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AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
by and among
EMI ACQUISITION, INC.,
a Delaware corporation
("Acquisition")
CERPROBE CORPORATION,
a Delaware corporation
("Cerprobe")
SILICON VALLEY TEST & REPAIR, INC.,
a California corporation
("Company")
and
WILLIAM AND CAROL MAYER
("Mayer")
Dated: January 15, 1997
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AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
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THIS AGREEMENT OF MERGER AND PLAN OF REORGANIZATION (this
"Agreement") is made and entered into this 15th day of January, 1997, by and
among EMI ACQUISITION, INC., a Delaware corporation ("Acquisition"), CERPROBE
CORPORATION, a Delaware corporation ("Cerprobe"), SILICON VALLEY TEST & REPAIR,
INC., a California corporation ("Company"), and WILLIAM E. MAYER and CAROL
MAYER, husband and wife (jointly and severally, "Mayer").
RECITALS
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A. Mayer owns all of the issued and outstanding capital stock
of Company, consisting of 100,000 shares of the common stock of Company (the
"Company Stock").
B. Company is engaged in refurbishing and adding new features
to automatic wafer probing equipment for use in the semiconductor industry (the
"Prober Refurbishing Business").
C. Acquisition is a newly formed, wholly-owned subsidiary of
Cerprobe.
D. The Boards of Directors of Cerprobe, Acquisition, and
Company each deem it advisable and in the best interests of their respective
corporations and shareholders that Company merge into Acquisition pursuant to
the terms and conditions of this Agreement, and applicable provisions of the
laws of the State of Delaware and the State of California.
E. Cerprobe, Acquisition, and Company intend, by approving
resolutions authorizing this Agreement, to adopt this Agreement as a plan of
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986 and the regulations promulgated thereunder (the "Code").
AGREEMENT
---------
NOW, THEREFORE, in consideration of the foregoing recitals and
the mutual covenants contained herein, the parties hereto hereby agree as
follows:
ARTICLE I
The Merger
----------
1.1 Merger of Company and Acquisition. Company and Acquisition
each agree to effect the merger (the "Merger") herein provided for, subject to
the terms and conditions contained in this Agreement.
1.2 The Surviving Corporation. Upon the Effective Time, as
hereinafter defined, Company shall be merged with and into Acquisition, and
Acquisition shall be the surviving corporation (hereinafter sometimes referred
to as the "Surviving Corporation").
1.3 Effective Time. The Merger shall become effective when the
requisite Merger Documents (as hereinafter defined) shall have been fully
executed and at the time (the "Effective Time") the Merger Documents are filed
pursuant to the laws of the State of Delaware; provided appropriate documents
with respect to the Merger are thereafter timely filed pursuant to the laws of
the State of California.
1.4 Merger Documents. The merger of Company into Acquisition
shall be in accordance with the Certificate of Merger for filing in the State of
Delaware, and the Articles of Merger (or such other document(s) that may be
permitted) for filing in the State of California, as are prescribed for
effecting the Merger in the States of Delaware and California (the "Merger
Documents").
ARTICLE II
Effective Merger on Existence, Assets and
-----------------------------------------
Liabilities of Company
----------------------
2.1 Corporate Existence. The corporate identity, existence,
purposes, powers, franchises, rights, licenses, permits, authorities, privileges
and immunities of Acquisition, shall continue unaffected and unimpaired by the
Merger, and the corporate identity, existence, purposes, powers, franchises,
rights, licenses, permits, authorities, privileges and immunities of Company
shall be merged with and into Acquisition, and the Surviving Corporation shall
be fully vested therewith. The separate corporate existence of Company, except
insofar as the same may be continued by statute, shall cease upon the Effective
Time.
2.2 Bylaws. The Bylaws of Acquisition as in existence prior to
the Merger shall be and constitute the Bylaws of the Surviving Corporation, and
the same may thereafter be altered, amended or repealed in accordance with the
General Corporation Law of the State of Delaware, the Certificate of
Incorporation of the Surviving Corporation and the Bylaws of the Surviving
Corporation.
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2.3 Certificate of Incorporation. The Certificate of
Incorporation of Acquisition as in existence prior to the Merger shall be and
constitute the Certificate of Incorporation of the Surviving Corporation, except
that the name of the Corporation shall be changed to "Silicon Valley Test &
Repair, Inc." The Certificate of Incorporation may thereafter be altered,
amended or repealed in accordance with the General Corporation Law of the State
of Delaware and the Bylaws of Acquisition.
2.4 Directors and Officers. The directors and officers of
Acquisition prior to the Merger shall be the directors and officers of the
Surviving Corporation, and each shall hold office until his successor is elected
and qualified or until his earlier resignation or removal. If on the Effective
Time of the Merger a vacancy shall exist on the Board of Directors or in any of
the offices of the Surviving Corporation as the same are specified above, such
vacancy may thereafter be filled in the manner provided by the Bylaws of the
Surviving Corporation.
2.5 Assets and Liabilities. Upon the Effective Time, all
rights, privileges, powers, licenses, permits, authorities, franchises and
interests of each of Acquisition and Company, both of a public and private
nature, all of its and their property, real, personal and mixed, all debts due
on whatever accounts and property of every description and every interest
therein belonging to each of Acquisition and Company or due to each of
Acquisition and Company shall thereafter be deemed to be the rights, privileges,
powers, licenses, permits, authorities, franchises and interests of, and shall
be vested in, the Surviving Corporation without further act or deed as
effectively as they were theretofore vested in Acquisition or Company as the
applicable case may be; title to any real estate, or any interest therein,
vested in each of Acquisition and Company by deed or otherwise, shall not revert
or in any way be impaired by reason of the Merger, all of the rights of
creditors of each of Acquisition and Company shall be preserved unimpaired by
the Merger, and all liens upon the property of each of Acquisition and Company
shall be preserved and unimpaired by the Merger, limited to the property
affected by such liens immediately prior to the Effective Time; and all debts,
liabilities and duties of each of Acquisition and Company shall thenceforth
attach to the Surviving Corporation and may be enforced against it to the same
extent as if said debts, liabilities and duties had been incurred or contracted
by it. Any existing claim, action or proceeding pending by or against
Acquisition or Company may be prosecuted as if the Merger had not taken place,
or the Surviving Corporation may be substituted in its place. Nothing herein is
intended to or shall extend or enlarge the lien of any indenture, agreement or
other instrument executed or assumed by either Acquisition or Company.
2.6 Service of Process. The Surviving Corporation hereby
agrees that from and after the Effective Time it may be served with process in
the State of California and that the California Secretary of State shall be the
designated agent for service of process in any proceeding for enforcement of any
obligation of Company, as well as for enforcement of any obligation of the
Surviving Corporation arising from the Merger,
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including any suit or any other proceeding to enforce the rights, if any, of a
dissenting shareholder as determined in an appraisal proceeding as allowed by
law and pursuant to the provisions of Section 3.4 of this Agreement.
2.7 Accounting Records. Upon the Effective Time, the assets,
liabilities, reserves and accounts of each of Acquisition and Company shall be
taken up on the books of the Surviving Corporation at the amounts at which they
respectively were carried on the books of Acquisition and Company, subject to
such adjustments as may be appropriate in giving effect to the Merger.
ARTICLE III
Exchange and Cancellation of Stock
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3.1 General. The manner of exchanging the shares of the
Company Stock for cash and shares of the Cerprobe Stock (as hereinafter defined)
to be issued for and upon the surrender of all shares of the Company Stock,
shall be as hereinafter set forth in this Article III.
3.2 Exchange of the Company Stock and Issuance of the Cerprobe
Stock.
(a) Exchange. The Company Stock issued and
outstanding at or immediately prior to the Effective Time shall, upon the
Effective Time, be converted into shares of the Cerprobe Stock and cash as
hereinafter provided. Each outstanding certificate evidencing the Company Stock
not surrendered at the Effective Time to the Surviving Corporation, which prior
to the Effective Time represented shares of the Company Stock, shall as of the
Effective Time be deemed for all purposes (other than the payment of dividends
or other distributions, if any, in respect of Cerprobe Common Stock) to be
cancelled and no longer represent shares of Company, but instead to represent
the number of whole shares of the Cerprobe Stock and cash into or for which the
shares of the Company Stock shall have been converted pursuant to this Section
3.2.
(b) Unsurrendered Certificates. Shares of the Company
Stock not surrendered upon the Effective Time are hereinafter referred to as the
"Unsurrendered Certificates." No interest shall be paid, and no dividend or
other distribution, if any, payable to the holders of shares of the Cerprobe
Stock shall be paid, to the holders of Un- surrendered Certificates; provided,
however, that upon surrender and exchange of such Un- surrendered Certificates
there shall be paid to the record holders of the stock certificate or
certificates issued in exchange for the Unsurrendered Certificates, the amount,
without interest thereon, of dividends and other distributions, if any, which
theretofore but subsequent to the Effective Time have been declared and become
payable with respect to the number of whole shares of the Cerprobe Stock into
which the Unsurrendered Certificates shall have been converted.
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(c) Cerprobe Stock and Cash. Upon the Effective Time,
all of the shares of the Company Stock shall be exchanged for:
(i) a total of Three Million Eight Hundred
Fifty Thousand Dollars ($3,850,000) (the "Proposed Cash Payment"), subject to
adjustment as provided in Sections 3.2(d) and 3.2(e) hereof ; and
(ii) a total of 300,000 validly issued,
fully paid, and nonassessable shares of Cerprobe's Common Stock, par value $.05
per share (the "Cerprobe Stock").
(d) Closing Adjustment to Proposed Cash Payment. At
the Closing (as hereinafter defined), the parties shall in good faith estimate
the net worth of the Company as of the Closing (the "Estimated Net Worth"). The
Proposed Cash Payment shall be reduced by $1.00 for every $1.00 or part thereof
by which the Estimated Net Worth of the Company is less than $1,381,000, and
shall be increased by $1.00 for every $1.00 or part thereof by which the
Estimated Net Worth of Company is greater than $1,381,000, to arrive at the
"Closing Cash Payment".
(e) Post-Closing Adjustment to Closing Cash Payment.
(i) Within forty-five (45) days of the
Closing, Cerprobe shall generate a balance sheet for Company, without audit, as
of the Closing (the "Closing Balance Sheet"), prepared on a basis consistent
with the September Balance Sheet (as hereinafter defined). Acquisition shall
provide Mayer and his agents and representatives with full and complete access
to the books of account and records of Company then in its possession, and its
full cooperation to facilitate the compilation of information necessary for
Mayer to determine the net worth of Company as of the Closing. Cerprobe shall
provide Mayer with a copy of the Closing Balance Sheet and a computation of the
net worth of Company as of the Closing Date, within fifty (50) days of the
Closing.
(ii) The Closing Cash Payment shall be
reduced by $1.00 for every $1.00 or part thereof by which the net worth of
Company, computed using the Closing Balance Sheet (the "Actual Net Worth"), is
less than the Estimated Net Worth of Company, and shall be increased by $1.00
for every $1.00 or part thereof by which the Actual Net Worth of Company is
greater than the Estimated Net Worth of Company.
