Agreement And Plan Of Merger Dated 2/27/97

EXHIBIT 10.18


AGREEMENT AND PLAN OF MERGER


AGREEMENT AND PLAN OF MERGER dated as of February 27, 1997 by and between ADE CORPORATION, a Massachusetts corporation (hereinafter called "Parent") (when used herein, the term "Parent" will include ADE corporation and its subsidiaries, unless the context requires otherwise), ADE TECHNOLOGIES, INC., a Massachusetts corporation (hereinafter called "Subsidiary"), DIGITAL MEASUREMENT SYSTEMS, INC., a Massachusetts corporation (hereinafter called "Acquired Company"), DENNIS E. SPELIOTIS, ELIAS SPELIOTIS, EVANTHIA SPELIOTIS, ISMENE SPELIOTIS, ADVANCED DEVELOPMENT CORPORATION, DAVID C. BONO and ALAN SLISKI (hereinafter each will be referred to individually as a "Stockholder" and collectively as the "Stockholders").


W I T N E S S E T H:


WHEREAS, the respective Boards of Directors of Parent, Subsidiary and Acquired Company and the stockholders of Subsidiary and Acquired Company have approved the Plan of Merger attached hereto as EXHIBIT 1.1 (the "Plan of
----------- Merger"), pursuant to which Acquired Company will be merged into Subsidiary, a wholly-owned subsidiary of Parent, in accordance with the applicable statutes of the Commonwealth of Massachusetts (the merger of the Acquired Company with and into the Subsidiary will be referred to herein as the "Merger").


WHEREAS, the Stockholders together, directly or indirectly, own 100% of the outstanding capital stock of Acquired Company.


WHEREAS, Parent owns all of the outstanding capital stock of Subsidiary.


WHEREAS, upon the effective date of the merger of Acquired Company with and into Subsidiary, all of the shares of common stock of Acquired Company then issued and outstanding will be converted into the right to receive shares of the Common Stock, par value $.01 per share, of Parent (the "Parent Stock") and the outstanding common stock of Subsidiary will continue to be outstanding stock of the corporation surviving the merger, all upon the terms and conditions hereinafter set forth;


NOW, THEREFORE, in order to consummate the transactions described above and in consideration of the mutual covenants, agreements, representations, and warranties herein contained, the parties hereto agree as follows:


SECTION 1. MERGER OF ACQUIRED COMPANY INTO SUBSIDIARY - ---------- ------------------------------------------


1.1. Plan of Merger. Upon the terms and subject to the conditions set
-------------- forth in this Agreement and in accordance with the applicable provisions of the laws of the Commonwealth of Massachusetts, Acquired Company will be merged with and into Subsidiary at the Closing (as hereinafter defined) in accordance with the Plan of Merger.


1.2. Effective Date of Merger. The Merger will be effective upon the
------------------------ filing with the Secretary of State of the Commonwealth of Massachusetts of Articles of Merger in the Form of EXHIBIT 1.2 hereto (the "Articles of Merger")
----------- or on such other date and time as is provided in the Plan of Merger (the date and time of the effectiveness of the Merger being hereinafter referred to as the "Effective Date").


1.3. Effect of Merger. On the Effective Date, the separate existence of
---------------- Acquired Company will cease, and Subsidiary will continue its corporate existence and be the corporation surviving the merger. Upon the Effective Date, the capital stock of Subsidiary then issued and


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outstanding will not be changed and will continue to be outstanding. As more fully provided in the Plan of Merger, the capital stock of Acquired Company issued and outstanding on such date will be converted into, and the holders of shares of common stock of Acquired Company on the Effective Date (the "Acquired Company Stockholders") will be entitled to receive in exchange for such shares an aggregate of 800,000 shares of Parent Stock, 80,000 of which will be placed in escrow and held in accordance with an escrow agreement substantially in the form of EXHIBIT 1.3 hereto.
-----------


SECTION 2. REPRESENTATIONS AND WARRANTIES OF ACQUIRED COMPANY AND THE - ---------- ---------------------------------------------------------- STOCKHOLDERS - ------------


Acquired Company and each of the Stockholders hereby represent and warrant, jointly and severally, as follows, except as stated otherwise with reference to a specific representation or warranty in the disclosure schedule attached hereto as SCHEDULE 2 (the "Disclosure Schedule"):
----------


2.1. Organization and Authority. Acquired Company is a corporation duly
-------------------------- organized, validly existing, and in good standing under the laws of the Commonwealth of Massachusetts with full corporate power and authority to own its assets and to conduct its business in the manner and in the places in which it is now being conducted. SECTION 2.1 of the Disclosure Schedule sets forth all
----------- jurisdictions in which the Acquired Company is qualified to do business as a foreign corporation, which are the only states in which the character of the properties owned or leased by Acquired Company and the nature of the business conducted by it require such qualification and where the failure to be so qualified could have a material adverse effect on its business or financial condition. True and complete copies of the Articles of Organization and


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Bylaws, together with all amendments thereto, of Acquired Company have been delivered to Parent.


