . . . . . . . . . . 31
(c) PERFORMANCE OF OBLIGATIONS BY CLAREMONT AND SUBSIDIARY.. . . 31
(d) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY.. . . . . . . . . . 32
(e) OPINION LETTER OF COUNSEL FOR CLAREMONT AND SUBSIDIARY.. . . 32
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(f) ESCROW AGREEMENT.. . . . . . . . . . . . . . . . . . . . . . 32
(g) PROCEEDINGS AND LITIGATION.. . . . . . . . . . . . . . . . . 32
(h) FILINGS AND CONSENTS.. . . . . . . . . . . . . . . . . . . . 32
(i) PROCEEDINGS SATISFACTORY TO COUNSEL. . . . . . . . . . . . . 32
(j) EMPLOYMENT AGREEMENT.. . . . . . . . . . . . . . . . . . . . 32
ARTICLE VIII TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . 33
8.1 TERMINATION BY MUTUAL CONSENT.. . . . . . . . . . . . . . . . . . 33
8.2 TERMINATION BY EITHER OPTEX OR CLAREMONT. . . . . . . . . . . . . 33
8.3 TERMINATION BY CLAREMONT. . . . . . . . . . . . . . . . . . . . . 33
8.4 TERMINATION BY OPTEX. . . . . . . . . . . . . . . . . . . . . . . 33
8.5 NOTICE OF TERMINATION.. . . . . . . . . . . . . . . . . . . . . . 33
8.6 EFFECT OF TERMINATION AND ABANDONMENT.. . . . . . . . . . . . . . 33
ARTICLE IX CERTAIN RIGHTS AND LIMITATIONS
REGARDING THE MERGER STOCK . . . . . . . . . . . . . . . . . . . 34
9.1 RESTRICTIONS ON SALE OR TRANSFER OF SHARES; LEGEND. . . . . . . . 34
ARTICLE X RIGHTS TO ESCROW FUND . . . . . . . . . . . . . . . . . . . . . 34
10.1 AGREEMENT FOR INDEMNIFICATION.. . . . . . . . . . . . . . . . . . 34
10.2 LIMITATIONS OF CLAIMS AGAINST ESCROW FUND.. . . . . . . . . . . . 36
10.3 NOTICE OF CLAIM.. . . . . . . . . . . . . . . . . . . . . . . . . 36
10.4 DEFENSE AND SETTLEMENT OF CLAIMS. . . . . . . . . . . . . . . . . 37
10.5 JURISDICTION. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.6 ESCROW FOR "EARN-OUT".. . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE XI MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.1 CONDITIONAL CLOSING . . . . . . . . . . . . . . . . . . . . . . . .39
11.2 COOPERATION.. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.3 PAYMENT OF EXPENSES.. . . . . . . . . . . . . . . . . . . . . . . 39
11.4 SURVIVAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.5 MODIFICATION OR AMENDMENT.. . . . . . . . . . . . . . . . . . . . 40
11.6 WAIVER OF CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . 40
11.7 CERTIFICATION OF SHAREHOLDER VOTE AND DISSENTERS. . . . . . . . . 40
11.8 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.9 GOVERNING LAW.. . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.10 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.11 ENTIRE AGREEMENT.. . . . . . . . . . . . . . . . . . . . . . . . 41
11.12 CAPTIONS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.13 SEVERABILITY.. . . . . . . . . . . . . . . . . . . . . . . . . . 41
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11.14 CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . . . 42
DISCLOSURE SCHEDULES
OpTex Disclosure Schedule
Claremont Disclosure Schedule
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EXHIBITS
Officers and Directors (2.5)
Pro Rata Share (3.1(d))
Employee Retention (7.1(f))
Opinion of Jones, Troyan, Pappas & Perkins (7.1(h))
Form of Letter of Transmittal (7.1(j))
Proprietary Information Agreement (7.1(n))
Employment Agreement (7.1(o))
Opinion of Ater Wynne Hewitt Dodson & Skerritt, LLP (7.2(e))
Escrow for Earn-Out (10.6(a))
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EXHIBIT 2.5
Officers and Directors
Board of Directors:
Paul J. Cosgrave
Dennis M. Goett
Edward A. Fullman
Michael L. Johnson
Officers:
Michael L. Johnson -- President
Terry D. Murphy -- Secretary
Terry D. Murphy -- Treasurer
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EXHIBIT 3.1(d)
Pro Rata Share
Initial Merger Escrowed Merger
Consideration Consideration
------------- -------------
Cash Shares Shares
---- ------ ------
Michael L. Johnson $220,000 78,400 105,600
Juli A. Shivley 50,000 6,000 6,000
Laura Henderson 50,000 6,000 6,000
Michael Lininger 20,000 2,400 2,400
Richard E. Brown 500,000 8,000 0
Michael A. Guider 160,000 19,200 0
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EXHIBIT 7.1(f)
Employee Retention
Except as indicated below, all current employees of OpTex shall continue to
be employed by OpTex and shall not have indicated either to Claremont or to
OpTex an intention to terminate their employment following consummation of the
Merger.