(iii) The amount of the adjustment to the
Closing Cash Payment pursuant to this Section 3.2(e), if any, shall be due and
payable from Mayer to Cerprobe if the Closing Cash Payment is reduced, or from
Cerprobe to Mayer if the Closing Cash Payment is increased, as the case may be,
in cash or by certified check, within fifteen (15) days following Mayer's
receipt of the Closing Balance Sheet, or, if Mayer disputes the information
contained in the Closing Balance Sheet or Cerprobe's calculations based
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thereon, five (5) days following the final resolution of the dispute as provided
for in Section 3.2(e)(iv) below. Cerprobe may but shall not be required to
resort to its rights under the Escrow and Security Agreement (as hereinafter
defined) to collect sums due from Mayer pursuant to this Section 3.2(e).
(iv) In the event that Mayer shall dispute
the information set forth by Cerprobe in the Closing Balance Sheet, or
Cerprobe's computation of the Actual Net Worth of Company as of the Closing,
then within ten (10) business days following the date of the delivery by
Cerprobe of its calculation of Actual Net Worth of Company, Mayer shall provide
written notice to Cerprobe specifying generally the amount disputed and the
basis for the dispute together with supporting documentation reflecting the
analysis of and justification for any recomputation made. Mayer and Cerprobe
shall make good faith efforts to resolve the dispute through negotiation for a
period of ten (10) business days following the written notice from Mayer to
Cerprobe identifying and describing generally the nature of the dispute. In the
event the parties are unable to finally resolve the dispute within such ten (10)
business day period, the parties to the dispute may elect by mutual agreement to
extend the period of negotiation (and may elect by mutual agreement to engage a
mediator to assist in such negotiation). To the extent that any matter remains
unresolved following negotiations, the unresolved matters only shall be resolved
by binding arbitration before one (1) arbitrator who shall be an audit partner
at the San Jose, California office of the independent public accounting firm of
Ernst & Young LLP having not less than ten (10) years of audit experience. The
selection of the arbitrator shall be made by the managing partner of the San
Jose, California office of Ernst & Young LLP, in the exercise of his sole
discretion. The decision of the arbitrator shall be a final resolution of the
parties' dispute and non-appealable and shall not be subject to further
arbitration or review. Each party to the dispute shall bear their respective
expenses incurred in respect of the dispute, however, all costs and expenses of
the arbitrator shall be borne equally by Mayer and Cerprobe.
(f) Determining Net Worth. The costs and commissions
incurred by Company in connection with the Merger, including, but not limited
to, legal, accounting, consulting and broker costs and commissions shall be
taken into account in determining the Estimated Net Worth and the Actual Net
Worth of Company; provided, however, that only one half (1/2) of the Accounting
Fees (as defined in this Section 3.2(f)) shall be taken into account in
determining the Estimated Net Worth and the Actual Net Worth of Company.
"Accounting Fees" means the KPMG Peat Marwick fees for work performed for
Company in connection with the financial statements of Company at September 30,
1996, December 31, 1996 and the Closing Balance Sheet.
3.3 Shareholders After the Merger. Immediately after the
Merger, Cerprobe will continue to be the sole stockholder of Acquisition and
Mayer will be a stockholder of Cerprobe.
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3.4 Rights of Dissenting Shareholders. Notwithstanding
anything in this Agreement to the contrary, shares of the Company Stock that are
issued and outstanding immediately prior to the Effective Time and that are held
by shareholders who have not voted such shares in favor of the Merger and who
shall have delivered a written demand for appraisal and payment of the fair
value of the shareholders' shares in the manner provided in the California
General Corporation Law (the "Dissenting Shares"), shall not be exchangeable for
any shares of the Cerprobe Stock or any portion of the Closing Cash Payment as
adjusted in Section 3.2(e) hereof, unless and until such holder shall have
failed to perfect or shall have effectively withdrawn or lost his/her right to
appraisal and payment under the California General Corporation Law. If such
holder shall have so failed to perfect or shall have effectively withdrawn or
lost such right, his/her shares shall thereupon be deemed to have been exchanged
into and to have become exchangeable for, upon the Effective Time, the right to
receive the number of shares of the Cerprobe Stock and portion of the Closing
Cash Payment as adjusted in Section 3.2 hereof, without interest thereon and
subject to the other provisions of Section 3.2 hereof.
3.5 Company Warrants and Options. No Cerprobe Stock or any
other securities of Cerprobe of any nature and type whatsoever, including any
options or warrants to acquire the Cerprobe Stock or other securities of
Cerprobe shall be issued in connection with or in exchange for any options,
warrants or other rights to acquire stock of Company. Mayer shall have caused
all options and warrants to acquire stock of Company to be exercised or
canceled, and to be of no further force or effect, prior to the Closing.
3.6 Treasury Stock of Company. All shares of the Company Stock
owned directly or indirectly by Company as treasury stock, shall, upon the
Merger, be cancelled and all rights with respect thereto shall cease to exist,
and no shares of the Cerprobe Stock shall be issued or exchanged therefor.
3.7 Fractional Shares. No fractional shares of the Cerprobe
Stock or any scrip shall be distributed upon the exchange of the Cerprobe Stock
for the Company Stock, but, in lieu thereof, all such fractional interests, if
any, shall be converted into the nearest whole share (half shares being rounded
down).
3.8 Cerprobe Common Stock and Closing Cash Payment. At the
Closing, Mayer shall deliver to Acquisition stock certificates representing the
Company Stock. At the Closing, Cerprobe shall deliver to Mayer the Closing Cash
Payment and stock certificates representing the Cerprobe Stock; provided,
however, that if Cerprobe is unable to deliver stock certificates representing
the Cerprobe Stock at the Closing, then Cerprobe will deliver such stock
certificates to Mayer within three (3) business days of the Closing.
3.9 Restricted Stock. The Cerprobe Stock to be issued pursuant
to Section 3.2 hereof, will be "Restricted Stock" and will not have been
registered under the Securities Act of 1993, as amended (the "1933 Act"), or any
state securities act, and shall be subject
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to Rule 144 promulgated under the 1933 Act. The certificates representing the
Cerprobe Stock will bear the following legend (and stop transfer orders will be
placed against the transfer, hypothecation or other disposition thereof with
Cerprobe's transfer agent), along with such other legends as are required by law
or as Cerprobe deems appropriate:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY
STATE SECURITIES ACT, AND ARE "RESTRICTED SECURITIES" WITHIN
THE MEANING OF SUCH ACTS. THE SHARES MAY NOT BE SOLD,
TRANSFERRED, HYPOTHECATED OR OTHERWISE DISTRIBUTED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION UNDER SUCH ACTS OR THE
RECEIPT OF AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER
THAT SUCH REGISTRATION IS NOT REQUIRED.
3.10 Escrow of the Cerprobe Stock. At the Closing, Mayer,
Cerprobe and an escrow agent (the "Escrow Agent") shall have entered into an
Escrow and Security Agreement (the "Escrow and Security Agreement").
ARTICLE IV
Earn-Out
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4.1 General. Subject to the terms and conditions of Article IV
hereof, as additional consideration for the Company Stock, Mayer may receive
from Cerprobe up to but not more than Five Hundred Thousand Dollars ($500,000)
and up to but not more than 50,000 validly issued, fully paid non-assessable
shares of Cerprobe common stock, par value $.05 per share. The additional
consideration set forth in Section 4.2 hereof and the additional consideration
set forth in Section 4.3 hereof are independent of each other and it is possible
for Mayer not to receive any additional consideration under Section 4.2 or
Section 4.3, or if certain goals are met for Mayer to receive additional
consideration under either Section 4.2 or Section 4.3, or both Section 4.2 and
Section 4.3.
4.2 Total Net Sales.
(a) Earn-Out for Total Net Sales. Subject to the
terms of Article IV hereof, Mayer shall be entitled to receive from Cerprobe up
to but not more than Two Hundred Fifty Thousand Dollars ($250,000.00) and 25,000
validly issued, fully paid non-assessable shares of Cerprobe common stock, par
value $.05 per share (the "Cash and Stock for Total Net Sales"), as follows:
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(i) If the "Total Net Sales of Acquisition"
(as hereinafter defined) are greater than or equal to $16,239,600 (which is 90%
of $18,044,000), then Mayer shall receive the entire amount of Cash and Stock
for Total Net Sales; and
(ii) If the Total Net Sales of Acquisition
are less than $12,630,800 (which is 70% of $18,044,000), then Mayer shall not
receive any of the Cash and Stock for Total Net Sales; and
(iii) If the Total Net Sales of Acquisition
are greater than $12,630,800 (which is 70% of $18,044,000), but less than
$16,239,600 (which is 90% of $18,044,000), then Mayer shall receive a prorata
portion of the Cash and Stock for Total Net Sales (e.g., 5% of the $250,000 and
5% of the 25,000 shares of Cerprobe common stock for each whole percentage point
between 70% and 90%, when the Total Net Sales of Acquisition are compared to
$18,044,000).
(b) Definition of Total Net Sales. Total Net Sales of
Acquisition shall mean the total amount of all sales of inventory and all
services performed by Acquisition in the ordinary course of business during the
calendar year ended December 31, 1997, less all returns and allowances
(calculated in accordance with generally accepted accounting principles,
consistent with the past practices of Company).
4.3 Net Income Before Interest and Taxes.
(a) Earn-Out for NIBIT. Subject to the terms of
Article IV hereof, Mayer shall be entitled to receive from Cerprobe up to but
not more than Two Hundred Fifty Thousand Dollars ($250,000.00) and 25,000
validly issued, fully paid non-assessable shares of Cerprobe common stock, par
value $.05 per share (the "Cash and Stock for NIBIT"), as follows:
(i) If the "NIBIT of Acquisition" (as
hereinafter defined) is greater than or equal to $1,458,900 (which is 90% of
$1,621,000), then Mayer shall receive the entire amount of Cash and Stock for
NIBIT.
(ii) If the NIBIT of Acquisition is less
than $1,134,700 (which is 70% of $1,621,000), then Mayer shall not receive any
of the Cash and Stock for NIBIT; and
(iii) If the NIBIT of Acquisition is
greater than $1,134,700 (which is 70% of $1,621,000), but less than $1,458,900
(which is 90% of $1,621,000), then Mayer shall receive a prorata portion of the
Cash and Stock for NIBIT (e.g., 5% of the $250,000 and 5% of the 25,000 shares
of Cerprobe common stock for each whole percentage point between 70% and 90%,
when the NIBIT of Acquisition is compared to $1,621,000).
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(b) Definition of NIBIT. NIBIT of Acquisition for
purposes of Article IV, shall be the net income from operations before interest
and taxes of Acquisition for the calendar year ended December 31, 1997
(calculated in accordance with generally accepted accounting principles,
consistent with the past practices of Company), such NIBIT to be adjusted only
as follows:
(i) NIBIT shall not reflect any corporate
management or "home office" fee paid (or accrued) to Cerprobe or other fees of
Cerprobe (unless such fees are charged for engineers or programmers but not for
managerial or administrative personnel, at rates not to exceed 130% of the then
current employees hourly rate) directly or indirectly allocated by Cerprobe, but
shall reflect all expenses and costs directly attributable to Acquisition's
business operations (including, without limitation, all costs and expenses of
salaries and bonuses of Mayer excluding the earn-out consideration provided for
in Article IV hereof or fees and charges related to the Merger and excluding any
charges for payments to Anderson under the Anderson Purchase Agreement (as
hereinafter defined)) paid (or accrued) by Acquisition and properly chargeable
to expense on the separate books of accounts of Acquisition.
(ii) NIBIT shall not reflect any deduction
for federal, state, local and foreign income taxes, but shall reflect deductions
for all other taxes.
(iii) NIBIT shall not reflect any deduction
for interest on money borrowed from financial institutions, but shall reflect
deductions for all other interest.
(iv) NIBIT shall take into account all
work-in-process as determined in accordance with generally accepted accounting
principles, using the actual cost of labor, materials, other direct costs, and
overhead, where all of these costs can be recovered.
4.4 Calculations. The Total Net Sales of Acquisition and the
NIBIT of Acquisition shall be determined by KPMG Peat Marwick, or Cerprobe's
then regularly engaged certified public accounting firm, at the time it
completes the audit of Acquisition's books and records for the calendar year
ended December 31, 1997. Attached hereto as Schedule 4.4 is the Quarterly
Projected Statement of Income that was prepared by Mayer to arrive at the Total
Net Sales of Acquisition and the NIBIT of Acquisition.
4.5 Payment and Issuance. The Cash and Stock for Total Net
Sales and the Cash and Stock for NIBIT shall be paid and issued to Mayer within
fifteen (15) days of the day the 1997 audit is complete, unless Cerprobe or
Acquisition, in their sole discretion, elect to pay/issue one hundred percent
(100%) (or such other percentage as Cerprobe and Mayer may agree) of the Cash
and Stock for Total Net Sales and the Cash and Stock for NIBIT, at an earlier
date. The common stock of Cerprobe that is issued to
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Mayer pursuant to the Article IV, if any, shall be valued at Ten Dollars
($10.00) per share for purposes of this Article IV, and any adjustments to the
Cash and Stock for Total Net Sales and Cash and Stock for NIBIT shall be prorata
so that the amount of the cash being paid, if any, and the value of the common
stock of Cerprobe being issued, if any, are always equal.
4.6 Operations. The parties hereto further understand and
agree that nothing contained in this Article IV shall be construed or be deemed
to imply that Cerprobe or Acquisition shall in any respect be restricted in the
manner in which the business of Acquisition shall be operated, and that Cerprobe
shall at all times be entitled to vote its shares of the capital stock of
Acquisition and the representatives and designees of Cerprobe who shall hold
directorships in Acquisition shall at all times be able to take any and all
action deemed by any of them, in the exercise of their sole discretion,
necessary or appropriate to protect and preserve the interests of Acquisition.
ARTICLE V
Representations and Warranties
------------------------------
5.1 General Statement. The parties make the
representations and warranties to each other which are set forth in this Article
V. Subject to Article VII hereof, all representations and warranties which are
set forth in this Agreement and in any financial statement, exhibit, schedule or
document delivered by or on behalf of a party hereto or their representative to
the other party pursuant to this Agreement shall survive the execution and
delivery of, and the consummation of the transactions contemplated by, this
Agreement and the Effective Time (and none shall merge into any document
executed in connection herewith), regardless of any knowledge or belief,
investigation or lack of investigation by any of the parties to this Agreement.
No specific representation or warranty shall limit the generality or
applicability of a more general representation or warranty. Representations and
warranties of the parties are made as of the Closing.
5.2 Representations and Warranties of Cerprobe and
Acquisition. To induce Company and Mayer to enter into this Agreement and to
perform their respective obligations hereunder, and with full knowledge that
Mayer will rely thereon, Cerprobe and Acquisition, jointly and severally,
represent and warrant the following, subject only to the provisions of Article
VII:
(a) Organization. Cerprobe and Acquisition
are each corporations duly formed, validly existing and in good standing under
the laws of the State of Delaware. Acquisition is a wholly owned subsidiary of
Cerprobe.
(b) Power and Authority. Each of Cerprobe
and Acquisition has full corporate power and authority to execute and deliver
this Agreement and the other
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agreements referenced herein to which Cerprobe or Acquisition is a party, and to
consummate the Merger and the other transactions contemplated hereby. The
execution and delivery by Cerprobe of this Agreement and the other agreements
referenced herein to which Cerprobe is a party, and the consummation of the
Merger and the other transactions contemplated hereby and thereby, have been
duly authorized and approved by Cerprobe's Board of Directors. The execution and
delivery by Acquisition of this Agreement and the other agreements referenced
herein to which Acquisition is a party, and the consummation of the Merger and
the other transactions contemplated hereby and thereby, have been duly
authorized and approved by Acquisition's Board of Directors and Acquisition's
sole stockholder. No other corporate actions on the part of Cerprobe or
Acquisition are required to authorize the execution and delivery of this
Agreement, the other agreements referenced herein to which Cerprobe and
Acquisition are parties, or the consummation of the Merger or other transactions
contemplated hereby or thereby.
(c) Enforceability. This Agreement and the
other agreements referenced herein to which Cerprobe or Acquisition is a party
have been duly executed and delivered by Cerprobe or Acquisition, as applicable,
and constitute legal, valid and binding obligations of Cerprobe and Acquisition,
enforceable against Cerprobe and Acquisition, as applicable, in accordance with
their respective terms.
(d) Charter and ByLaws. Cerprobe has
heretofore furnished to Mayer a complete and correct copy of Cerprobe's
certificate of incorporation and bylaws, as amended to date.
(e) Cerprobe Stock. The Cerprobe Stock,
when issued pursuant to Section 3.2 hereof, will be duly authorized, validly
issued, fully paid and non-assessable.
(f) Financial Statements of Cerprobe.
Cerprobe has previously delivered to Company true, complete and correct copies
of the following financial statements of Cerprobe and its subsidiaries (the
"Cerprobe Financial Statements"): (i) audited consolidated operating statement
for the twelve (12) month period ended December 31, 1995, and related notes
thereto (the "Audited Cerprobe P&L); (ii) audited consolidated balance sheet as
of December 31, 1995, and related notes thereto (the "Audited Cerprobe Balance
Sheet"); (iii) unaudited consolidated operating statement for the nine (9) month
period ended September 30, 1996 (the "Unaudited Cerprobe P&L"); and (iv)
unaudited consolidated balance sheet as of September 30, 1996 (the "Unaudited
Cerprobe Balance Sheet"). Each of the Audited Cerprobe Balance Sheet and
Unaudited Cerprobe Balance Sheet fairly presents the financial condition of
Cerprobe and its subsidiaries, on a consolidated basis, as of the respective
dates thereof. Each of the Audited Cerprobe P&L and Unaudited Cerprobe P&L
fairly presents the results of the operations of Cerprobe and its subsidiaries,
on a consolidated basis, for the respective periods then ended. The Cerprobe
Financial Statements are attached to Schedule 5.2(f) hereto.
12
(g) Exchange Act. Cerprobe has a class of
securities registered under Section 12(g) of the Securities Exchange Act of
1934, as amended, and has filed all the materials required to be filed as
reports pursuant to the Securities Exchange Act of 1934, as amended, for a
period of at least twelve months preceding the date hereof (or for such shorter
period as Company was required by law to file such material), and all such
filings have been made on a timely basis.
(h) Absence of Changes. Since September 30,
1996, except as disclosed in any reports filed with the SEC pursuant to the
Securities Exchange Act of 1934, as amended, there has not been any material
adverse change in the financial condition of Cerprobe and its subsidiaries,
considered on a consolidated basis.
(i) Absence of Conflicting Agreements;
Requirements of Law. Neither the execution and delivery by Cerprobe of this
Agreement nor the issuance and delivery of the Cerprobe Stock will conflict with
or result in a breach of or default under any organizational documents or
contractual obligation to which Cerprobe or any of its subsidiaries is a party
or by which any of them or any of their properties or assets is otherwise bound,
or violate any requirement of law applicable to Cerprobe or any of its
subsidiaries, or any of their properties or assets. No governmental filing,
consent, license, approval, permit, authorization or other action is required of
Cerprobe in connection with the execution and delivery of this Agreement and the
issuance and delivery of the Cerprobe Stock by Cerprobe, except for (i) the
filing with the Secretary of State of California and the Secretary of State of
Delaware of the applicable Merger Documents; and (ii) the filing of applicable
blue sky documents.
(j) Accuracy of Documents, Representations
and Warranties. The copies of all documents furnished to Company or Mayer and
their representatives by or on behalf of Cerprobe or Acquisition and its or
their representatives are true, complete and correct. No representation or
warranty of Cerprobe or Acquisition contained in this Agreement or the other
agreements referenced herein to which Cerprobe or Acquisition is a party, and no
statement contained in the exhibits or the other documents delivered by or on
behalf of Cerprobe, Acquisition or its or their representatives pursuant to or
in connection with this Agreement or any of the transactions contemplated hereby
contains any untrue statement of a material fact, or omits to state any material
fact required to be stated herein or therein in order to make the statements
contained herein or therein not misleading.
5.3 Representations and Warranties of Mayer. To
induce Cerprobe and Acquisition to enter into this Agreement and to perform
their respective obligations hereunder, and with full knowledge that Cerprobe
and Acquisition will rely thereon, Mayer represents and warrants the following,
subject only to the provisions of Article VII and the exceptions expressly and
specifically set forth in the schedules designated in this Section 5.3
(collectively, the "Disclosure Schedules"):
13
(a) Ownership of Stock. Mayer owns all of
the issued and outstanding shares of the capital stock of Company, which shares
in the aggregate constitute the Company Stock. Mayer has good title to and
rightful possession of the Company Stock, free and clear of all liens, claims,
rights, charges, encumbrances, and security interests of whatsoever nature or
type.
(b) Power and Authority. Mayer has the full
right and capacity, for himself and for and on behalf of Company, to execute and
deliver this Agreement and the other agreements referenced herein to which Mayer
is or will be a party, and to consummate the Merger and the other transactions
contemplated hereby and thereby. Company has the full right, power and authority
to execute and deliver this Agreement and the other agreements referenced herein
to which Company is or will be a party, and to consummate the Merger and the
other transactions contemplated hereby and thereby, and such actions have been
duly and validly authorized and approved by Company's Board of Directors, and no
other corporate actions on the part of Company are required to authorize the
execution and delivery of this Agreement, the other agreements referenced herein
to which Company is a party, or the consummation of the Merger or the other
transactions contemplated hereby or thereby.
(c) Enforceability. This Agreement and each
of the other agreements referenced herein to which Mayer, Company, or either of
them, is a party have been duly executed and delivered by Mayer and Company, as
applicable, and constitute legal, valid and binding obligations of Mayer and
Company, enforceable against Mayer and Company, as applicable, in accordance
with their respective terms.
(d) Conflicts; Consents. Except as
disclosed in Schedule 5.3(d) hereto, neither the execution and delivery by Mayer
or Company of this Agreement or any of the other agreements referenced herein to
which Mayer or Company is a party, nor the consummation of the transactions
contemplated hereby or thereby, will conflict with, violate or result in a
breach of or default under (with or without the giving of notice or the passage
of time, or both): (i) the Articles of Incorporation or the Bylaws, and any
amendments thereto, of Company, true and correct copies of which are attached to
Schedule 5.3(g); (ii) any material license, instrument, contract or agreement to
which Mayer or Company is a party or by which Mayer or Company or any of the
assets of Company is bound; (iii) any order, writ, injunction or decree that is
applicable to Mayer or Company or any of the assets of Company; or (iv) to
Mayer's best knowledge and belief any law, rule or regulation that is applicable
to Mayer or Company or any of the assets of Company. Except as set forth in
Schedule 5.3(d) hereto, neither the execution and delivery by Mayer or Company
of this Agreement or any of the other agreements referenced herein to which
Mayer or Company is a party, nor the consummation of the transactions
contemplated hereby or thereby, will result in the creation of any lien, claim,
right, charge, encumbrance or security interest of any nature or type whatsoever
with respect to any of the Company Stock or any of the assets of Company. Except
as set forth in Schedule 5.3(d) hereto,
14
neither the execution and delivery by Mayer or Company of this Agreement or the
other agreements referenced herein to which Mayer or Company is a party, nor the
consummation of the transactions contemplated hereby or thereby, will require
Company or Mayer to obtain any consent, permit, license or approval of, or to
make any filing with, any governmental or private entity, body, or other person,
firm or other entity, except for the filing with the Secretary of State of
California and the Secretary of State of Delaware of the applicable Merger
Documents, and any Hart-Scott-Rodino filings that may be required.