Michael A. Guider's employment will be terminated following consummation of
the Merger.
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EXHIBIT 10.6(a)
For purposes of calculating the "Earn-Out" under Section 10.6, "Revenue"
and "Operating Profit" shall be determined as follows:
At the end of Claremont's fiscal year 1998 and 1999, as applicable,
OpTex's fiscal year 1998 and 1999, as applicable, revenue and
operating profits will be reviewed, determined and audited by
Claremont's independent auditors. In such audit process, OpTex's
revenue will be determined using generally accepted accounting
principals, consistently applied. OpTex's operating profit will be
equal to its revenue less OpTex's direct expenses, and less OpTex's
allocated portion of Claremont's company-wide overhead in areas of
benefits, administration, facilities and communications applicable to
OpTex, which allocation will be performed using standard and customary
Claremont allocation rules for such expenses (including currency
translation procedures where appropriate). The audit will be binding
on Claremont and OpTex.
"Revenue" is the sum of the following components for each fiscal year (July 1 to
June 30) derived from Claremont's Consolidated Financial Statements which are
marked and reported as OpTex Revenue:
Software Licenses and System Integration Services for:
- SystemOne
- SystemX
- Derivative OpTex systems, including Switch software
- Versions of PREMOST Biller and PREMOST Provisioner subsequent to
version ____ and ____, respectively
- Subsequent versions of products acquired by Claremont and managed
by Michael L. Johnson
Outsourcing for:
- Customer care using OpTex systems
- Other applications using derivative OpTex systems
Telecom Services:
- Using OpTex systems
"Operating Profit" is "Revenue," minus the following costs for each fiscal year
(July 1 to June 30) derived from Claremont's Consolidated Financial Statements
which are marked and reported as OpTex Costs:
Research and Development Costs for the following:
- SystemOne
- SystemX
- Derivative OpTex systems, including Switch software
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- Versions of PREMOST Biller and PREMOST Provisioner subsequent to
version ____ and ____, respectively, and managed by Michael L.
Johnson
- Subsequent versions of products acquired by Claremont and managed
by Michael L. Johnson
System Integration Costs for Implementation of (generated by OpTex,
Claremont Communications, Claremont U.S. or International Operations):
- SystemOne
- SystemX
- Derivative OpTex systems, including Switch software
- Versions of PREMOST Biller and PREMOST Provisioner subsequent to
version ____ and ____, respectively
- Subsequent versions of products acquired by Claremont
Outsourcing Costs for Delivery of:
- Customer care applications using OpTex systems
- Other applications using derivative OpTex systems
Telecom Services Costs for Delivery of:
- OpTex long distance or other telecom services
Sales, Marketing and Administrative Costs Attributable to:
- Software described hereinabove
- System integration services described hereinabove
- Outsourcing described hereinabove
- Telecom services described hereinabove
- Allocated cost of capital
- Allocated corporate burden--that percentage of OpTex employees'
salaries attributable to the employee benefits and payroll taxes
of such employees
- Sales, general and administrative expenses attributable to
OpTex's operations
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