(e) Capital Stock. Company has authorized
capital stock consisting of 10,000,000 shares of Common Stock, of which 100,000
shares are issued and outstanding and owned, directly and beneficially of
record, by Mayer. Each share of the Company Stock has been validly authorized
and issued, is fully paid and nonassessable, and is free of preemptive rights of
every nature and type. Except for the Company Stock, there are no other
authorized or outstanding securities of Company of any class, kind or character
whatsoever. Except as disclosed in Schedule 5.3(e) hereto, there are no
outstanding subscriptions, options, warrants or other rights, agreements or
commitments obligating Company to issue any additional shares of capital stock,
or any options or rights with respect thereto, or any securities convertible
into or exchangeable for any shares of capital stock. There are no outstanding
obligations of Company, contractual or otherwise, to repurchase, redeem or
otherwise acquire any outstanding shares of the capital stock of Company or any
of its subsidiaries.
(f) Subsidiaries and Affiliates. Except as
disclosed in Schedule 5.3(f) hereto, Company does not have any subsidiaries or
any other equity investment in any entity. Except as disclosed in Schedule
5.3(f) hereto, Mayer does not have any equity investments in any "Affiliates."
For purposes of this Agreement, the term "Affiliates" shall mean all entities in
which Mayer is an officer or director, or in which Mayer, directly or
indirectly, owns or controls ten percent (10%) or more of the equity securities
of the entity, and which entity is engaged in any aspect of the Prober
Refurbishing Business.
(g) Organization. Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California. The copies of the Articles of Incorporation and Bylaws of
Company, and all amendments thereto which are attached to Schedule 5.3(g)
hereto, are true, complete and correct copies of such documents, as presently in
effect. The minutes of the meetings of the shareholders and/or board of
directors of Company that have been delivered to Cerprobe and Acquisition are
true, complete and correct copies of such minutes and accurately reflect the
events that took place at such meetings. The unanimous consents in lieu of the
meetings of the shareholders and/or board of directors of Company that have been
delivered to Cerprobe and Acquisition are true, complete and correct copies of
such unanimous consents, and the information contained therein is true and
correct.
15
(h) Qualification. Except as disclosed in
Schedule 5.3(h), hereto, Company has qualified as a foreign corporation, and is
in good standing, under the laws of all jurisdictions where the nature of its
business or the nature or location of its assets requires such qualification
(all of such jurisdictions are referred to herein collectively as the "Foreign
Jurisdictions") or if not so qualified, the failure to be so qualified will not
materially and adversely affect its financial condition, business, operations,
assets or business prospects. Schedule 5.3(h) hereto, contains a list of the
Foreign Jurisdictions and a list of all addresses at which Company conducts
business or owns or holds assets.
(i) Assets.
(i) Company has good title to and
rightful possession of all of the assets reflected in the September Balance
Sheet (as defined in Section 5.3(s) hereof) delivered to Cerprobe and
Acquisition and attached to Schedule 5.3(s) hereto, and to all of the assets
acquired since the date of the September Balance Sheet (other than those assets
disposed of after the date of the September Balance Sheet only in the ordinary
course of business and not in violation of this Agreement), free and clear of
any and all mortgages, liens, pledges, privileges, claims, rights, charges,
encumbrances and security interests of whatsoever type or nature, except: (A)
liens for current taxes not yet delinquent or taxes that are being contested in
good faith, which contested taxes, if any, are listed on Schedule 5.3(i) hereto;
and (B) liens and liabilities to the extent reflected in the September Balance
Sheet, the September P&L (as defined in Section 5.3(s) hereof), any of the
footnotes to the September Balance Sheet or the September P&L, or any Schedule
specifically referred to in Section 5.3 hereof.
(ii) The inventories of Company
reflected in the September Balance Sheet and those items of inventory acquired
after the date of the September Balance Sheet until the Effective Time are
carried on the books of account of Company and are stated at not more than the
lower of cost or market, with adequate adjustments for obsolete, obsolescent or
otherwise not readily saleable items. The inventories of Company are in good and
saleable condition. Since the date of the September Balance Sheet, there have
been no write-downs in the value of the inventories or write-offs with respect
to the inventories.
(iii) The furniture, fixtures and
equipment of Company reflected in the September Balance Sheet and items of
furniture, fixtures and equipment acquired since the date of the September
Balance Sheet to the Effective Time are in good working condition.
(j) Bank Accounts. Schedule 5.3(j) hereto,
sets forth the name and location of each bank in which Company has an account,
lock box or safe deposit box, the number of each such account or box, a
description of the contents of each box, the
16
names of all signatories to any account or box and the persons authorized to
draw thereon or have access thereto. No power of attorney exists from Company.
(k) Ability to Conduct Business. To Mayer's
best knowledge and belief, the assets and properties of Company are sufficient
to permit the Surviving Corporation to conduct the Prober Refurbishing Business
after the Effective Time in the same manner it is currently being conducted by
Company.
(l) Real Property; Leases. A true, complete
and correct list of all real property of every kind, and all interests in real
property, which is owned, leased, occupied, or used by Company is disclosed in
Schedule 5.3(l) hereto.
(m) Contracts. Disclosed in and attached to
(unless otherwise noted) Schedule 5.3(m) hereto, is a true, complete and correct
list of every (written or oral):
(i) union, collective bargaining or
similar agreement, together with all amendments thereto or
interpretations thereof, such as arbitration decisions and the
like;
(ii) profit sharing, deferred
compensation, bonus, stock option, stock purchase, pension,
retainer, consulting, retirement, welfare (including, without
limitation, retiree welfare benefit) or material incentive
plan or agreement maintained or sponsored by Company, or to
which Company contributes;
(iii) plan of Company providing for
material "fringe benefits" to its employees or former
employees, including, but not limited to, vacation, sick
leave, severance pay, medical, hospitalization, life insurance
and other plans, or related benefits;
(iv) employment agreement that is
not terminable at will and without penalty on thirty (30) days
or less prior written notice or that provides for payments
upon or after termination beyond payments for accrued wages
and benefits earned through the effective date of termination;
(v) agency, sales, brokerage,
wholesaling, franchise, distributorship or similar agreement
or contract;
(vi) loan agreement or letter of
credit;
(vii) personal property lease which
reasonably may be expected to involve future obligations or
benefits in excess of $1,000, individually, or $12,000, in the
aggregate, in any one calendar year;
17
(viii) security or pledge agreement;
(ix) mortgage or deed of trust;
(x) purchase commitment to, or
contract or agreement with, any supplier which reasonably may
be expected to involve future obligations or benefits in
excess of $12,000;
(xi) contract or agreement relating
to research and development;
(xii) license, authority or permit
granted by Company to any person or entity;
(xiii) contract or agreement to
which Company is a party or by which Company or any of its
assets is bound and is not otherwise referred to in Section
5.3(m)(i) through (xii) above, which reasonably may be
expected to involve future obligations or benefits in excess
of $12,000 in any one calendar year;
(xiv) contract or agreement to which
Company is a party or by which Company or any of its assets is
bound and is not otherwise referred to in Section 5.3(m)(i)
through (xii) above, which is either individually or
collectively, material to the financial condition, business,
operations, assets or business prospects of Company; and
(xv) contract or agreement to which
Company is a party, or by which Company or any of its assets
is bound, regarding or pertaining to the manufacture or supply
of any products or services to any customer of Company,
whether an individual, corporation or other business entity,
which reasonably may be expected to involve future obligations
or benefits in excess of $12,000 in any one calendar year.
All of the foregoing are referred to in this Agreement
individually as a "Contract" and collectively as the "Contracts." Except as
disclosed in Schedule 5.3(m) hereto, to Mayer's best knowledge and belief each
of the Contracts is in full force and effect and enforceable in accordance with
its respective terms and conditions, and will continue as such following the
Effective Time and the other transactions contemplated in this Agreement, and:
(i) there is not existing any
default, or event or condition which, with or without the
giving of notice or the passage of time, or both,
18
would constitute an event of default, by Company or any other
party thereto under any of the Contracts;
(ii) no party to any of the
Contracts has given any notice of default or termination, nor
does Mayer or Company believe that such notice will be given;
and
(iii) Company has not waived any
right under or with respect to any of the Contracts, the
waiver of which could have a material and adverse effect on
the financial condition, business, operations, assets or
business prospects of Company.
Except as disclosed in Schedule 5.3(m) hereto, Mayer does not
believe that there is a likelihood that any of the material customers of or
material suppliers to Company will terminate its or their business relationship
with Company for any reason whatsoever, including, without limitation, by reason
of the Merger and/or any change in ownership of Company.
Except as accurately and specifically disclosed on Schedule
5.3(m) hereto, there have not been, and there is not pending or contemplated,
any transactions between Company and Mayer, or between Company and any of the
Affiliates.
(n) Insurance. Schedule 5.3(n) hereto,
contains a description (identifying insurer, coverage, premiums, named insured,
deductibles and expiration date) of all policies of fire, liability and other
forms of insurance that currently are, or at any time within the past five (5)
years have been, maintained in force by or for the account of Company with
respect to its business and assets (such policies are hereinafter referred to as
the "Policies"). Except as disclosed in Schedule 5.3(n) hereto, the insurance
coverage provided by the Policies presently in force will not in any material
respect be affected by, and will not terminate or lapse by reason of, the
transactions contemplated hereby. Except as disclosed in Schedule 5.3(n) hereto,
at no time subsequent to January 1, 1991, has Company been denied insurance or
indemnity bond coverage. Except as disclosed in Schedule 5.3(n) hereto, at no
time subsequent to January 1, 1991, has any insurance carrier cancelled or
reduced any insurance coverage for Company or given any notice or other
indication of its intention to cancel or reduce any such coverage.
(o) Intellectual Property. Except as
disclosed in Schedule 5.3(o) hereto, Company owns or has the necessary rights
with respect to any patents and copyrights that are used by Company in the
conduct of its business and to Mayer's best knowledge and belief owns or has the
right to use all trademarks, trade names, fictitious names, service marks,
patents and copyrights that are used in the conduct of its business. Disclosed
in Schedule 5.3(o) hereto, is a true, complete and correct list of all
trademarks, trade names, fictitious names, service marks, patents, copyrights
and all registrations or
19
applications with respect thereto, and all licenses or rights under the same
which are presently or which have been, during the past two (2) years, owned or
used by Company (collectively, the "Intellectual Property"). Except as disclosed
in Schedule 5.3(o) hereto, none of the matters covered by the Intellectual
Property, nor any of the products or services sold or provided by Company, nor
any of the processes used or the business practices followed by Company,
infringes or has infringed upon any trademark, trade name, fictitious name,
service mark, patent or copyright owned by any person or entity (or any
application with respect thereto), or constitutes unfair competition. Company is
not obligated to pay any royalty or other payment with respect to any of the
Intellectual Property, except as disclosed in Schedule 5.3(o) hereto. To the
best knowledge and belief of Mayer, except as disclosed in Schedule 5.3(o)
hereto, no person or entity is producing, providing, selling or using products
or services that would constitute an infringement of any of the Intellectual
Property.
(p) Licenses and Permits. Schedule 5.3(p)
hereto, contains a true, correct and complete list of all licenses, permits,
franchises, certificates, consents, approvals, and authorizations (collectively
"Licenses"), issued to, or owned, held or used by Company and all applications
therefore that are pending. Company has all Licenses necessary for the conduct
of its business and the ownership and use of its assets, properties, the
premises occupied by it and the conduct of its business plans as presently
contemplated, except where the failure to have any such Licenses would not
result in a material and adverse effect on the financial condition, business,
operations, assets and business prospects of Company.
(q) Taxes. All federal, state, county,
local, foreign, and other taxes, including, without limitation, income, excise,
payroll, sales, use, unemployment, social security, occupation, franchise,
property, and other taxes, duties or similar charges (collectively, "Taxes")
levied, assessed, or imposed upon Company or its business, assets or properties
through the Closing, have been duly and fully paid or have been adequately
provided for on the Financial Statements (as hereinafter defined) or disclosed
in Schedule 5.3(q) hereto. In addition, except as disclosed on Schedule 5.3(q)
hereto, all filings, returns, and reports with respect to Taxes required by any
foreign or domestic law or regulation to be filed by Company on or prior to the
date hereof have been duly and timely filed. Except as disclosed in Schedule
5.3(q) hereto, there are no agreements, waivers or other arrangements (oral or
written) providing for extensions of time with respect to the assessment or
collection of unpaid Taxes, nor are there any actions, suits, proceedings,
inquiries, investigations or claims of any nature or kind whatsoever now pending
or threatened, against Company with respect to any such returns or reports, or
any such Taxes, or any matters under discussion with any federal, state, county,
local or other authority relating to Taxes.
(r) Labor Disputes; Unfair Labor Practices.
Except as disclosed in Schedule 5.3(r) hereto, there is no pending or threatened
labor dispute,
20
grievance, strike or work stoppage involving any group of employees of Company
which materially affects or which may materially affect the financial condition,
business, operations, assets or business prospects of Company. Except as
disclosed in Schedule 5.3(r) hereto, there is no pending or threatened charge or
complaint against or involving Company or any of its officers or employees, by
the National Labor Relations Board, the Occupational Health and Safety
Administration, the Department of Labor, or any similar federal, state or local
board or agency, or any representative thereof. Except as disclosed in Schedule
5.3(r) hereto, there are no unfair employment or labor practice charges or
complaints presently pending or threatened, by or on behalf of any employee of
Company.
(s) Financial Statements. Mayer has caused
Company previously to furnish Cerprobe and/or Acquisition with true, complete
and correct copies of the following unaudited financial statements of Company
(collectively the "Financial Statements"): (i) unaudited balance sheet as of
December 31, 1994 (the "1994 Balance Sheet"); (ii) unaudited operating statement
for the twelve (12) month period ended December 31, 1994 (the "1994 P&L"); (iii)
unaudited balance sheet as of December 31, 1995 (the "1995 Balance Sheet"); (iv)
unaudited operating statement for the twelve (12) month period ended December
31, 1995 (the "1995 P&L"); (v) unaudited balance sheet as of September 30, 1996
(the "September Balance Sheet"); and (vi) unaudited operating statement for the
nine (9) month period ended September 30, 1996 (the "September P&L"). The
Financial Statements have been prepared from the books and records of Company in
accordance with generally accepted accounting principles, applied on a basis
consistent with prior periods. Each of the 1994 Balance Sheet, 1995 Balance
Sheet and September Balance Sheet fairly presents the financial position of
Company as of the respective dates thereof. Each of the 1994 P&L, 1995 P&L and
September P&L fairly presents the results of the operations of Company for the
respective periods then ended. The Financial Statements are attached hereto as
Schedule 5.3(s).
(t) Books and Records. The books and
records of Company have been maintained in the usual, regular and ordinary
manner, and all entries with respect thereto have been made and all transactions
have been properly accounted for. All applicable corporate and other laws
relating to the maintenance of such books and records have been complied with by
Company, or the failure to comply with such laws will not have a material and
adverse effect on the financial condition, business, operations, assets or
business prospects.
(u) Liabilities. Except as either fully
disclosed in Schedule 5.3(u) hereto, or fully and properly reflected on or
reserved for in the September Balance Sheet or incurred by Company after the
date of the September Balance Sheet only in the ordinary course of business,
none of which are either individually or collectively material, and none of
which would require accrual or disclosure under generally accepted accounting
principles, Company has no: (i) debts, liabilities or obligations of a nature
required to be reflected or disclosed in financial statements prepared in
accordance with generally accepted
21
accounting principles; or (ii) other debts, liabilities or obligations, whether
accrued, absolute, contingent or otherwise, whether due or to become due,
relating to or arising out of any act, transaction, circumstance or state of
facts which occurred or existed on or before the Closing. Schedule 5.3(u)
hereto, contains a true, complete and correct list of all contracts and
agreements pursuant to which Company has guaranteed or indemnified any debt,
liability and obligation of any other person or entity, including, without
limitation, of Mayer or any of the Affiliates (including, without limitation,
the execution of any document obligating Company with respect to any performance
or other bond), or pursuant to which Company has pledged or otherwise encumbered
any of its assets (including, without limitation, any document obligating
Company with respect to any performance or other bond). Except as disclosed in
Schedule 5.3(u) hereto, Company is not indebted to Mayer or any of the
Affiliates, nor is Mayer or any of the Affiliates indebted to Company in any
amount for any purpose.
(v) Subsequent Events. Except as set forth
on Schedule 5.3(v) hereto, since September 30, 1996, Company has not:
(i) created or suffered to exist any
material liens or encumbrances with respect to any of its assets which have not
been discharged, other than liens for nondelinquent taxes;
(ii) sold or transferred any of its
assets or property (including sales and transfers to Mayer or any of the
Affiliates), other than the sale of inventories of products of Company sold in
the ordinary course of the business of Company;
(iii) suffered any material loss, or
material interruption in use, of any of its assets or properties (whether or not
covered by insurance), on account of fire, flood, riot, strike or other hazard
or Act of God;
(iv) suffered any material and
adverse change in its financial condition, business, operations, assets or
business prospects;
(v) written off any equipment as
unusable or obsolete or for any other reason;
(vi) waived any rights that would
have a material and adverse effect on the financial condition, business,
operations, assets or business prospects of Company;
(vii) paid Mayer or any Affiliate or
been charged by Mayer or any Affiliate for goods sold or services rendered, or
paid Mayer or any Affiliate or been charged by any Affiliate for corporate
overhead expenses, management fees, legal or accounting fees, capital charges,
or similar charges or expenses;
22
(viii) paid, declared or set aside
any dividends or other distributions on its securities of any class, or
purchased, exchanged or redeemed any of its securities of any class;
(ix) incurred or committed to incur
any individual capital expenditures in excess of $5,000 or in the aggregate in
excess of $20,000;
(x) incurred any indebtedness for
borrowed money;
(xi) paid any compensation or bonus
to Mayer except in the ordinary course of business or increased the compensation
payable to any employee except in the ordinary course of business;
(xii) paid or incurred any
management or consulting fees, which fees do not include legal or accounting
fees;
(xiii) hired any employee for an
annual salary in excess of $50,000 other than employees identified on Schedule
5.3(z) hereto;
(xiv) made any change in its
Articles of Incorporation or Bylaws, except for the filing of Articles of Merger
pursuant to which Acquisition will merge with and into Company;
(xv) merged or consolidated or
agreed to merge or consolidate with or into any corporation or other entity,
other than Acquisition; and
(xvi) without limitation by the
enumeration of any of the foregoing, entered into any material transaction other
than in the usual and ordinary course of business (the foregoing representation
and warranty shall not be deemed to be breached by virtue of the entry by Mayer
and/or Company into this Agreement or Mayer and Company consummating the Merger
or the other transactions contemplated hereby).
(w) No Material Changes. Except as
disclosed in Schedule 5.3(w) hereto, and except as is reflected in any
adjustment to the Proposed Cash Payment based upon an adjustment to the Net
Worth, since September 30, 1996, Company has not suffered or been threatened
with any material adverse change in its financial condition, business,
operations, assets or business prospects, including, without limiting the
generality of the foregoing, the existence or threat of any labor dispute, or
any material adverse change in, or loss of, any material relationship between
Company and any of its customers, suppliers or key employees.
(x) Renegotiation. Except as set forth in
Schedule 5.3(x) hereto, Company is not subject to any legal obligations to
renegotiate, and to Mayer's best
23
knowledge and belief there is no claim for a legal right to renegotiate any
material contract, loan, agreement, lease, sublease or instrument to which it is
now or has been bound.
(y) ERISA.
(i) Except as disclosed in Schedule
5.3(y) hereto, Company does not maintain, administer or contribute to, and did
not at any time during the past three (3) years, maintain, administer or
contribute to, any (A) employee pension benefit plan (as defined in Section 3(2)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
whether or not excluded from coverage under specific Titles or Subtitles of
ERISA) (the employee pension benefit plans disclosed in Schedule 5.3(y) hereto,
are hereinafter referred to as the "Pension Plans"); (B) employee welfare
benefit plan (as defined in Section 3(1) of ERISA, whether or not excluded from
coverage under specific Titles or Subtitles of ERISA) (the employee welfare
benefit plans disclosed in Schedule 5.3(y) hereto, are hereinafter referred to
as the "Welfare Plans"); or (C) bonus, deferred compensation, stock purchase,
stock option, severance plan, insurance or similar arrangement (the plans,
insurance or similar arrangements so disclosed in Schedule 5.3(y) hereto, are
hereinafter referred to as the "Employee Benefit Plans").
(ii) All Pension Plans, Welfare
Plans and Employee Benefit Plans and any related trust agreements or annuity
contracts (or any related trust instruments) are in substantial compliance and
have been operated in all material respects in accordance with ERISA, the Code,
other federal statutes, state law and the regulations and rules promulgated
pursuant hereto. All necessary governmental approvals for the Pension Plans, the
Welfare Plans and the Employee Benefit Plans have been obtained, a favorable
determination as to the qualification under the Code of each of the Pension
Plans and each amendment thereto has been made by the Internal Revenue Service,
and all of the Pension Plans remain qualified under the Code.
(iii) No Pension Plan, Welfare Plan,
"disqualified person" (as such term is used in Section 4975(c)(1) of the Code),
nor Mayer has engaged in any transaction in violation of Section 406 of ERISA or
any "prohibited transaction" (as defined in Section 4975(c)(1) of the Code)
other than any such transaction which is exempt under Section 408 of ERISA or
Section 4975(d) of the Code.
(iv) Company has not incurred any
liability to the Pension Benefit Guaranty Corporation ("PBGC") as a result of
the voluntary or involuntary termination of any Pension Plan subject to Title IV
of ERISA; there is currently no active filing by Company with the PBGC (and no
proceeding has been commenced by the PBGC) to terminate any Pension Plan subject
to Title IV of ERISA that is maintained or funded, in whole or in part, by
Company, and Company has not made a complete or partial withdrawal from a
multi-employer plan, as such term is defined in Section 3(37) of ERISA,
resulting in "withdrawal liability," as such term is defined in Section 4201 of
ERISA (without
24
regard to subsequent reduction or waiver of such liability under either Section
4207 or 4208 of ERISA).
(z) Employees and Consultants. Schedule
5.3(z) hereto, contains a true and complete list of all of the employees of
Company and such list correctly reflects their salaries, hourly wages, other
compensation (other than benefits under Employee Benefit Plans, Pension Plans,
or Welfare Plans) and dates of employment. Except as disclosed in Schedule
5.3(z) hereto, Company does not owe any past or present employee any sum other
than for accrued wages or salaries for the current payroll period, reimbursable
expenses, accrued vacation and holiday pay and sick leave rights.
(aa) Litigation. Except as disclosed in
Schedule 5.3(aa) hereto, there is no litigation or proceeding, in law or in
equity, and there are no proceedings or investigations or inquiries before any
commission or other governmental or private administrative authority, pending
or, to the best knowledge and belief of Mayer, threatened, against Company with
respect to or affecting the business or financial condition of Company, or the
consummation of the Merger or the other transactions contemplated herein, or
with respect to or affecting the Pension Plans, Welfare Plans or Employee
Benefit Plans of Company, or the use of the assets of Company (whether by
Cerprobe or the Surviving Corporation after the Effective Time or by Company
prior thereto).
(ab) Unasserted Claims. Except as disclosed
in Schedule 5.3 (ab) hereto, to the best knowledge and belief of Mayer, Mayer is
not aware of any breach or wrongdoing that if known by a potential claimant or
governmental authority would give rise to a claim or proceeding which, if
resolved with results unfavorable to Company, would have a material adverse
effect on the financial condition, business, operations, assets or business
prospects of Company or the consummation of the Merger or the other transactions
contemplated herein.
(ac) Absence of Product or Service
Warranties. Except as disclosed in Schedule 5.3(ac) hereto, or included in
Schedule 5.3(m) hereto, neither Company nor any officer, director, employee or
agent of Company has made any written, or to the best knowledge and belief of
Mayer any oral, warranties with respect to the quality or absence of defects of
the products or services of Company that Company has sold or performed and that
are in force as of the date hereof. Except as set forth on Schedule 5.3(ac)
hereto, there are no material claims pending or anticipated or threatened
against Company with respect to the quality of or absence of defects in such
products or services. Except as disclosed in Schedule 5.3(ac) hereto, Company
has not been required to pay direct, incidental, or consequential damages to any
person in connection with any of such products or services at any time during
the five (5) year period preceding the date hereof.
(ad) Absence of Judicial Orders. Except as
disclosed in Schedule 5.3(ad) hereto, Company is not a party to any decree,
order or arbitration award
25
(or agreement entered into in any administrative, judicial or arbitration
proceeding with any governmental authority) with respect to or affecting its
properties, assets, personnel, business activities or business prospects.
(ae) Compliance with Law. Except as
disclosed in Schedule 5.3(ae) hereto, Company is not in violation of, or
delinquent in respect to, any decree, order or arbitration award or law or
regulation of or agreement with, or any license or permit from, any governmental
authority to which any of its properties, assets, personnel or business
activities are subject, including, without limitation, laws and regulations and
the common law relating to occupational health and safety, equal employment
opportunities, fair employment practices, and sex, race, religion and age
discrimination, and the environment, the violation of or delinquency with
respect to would have a material and adverse effect on the financial condition,
business, operations, assets or business prospects of Company. Except as
disclosed in Schedule 5.3(ae) hereto, Company has not received notice of any
violation of a type referred to in any portion of this Section 5.3(ae).
(af) Hazardous Materials. Except as
disclosed in Schedule 5.3(af) hereto, there has been no storage, treatment,
generation, discharge, transportation or disposal of medical, industrial, toxic
or hazardous substances or solid or hazardous waste by or on behalf of Company,
in violation of any foreign, Federal, state or local law, statute, rule or
regulation or the common law or any decree, order, arbitration award or
agreement with or any license or permit from any foreign, Federal, state or
local governmental authority. Except as disclosed in Schedule 5.3(af) hereto,
there has been no spill, discharge, leak, emission, injection, escape, dumping,
or release of any kind by, on behalf of or attributable to, Company into the
environment (including, without limitation, into air, water or ground water) of
any materials including, without limitation, medical, industrial, toxic or
hazardous substance or solid or hazardous waste, as defined under any foreign,
federal, state or local law, statute, rule or regulation other than those
releases permissible under such law, statute, rule or regulation or allowable
under applicable permits. Schedule 5.3(af) hereto, sets forth a complete list of
all aboveground and underground storage tanks, vessels, and related equipment
and containers that are subject to foreign, federal, state or local laws,
statutes, rules or regulations, and sets forth their present contents, what the
contents have been at any time in the past, and what program of remediation, if
any, is contemplated with respect thereto.
(ag) Technology. The terms Invention,
Z-Stage Designs, Programs and Creations shall have the meanings assigned to them
in that certain Purchase Agreement, by and among Company, SILPRO, Inc., and
Andrew Anderson, dated January 15, 1997, as amended by that certain Addendum to
Purchase Agreement among Anderson, Company and SILPRO, Inc., dated January 15,
1997 (together the "Anderson Purchase Agreement"):
26
The Invention, Z-Stage Designs, Programs
and Creations are owned by SVTR free and
clear of any liens, claims and
encumbrances.
Except for elements in the public domain,
SVTR is the sole owner of all rights in and
to the Invention, Programs, Z-Stage Designs
and Creations.
To Mayer's actual knowledge, no person can
validly claim to be a "contractor to SVTR"
as used in the Anderson Purchase Agreement.
The Z-Stage Designs, Invention and Programs
owned by SVTR are the most current versions
thereof.
The Programs will function as intended with
at least the same reliability and accuracy
as the best previously achieved reliability
and accuracy.
The Programs do not contain any viruses,
worms, trojan horses or other code designed
to damage computer systems or data or to
permit unauthorized access.
Andrew Anderson has no other right, title
or interest in or to any technology that
SVTR has used before the execution of this
Agreement, except what was purchased from
Anderson by SVTR pursuant to the Purchase
Agreement.
Company has the necessary technology to
operate its Prober Refurbishing Business
without further payment to Anderson other
than pursuant to the Anderson Purchase
Agreement, and without any relationship
with SILPRO, Inc.
(ah) Accuracy of Documents, Representations
and Warranties. The copies of all documents furnished to Cerprobe, Acquisition,
or any of its or their representatives by or on behalf of Company, Mayer or any
of his, its or their representatives, are true, complete and correct. No
representation or warranty of Company or Mayer contained in this Agreement or
the other agreements to be executed by Company or Mayer pursuant hereto, and no
statement contained in the exhibits, the schedules or the other documents
delivered by or on behalf of Company or Mayer, or his, its or their
representatives pursuant to or in connection with this Agreement or the other
agreements to be executed by Mayer or Company pursuant hereto, or any of the
transactions contemplated hereby or thereby, contains any untrue statement of a
material fact, or omits to state any material fact required
27
to be stated herein or therein in order to make the statements contained herein
or therein not misleading.
5.4 Reliance.
(a) By Cerprobe and Acquisition. Neither
Cerprobe nor Acquisition is relying on any oral or written representations,
warranties, statements or assurances from Company or Mayer other than those set
forth in this Agreement, and those set forth in the certificates, documents,
exhibits or schedules delivered in connection with this Agreement. Neither
Cerprobe nor Acquisition has seen or heard of any advertising of any offer to
sell the Company Stock.
(b) By Mayer and Company. Neither Company
nor Mayer is relying on any oral or written representations, warranties,
statements or assurances from Cerprobe or Acquisition other than those set forth
in this Agreement, and those set forth in the certificates, documents, exhibits
or schedules delivered in connection with this Agreement.
5.5 Best Knowledge and Belief. A representation or
warranty that is made to the "best knowledge and belief" of Company or Mayer is
based on (a) the knowledge Mayer actually has, (b) the knowledge Mayer should be
expected to have as someone who is the sole shareholder and President of
Company, directly involved with and responsible for the day to day operations of
Company, and (c) the knowledge he could have obtained after performing
reasonable due diligence that would include but not be limited to making
appropriate inquiries of Company's managers, employees and 1996 consultants.
5.6 Disclosures. Mayer and Company may make
disclosures on the schedules referred to in Section 5.3 hereof that may not be
required by this Agreement to be disclosed, and the disclosure of such a matter
shall not create any inference that similar matters, or that other matters not
expressly required by this Agreement to be disclosed on a schedule referred to
in Section 5.3 hereof, are required to be disclosed.
ARTICLE VI
Closing
-------
6.1 Time and Place of Closing. The closing of the
Merger (the "Closing") shall take place on the date and at the time this
Agreement is executed by the parties, at the Phoenix, Arizona, offices of
O'Connor, Cavanagh, Anderson, Killingsworth & Beshears, P.A.
28
6.2 Form of Documents. At the Closing, each party
shall deliver the documents, and shall perform the other acts, which are set
forth in this Agreement and the Closing Schedule approved by all parties.
ARTICLE VII
Indemnification
7.1 Indemnification in General.
(a) By Mayer. Subject to the other terms
and conditions of this Agreement, Mayer shall defend, indemnify and hold
harmless Cerprobe and Acquisition, and their officers and directors, for, from
and against any Indemnifiable Loss (as hereinafter defined) resulting from the
breach or inaccuracy of any of the representations or warranties (except for the
Excluded Representations and Warranties that are dealt within Section 7.4
hereof) of Mayer contained in this Agreement or the Investment Agreement, by and
between Mayer and Cerprobe, dated the date hereof (the "Investment Agreement").
(b) By Cerprobe and Acquisition. Subject to
the other terms and conditions of this Agreement, Cerprobe and Acquisition shall
defend, indemnify and hold harmless Mayer, for, from and against any
Indemnifiable Loss resulting from (i) the breach or inaccuracy of any of the
representations or warranties of Cerprobe and Acquisition contained in this
Agreement or the Investment Agreement; (ii) the failure of Acquisition to pay or
perform any of the liabilities or obligations to the extent disclosed on the
September Balance Sheet or to the extent disclosed in the Disclosure Schedules
referred to in Section 5.3 hereof, provided Cerprobe's and Acquisition's
obligations under this Section 7.1(b) do not in any way relieve Mayer from his
obligations under this Agreement that arise as a result of a breach by Mayer of
a representation, warranty or covenant; and (iii) the operation of Acquisition
after the Effective Time, except for an obligation caused by the misconduct of
Mayer.
7.2 Indemnifiable Loss.
(a) General. Subject to the conditions to
indemnifications set forth in this Agreement, Cerprobe and Acquisition, and
Mayer, as the case may be, shall be indemnified under this Agreement if, and
only to the extent, Cerprobe and Acquisition, and Mayer, as the case may be,
suffer an Indemnifiable Loss. An Indemnifiable Loss is the out-of-pocket harm,
net of tax effect, actually suffered by reason of a breach or inaccuracy of any
of the representations, warranties or covenants contained in this Agreement or
the Investment Agreement. An Indemnifiable Loss includes all damages,
liabilities, costs, expenses, fines, taxes, and penalties, and all attorneys'
fees and charges, expert witness fees,
29
and other out-of-pocket expenses of investigating and defending against any
indemnifiable claim.
(b) Calculation. The following shall also
apply in determining an Indemnifiable Loss:
(i) An Indemnifiable Loss with
respect to an asset may not exceed its fair market value. Indirect, diminution
of value, consequential, or punitive damages are not Indemnifiable Losses.
(ii) To the extent that a loss is
recovered from insurance proceeds, the loss is not an Indemnifiable Loss.
(iii) There is no Indemnifiable Loss
until the aggregate out-of-pocket losses exceed $25,000, and then only the
amount in excess of the $25,000 shall be an Indemnifiable Loss. This Section
7.2(b)(iii) applies only to claims against Mayer and does not apply to claims
against Cerprobe or Acquisition (or both).
(c) No Multiple Recovery.
(i) To the extent a liability or
expense or the omission of an asset is taken into account in determining the
merger consideration payable to Mayer, a corresponding breach of a
representation and warranty by reason of such liability, expense, or asset
omission does not constitute an Indemnifiable Loss.
(ii) If more than one representation
and warranty is breached by the same set of facts, the Indemnifiable Loss is
determined by the set of facts and is not affected by the number of
representations and warranties breached.
(d) Example of Contract Exclusion. If a
representation and warranty is breached by the omission of a material contract
from a Disclosure Schedule, but Acquisition elects not to cancel the contract,
then there is no Indemnifiable Loss. If the omitted contract requires payments
of $48,000 per year but is cancellable on one month's notice, and Acquisition
cancels the contract at an out-of-pocket cost of $4,000, the Indemnifiable Loss
is $4,000. If such contract is noncancellable and Acquisition pays $25,000 in
damages for cancellation and $10,000 in attorney's fees, the Indemnifiable Loss,
before tax effect, is $35,000.
(e) Escrow and Security Agreement. Except
as set forth in Section 7.4 hereof, the sole source Cerprobe and Acquisition
shall have for indemnification under Section 7.1(a) of this Agreement is Mayer's
shares of Cerprobe Stock while held in escrow under the Escrow and Security
Agreement, and all claims against Mayer's shares of
30
Cerprobe stock under the Escrow and Security Agreement must be made by July 15,
1998 and if not made by July 15, 1998, shall lapse.
7.3 Nature and Effect of Representations and
Warranties.
(a) Those Made By Mayer. Except for the
Excluded Representations and Warranties (as hereinafter defined), the
representations and warranties made by Mayer in this Agreement are made on the
condition that such representations and warranties shall create liability only
with respect to indemnification expressly provided for by this Agreement or with
respect to any statutory or common law right to rescind the Merger (based upon
the representations and warranties taken as a whole, together with the
Disclosure Schedules), and Cerprobe and Acquisition are not relying on the
representations and warranties of Mayer for any other purpose. Except for a
breach of a representation and warranty relating to any of the following (the
"Excluded Representations and Warranties"): (i) ownership and title to any of
the assets of Company; (ii) ownership and title to the capital stock of Company;
(iii) competency to execute and deliver documents to effect the transactions
contemplated in this Agreement, and the legal, binding and enforceable nature
hereof and thereof; (iv) taxes; and (v) the environment, the sole and exclusive
remedy of Cerprobe and Acquisition for a breach of a representation and warranty
by Mayer shall be the right of indemnification as provided for in this
Agreement. Cerprobe and Acquisition shall have all rights and remedies available
to them for a breach of any of the Excluded Representations and Warranties, for
a breach by Mayer of any of the covenants contained in this Agreement, for any
fraud committed by Mayer, and (unless otherwise specifically limited therein)
for a breach by Mayer of any of the covenants contained in any of the other
agreements entered into by Mayer in connection with this Agreement.
(b) Those Made By Cerprobe and Acquisition.
The repre- sentations and warranties made by Cerprobe and Acquisition in this
Agreement are made on the condition that such representations and warranties
shall create liability only with respect to indemnification expressly provided
for by this Agreement or with respect to any statutory or common law right to
rescind the Merger (based upon the representations and warranties taken as a
whole), and Mayer is not relying on the representations and warran- ties of
Cerprobe and Acquisition for any other purpose. The sole and exclusive remedy of
Mayer for a breach of a representation and warranty by Cerprobe and Acquisition
shall be the right of indemnification as provided for in this Agreement. Mayer
shall have all rights and remedies available to him for a breach by Cerprobe or
Acquisition of any of the covenants contained in this Agreement, for any fraud
committed by Cerprobe or Acquisition, and (unless otherwise specifically limited
therein) for a breach by Cerprobe or Acquisition of any of the covenants
contained in any of the other agreements entered into by Cerprobe or Acquisition
in connection with this Agreement.
31
7.4 Additional Indemnification By Mayer. The
provisions of Section 7.2 hereof shall not apply to, and shall not limit any
rights or claims by Cerprobe or Acquisition for, the following:
(a) Excluded Representations and
Warranties. Mayer shall defend, indemnify and hold harmless Cerprobe and the
Surviving Corporation, and their officers and directors, for, from and against
any and all damages, losses, liabilities (absolute and contingent), fines,
penalties, costs and expenses (including, without limitation, reasonable counsel
fees and costs and expenses incurred in the investigation, defense or settlement
of any claim covered by this indemnity) ("Losses") with respect to or arising
out of any demand, claim, inquiry, investigation, proceeding, action or cause of
action ("Claim") which Cerprobe, the Surviving Corporation, or their officers or
directors, may suffer or incur by reason of the breach or inaccuracy of any of
the Excluded Representations and Warranties.
(b) Environmental. Mayer shall defend,
indemnify and hold harmless Cerprobe, the Surviving Corporation, and their
officers and directors, for, from and against any and all Losses with respect to
or arising out of any Claim which Cerprobe, the Surviving Corporation, or their
officers, directors and shareholders may suffer or incur by reason of:
(i) any generation, transportation,
storage, treatment or disposal of any hazardous substances, solids or wastes as
contemplated in Section 5.3(af) hereof ("Hazardous Substances") by or on behalf
of Company occurring on or prior to the Effective Time including, without
limitation, any waste or other disposal activities or discharges which occurred
at a facility on which a portion of Company's (or its predecessors') business
was conducted, any waste or other disposal activities or discharges which
occurred off of any such facility with regard to wastes and other substances
generated on such facility, and any waste or other disposal activities or
discharges which occurred on real estate at any time whether or not Company (or
its predecessors) owned or leased such real estate at the time such waste or
other disposal activities or discharges were engaged in, and whether or not
Company performed such waste or other disposal activities or discharges;
(ii) any releases or threatened
releases as defined now or in the future under the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, P.L. 96-510, as amended or
reauthorized from time to time, or any other similar federal, state or local
laws, statutes, rules or regulations occurring on or prior to the Effective
Time, including, but not limited to, (A) those releases of Hazardous Substances
involving potential or actual environmental contamination which required
notification or reporting to appropriate federal, state or local officials or
agencies, or clean-up or remedial activities and (B) those releases or incidents
which occurred prior to the Effective Time, of any requirements imposing such
notification or reporting obligations or
32
clean-up or remedial activities, but which would have been subject to such
obligations if they had occurred subsequent to the effective date of such
requirements;
(iii) any discharges by or on behalf
of Company or as a result of any activities by or on behalf of Company to
surface waters or groundwaters occurring on or prior to the Effective Time;
(iv) any air emissions of Company
occurring on or prior to the Effective Time;
(v) the exposure of and resulting
consequences to any persons, including, but not limited to, past or present
employees of Company or the Surviving Corporation, to any mineral, chemical or
industrial product, raw material intermediate, by-product or medical or other
waste, or substance created, generated, processed, handled or originating at a
facility at which Company (or any of its predecessors) conducted business on or
prior to the Effective Time or otherwise used by Company (or any of its or their
predecessors) in the conduct of its business;
(vi) any violations by or on behalf
of Company or any other activity by or on behalf of Company occurring on or
prior to the Effective Time of federal, state or local (A) environmental laws,
or (B) occupational or employee health and safety laws (but excluding any
product liability claims, any workers' compensation claims and any claim under
the Occupational Safety and Health Act not involving environmental laws or
Hazardous Substances);
(vii) any and all actions, failures
to act and negligence by or on behalf of Company in monitoring, maintaining and
upkeep of on-site storage, treatment and disposal facilities on or prior to the
Effective Time;
(viii) any use, removal, maintenance
or monitoring by or on behalf of Company or any other activity by or on behalf
of Company of storage tanks on or prior to the Effective Time; or
(ix) any violations, fees,
obligations or failures by Company or any other activity by or on behalf of
Company to comply with any and all environmental permit requirements on or prior
to the Effective Time.
7.5 Limit for Mayer. Mayer's liability under this
Agreement shall be limited to and shall not exceed Seven Million Dollars
($7,000,000) until January 15, 2007, and shall be limited to and shall not
exceed Five Million dollars ($5,000,000) after January 15, 2007, unless such
liability is a result of fraud committed by Mayer and then there shall be no
limit. This Section is intended to limit and not expand Mayer's potential
liability.
33
7.6 Claims Under Escrow and Security Agreement. On or
before the forty-fifth (45th) day after the close of each calendar quarter in
1997 and 1998 (provided the forty-fifth (45th) day is a business day and if not,
then the next business day following the forty-fifth (45th) day) Cerprobe and
Acquisition shall notify Mayer of any claims they have discovered during the
prior quarter for which they may seek recourse under the Escrow and Security
Agreement.
7.7 Notice and Right to Defend Third-Party Claims.
Promptly upon receipt of notice of any claim, demand or assessment or the
commencement of any suit, action or proceeding with respect to which indemnity
may be sought pursuant to this Agreement, the party seeking to be indemnified or
held harmless (the "Indemnitee") shall notify in writing, if possible, within
sufficient time to respond to such claim or answer or otherwise plead in such
action (but in any event within thirty (30) days), the party from whom
indemnification is sought (the "Indemnitor"). In case any claim, demand or
assessment shall be asserted, or suit, action or proceeding commenced against
the Indemnitee, the Indemnitor shall be entitled, at the Indemnitor's expense,
to participate therein, and, to the extent that it may wish, to assume the
defense, conduct or settlement thereof, at its own expense, with counsel
satisfactory to the Indemnitee, whose consent to the selection of counsel shall
not be unreasonably withheld or delayed, provided that the Indemnitor confirms
to the Indemnitee that it is a claim to which its rights of indemnification
apply. The Indemnitor shall have the right to settle or compromise monetary
claims; however, as to any other claim, the Indemnitor shall first obtain the
prior written consent from the Indemnitee, which consent shall be exercised in
the sole discretion of the Indemnitee. After notice from the Indemnitor to the
Indemnitee of Indemnitor's intent so to assume the defense, conduct, settlement
or compromise of such action, the Indemnitor shall not be liable to the
Indemnitee for any legal or other expenses (including, without limitation,
settlement costs) subsequently incurred by the Indemnitee in connection with the
defense, conduct or settlement of such action while the Indemnitor is diligently
defending, conducting, settling or compromising such action. The Indemnitor
shall keep the Indemnitee apprised of the status of the suit, action or
proceeding and shall make Indemnitor's counsel available to the Indemnitee, at
the Indemnitor's expense, upon the request of the Indemnitee. The Indemnitee
shall cooperate with the Indemnitor in connection with any such claim and shall
make personnel, books and records and other information relevant to the claim
available to the Indemnitor to the extent that such personnel, books and records
and other information are in the possession or control of the Indemnitee. If the
Indemnitor decides not to participate, the Indemnitee shall be entitled, at the
Indemnitor's expense, to defend, conduct, settle or compromise such matter with
counsel satisfactory to the Indemnitor, whose consent to the selection of
counsel shall not be unreasonably withheld or delayed.
34
ARTICLE VIII
Post-Closing
------------
8.1 Accounts Receivable. On June 30, 1997, Mayer
shall purchase from the Surviving Corporation, and the Surviving Corporation
shall sell and assign to Mayer, all accounts receivable of Company as of the
Closing (the "Accounts Receivable") that have not been paid in full by June 30,
1997 (with the payments received by the Surviving Corporation being applied to
the Accounts Receivable the customer so designates, or if the customer does not
designate or if the Surviving Corporation directs the customer to designate a
specific Accounts Receivable, then to the oldest Accounts Receivable of that
customer) at the amount of the then outstanding Accounts Receivable. Acquisition
agrees to use reasonable efforts to collect the Accounts Receivable, but shall
not be obligated to initiate legal action in order to collect the Accounts
Receivable. If Mayer does not purchase the Accounts Receivable as required
pursuant to this Section 8.1, then Cerprobe and Acquisition may make a claim
under the Escrow and Security Agreement for the amount owed. At the time Mayer
purchases the Accounts Receivable, Acquisition shall execute a UCC-1 Financing
Statement evidencing the assignment of that Accounts Receivable to Mayer.
8.2 Nondisclosure/Confidentiality. From and after the
date of this Agreement, Mayer shall not disclose to any third party or use for
any purpose other than as contemplated by this Agreement, any proprietary or
confidential information regarding Company, Cerprobe and Acquisition. The
preceding sentence shall not apply to information that (a) is, was, or becomes
generally known or available to the public or the industry other than as a
result of a disclosure by Mayer in violation of this Agreement; (b) was
previously known by Mayer; (c) is subsequently obtained by Mayer from an
independent third-party source having no obligation of confidentiality to
Company, Cerprobe or Acquisition; or (d) is required to be disclosed by law.
Mayer shall advise Company, Cerprobe and Acquisition, in writing, of any
request, including a subpoena or similar legal inquiry, to disclose any such
confidential information, so that Company, Cerprobe and Acquisition can seek
appropriate legal relief.
Mayer acknowledges that the covenants contained in this
Section 8.2 are a material inducement for Cerprobe and Acquisition to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. Accordingly, Mayer acknowledges that the restrictions contained in this
Section 8.2 are reasonable and necessary for the protection of the business of
Company, Cerprobe and Acquisition, and that a breach of any such restriction
could not adequately be compensated by damages in an action at law. In the event
of a breach or threatened breach by Mayer of any of the provisions of this
Section 8.2, Company, Cerprobe and/or Acquisition shall be entitled to obtain,
without the necessity of posting bond therefor, an injunction (preliminary or
permanent, or a temporary restraining order) restraining Mayer from the activity
or threatened activity constituting or which would constitute a breach, as well
as damages and an equitable accounting of all
35
earnings, profits and other benefits arising from a violation, which right shall
be cumulative and in addition to any other rights or remedies to which Company,
Cerprobe and/or Acquisition may be entitled.
Each and every provision set forth in this Section 8.2 is
independent and severable from the others, and no provision shall be rendered
unenforceable by virtue of the fact that, for any reason, any other or others of
them may be unenforceable in whole or in part. The parties hereto agree that if
any provision of this Section 8.2 shall be declared by a court of competent
jurisdiction to be unenforceable for any reason whatsoever, the court may
appropriately limit or modify such provision, and such provision shall be given
effect to the maximum extent permitted by applicable law.
8.3 Filing of Merger Documents. Cerprobe agrees to
take all necessary actions to file the Merger Documents with, and obtain the
approval for such filing by, the respective Secretary of State for each of the
States of Delaware and California, and Mayer shall, upon the request of
Cerprobe, take all necessary actions to assist Cerprobe with such filings and
approvals.
8.4 Tax Inquiry. Cerprobe or Acquisition shall,
within fifteen (15) days of being notified of any tax inquiry or audit, notify
Mayer of any tax inquiry or audit concerning the operations of Company prior to
the Closing. Cerprobe, Acquisition and Mayer agree to cooperate with each other
to resolve such tax inquiry or audit.
8.5 No Liquidation. Cerprobe agrees not to liquidate
Acquisition for a period of two (2) years following the Closing.
8.6 Release of Silpro Shares and Guaranty. Following
the Closing, Cerprobe shall return to Mayer all of his shares of SILPRO, Inc., a
California corporation, held by Cerprobe under that certain Stock Pledge
Agreement, by and among Mayer and Cerprobe, dated December 12, 1996, and shall
release Mayer from Mayer's obligations under that certain Payment Guaranty by
and among Mayer and Cerprobe, dated December 12, 1996.
8.7 Company Tax. Except as otherwise provided in that
certain Indemnification Agreement, by and among Mayer, Cerprobe and Acquisition,
Mayer is not responsible for any corporate income tax assessed against
Acquisition as a result of the Merger if the Internal Revenue Service determines
that the Merger does not meet the requirements of Section 368(a) of the Code.
36
ARTICLE IX
Miscellaneous
-------------
9.1 Disclosure Schedules. The Disclosure Schedules
referred to in Section 5.3 of this Agreement reflect information supplied to
Cerprobe and Acquisition in the course of their investigation of Company.
9.2 Broker's Fees. The parties hereto each represent
and warrant to the other that, except for the costs, expenses and fees incurred
by Company for the services of Corporate Strategic Coventures, the respective
warrantor has not dealt with and is not aware of any dealings with any person,
firm or corporation who is or may be entitled to a broker's commission, finder's
fee, investment banker's fee or similar payment from the other party for
arranging these transactions or introducing the parties to each other.
9.3 Fees and Expenses.
(a) General. It is agreed that all costs,
expenses and fees of Company incurred in connection with this Agreement, shall
be borne by Company; provided, however, that such costs, expenses and fees are
included in the calculation of the Estimated Net Worth and Actual Net Worth of
Company, as contemplated in Section 3.2 hereof. All of the costs and expenses,
and fees of Cerprobe, including legal and accounting services, incurred in
connection with the herein proposed transactions, shall be borne by Cerprobe.
(b) Accounting Fees. Notwithstanding
anything to the contrary in Section 4.1 hereof, all of the Accounting Fees shall
be paid for by Company, but consistent with Section 3.2(f) hereof, only one half
(1/2) of the Accounting Fees will be taken into account in determining the
Estimated Net Worth and Actual Net Worth of Company, which has the effect of
Company and Cerprobe each paying one half (1/2) of the Accounting Fees.
9.4 Public Announcements. Cerprobe and Mayer shall
consult with each other before issuing any press release with respect to the
Merger or this Agreement and shall not issue any such press release or make any
such public statement without the prior consent of the other party, which shall
not be unreasonably withheld; provided, however, that Cerprobe may, without the
prior consent of Mayer, issue such press release or make such public statement
if Cerprobe is required by law, and Cerprobe may, without the prior consent of
Mayer, make such filings with the Securities and Exchange Commission as may be
required by law.
9.5 Notices. All notices required or permitted to be
given hereunder shall be in writing and shall be deemed given when delivered in
person, or three (3) business days after being placed in the hands of an
overnight courier service prepaid for
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next day delivery or faxed provided that a confirming copy (together with a copy
of the fax transmission sheet showing the fax transmission was "good") is
delivered forthwith as herein provided, addressed as follows:
If to Mayer:
William E. Mayer
6519 Old Meadow Court
San Jose, California 95135
FAX: 408/270-6957
With copies to:
Richard G. Burt, Esq.
Ten Almaden Boulevard, 11th Floor
San Jose, California 95113
FAX: 408/286-7342
Martin S. Snitow, Esq.
5300 Stevens Creek Blvd., Suite 300
San Jose, California 95129-1091
FAX: 408/985-7595
If to Cerprobe, Acquisition, or Surviving Corporation:
------------------------------------------------------
Cerprobe Corporation
600 South Rockford Drive
Tempe, Arizona 85281
Attention: C. Zane Close
FAX: 602/967-4636
With a copy to:
O'Connor, Cavanagh, Anderson,
Killingsworth & Beshears, P.A.
One East Camelback Road
Phoenix, Arizona 85012-1656
Attention: John B. Furman, Esq.
FAX: 602/263-2900
and/or to such other respective addresses and/or addressees as may be designated
by notice given in accordance with the provisions of this Section.
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9.6 Entire Agreement. This Agreement constitutes the
entire agreement between the parties and shall be binding upon and inure to the
benefit of the parties hereto and their respective legal representatives,
successors and permitted assigns. Each exhibit and schedule to this Agreement
shall be considered incorporated into each of the respective agreements. This
Agreement supersedes all prior written or oral agreements between the parties
hereto and thereto.
9.7 Waivers. The failure in any one or more instances
of a party to insist upon performance of any of the terms, covenants or
conditions of this Agreement, to exercise any right or privilege conferred in
this Agreement or the waiver by said party of any breach of any of the terms,
covenants or conditions of this Agreement, shall not be construed as a
subsequent waiver of any such terms, covenants, conditions, rights or
privileges, but the same shall continue and remain in full force and effect as
if no such forbearance or waiver had occurred. No waiver shall be effective
unless it is in writing and signed by an authorized representative of the
waiving party. A breach of any representation, warranty or covenant shall not be
affected by the fact that a more general or more specific representation,
warranty or covenant was not also breached.
9.8 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed to be an original, and all
such counterparts shall constitute but one instrument.
9.9 Attorneys' Fees. If any action is brought to
enforce this Agreement or to collect damages as a result of a breach of any of
its provisions, the prevailing party shall also be entitled to collect its
reasonable attorneys' fees and costs incurred in such action, which costs can
include the reasonable costs of investigation, expert witnesses and the costs in
enforcing or collecting any judgment rendered.
9.10 Severability. The invalidity of any provision of
this Agreement or portion of a provision shall not affect the validity of any
other provision of this Agreement or the remaining portion of the applicable
provision.
9.11 Applicable Law. This agreement shall be governed
by and construed and enforced in accordance with the internal laws of the State
of Arizona without regard to the conflict of laws principles of such state.
9.12 Further Assurances. The parties shall execute
such further documents, and perform such further acts, as may be necessary to
consummate the Merger, and the other transactions contemplated herein on the
terms herein contained, and to otherwise comply with the terms of, and carry out
the transactions contemplated in, this Agreement.
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9.13 Construction. The parties hereto acknowledge and
agree that each party has participated in the drafting of this Agreement and
that this document has been reviewed by the respective legal counsel for the
parties hereto and that the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be applied
to the interpretation of this Agreement. No inference in favor of, or against,
any party shall be drawn from the fact that one party has drafted any portion
hereof.
9.14 Cerprobe Guaranty. Cerprobe guarantees the
timely performance by Acquisition of the obligations of Acquisition under this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first above written.
ACQUISITION:
EMI ACQUISITION, INC., a Delaware
corporation
By:
-------------------------------------
, President
-------------------------
By:
-------------------------------------
, Secretary
-------------------------
CERPROBE:
CERPROBE CORPORATION, a
Delaware corporation
By:
-------------------------------------
, President
-------------------------
By:
-------------------------------------
, Secretary
-------------------------
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MAYER:
---------------------------------------
William E. Mayer
---------------------------------------
Carol Mayer
COMPANY:
SILICON VALLEY TEST & REPAIR,
INC., a California corporation
By:
-------------------------------
William E. Mayer, President and
Secretary
41