2.2. Authorization; Binding Agreement. Acquired Company has full
-------------------------------- corporate power and authority to enter into this Agreement and to carry out its obligations hereunder, including the consummation of the Merger. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, including the consummation of the Merger, have been duly and validly authorized by Acquired Company's Board of Directors and its stockholders. No other corporate acts or proceedings on the part of the Company are necessary to authorize this Agreement and the consummation of the transactions contemplated hereby, including the Merger. When duly executed and delivered by the parties hereto and thereto, (i) this Agreement will constitute a valid and binding obligation of Acquired Company and the Stockholders, (ii) the Escrow Agreement will constitute a valid and binding obligation of the Stockholders, and (iii) the Employment Agreements and the Non competition Agreements will constitute valid and binding obligations of the Stockholders which are parties to them, in each case enforceable against Acquired Company and the Stockholders in accordance with such agreements' respective terms.


2.3. Capitalization. The authorized capital stock of the Acquired Company
-------------- consists of 5,000 shares of Class A Common Stock (Voting), no par value (the "Voting Common Stock"), 1,000 of which are issued and outstanding and held beneficially of record by the persons and in the amounts listed in SECTION 2.3
----------- of the Disclosure Schedule, 5,000 shares of Class B Common Stock (Nonvoting), no par value (the "Nonvoting Common Stock"), 53 of which are issued and outstanding and held beneficially of record by the person listed in SECTION 2.3 of the Disclosure - -----------


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Schedule, and 100 shares of Convertible Preferred Stock, $1,000 par value per share, none of which are issued and outstanding. The outstanding shares of Voting Common Stock were validly issued and are fully paid and nonassessable. There are no options, warrants, subscription, preemptive or other rights or commitments outstanding for the sale or issue of any shares or other securities of Acquired Company.


2.4. No Conflicts. Neither the execution and delivery by Acquired Company
------------ and the Stockholders of this Agreement, nor the consummation of the Merger and the other transactions contemplated hereby, nor compliance by Acquired Company and the Stockholders with any of the provisions hereof, will:


(a) have a material adverse effect on any of the rights of Acquired Company in, to, or under any of the material agreements or have a material adverse effect on any material assets of Acquired Company;


(b) subject to receipt of all third party consents and governmental approvals described in Section 2.22 hereof, violate, conflict with, result in a breach of any provision of, or constitute a default (or an event which, with the giving of notice or the passage of time or otherwise, would constitute such a default) under, or entitle any party (with the passage of time or otherwise) to terminate, accelerate or give notice of a default under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the assets of Acquired Company, under (i) any of the provisions of the Articles of Organization or By-Laws of Acquired Company; (ii) any note, bond, mortgage, indenture, deed of trust, license, contract, undertaking, agreement, lease or other instrument or obligation to which the Acquired Company is a party, or by which


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Acquired Company or any of its assets may be bound or affected; or (iii) violate any order, writ, injunction, decree, statute, rule or regulation applicable to Acquired Company or any of its assets.


2.5. Subsidiaries and Investments. There is no corporation or other legal
---------------------------- entity in which Acquired Company has any direct or indirect ownership interest.


2.6. Financial Statements. Acquired Company has delivered to Parent true
-------------------- copies of all of its federal, state and local tax returns for each of its last three fiscal years, an unaudited balance sheet of Acquired Company (the "Balance Sheet") as at December 31, 1996 (the "Balance Sheet Date") and unaudited monthly statements of net income for the nine months period then ended (such tax returns, the Balance Sheet and such income statements will be referred to collectively as the "Financial Statements"). The Financial Statements are in accordance with all books, records and accounts of Acquired Company, are true and complete, were prepared in accordance with generally accepted accounting principles on a consistent basis and present fairly the financial position and results of operations of Acquired Company as of the dates and for the periods indicated.


2.7. Ownership of and Title to Assets.
--------------------------------


(a) SECTION 2.7(A) of the Disclosure Schedule sets forth a
-------------- complete list and brief description of all real property owned by Acquired Company. Acquired Company has good and marketable title to all such real property, in each case free and clear of all material mortgages, liens, and encumbrances except those shown or reflected in the Balance Sheet and except liens for taxes not yet due and encumbrances which do not materially reduce the value of such property.


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(b) SECTION 2.7(B) of the Disclosure Schedule sets forth a
-------------- complete list of all leases or agreements under which Acquired Company is lessee of or holds or operates any real property and a brief description of the property. Each of such leases is in full force and effect and enforceable in accordance with its terms, and there is not under any of such leases any existing default of Acquired Company (or event or condition which with notice or lapse of time, or both, would constitute a default) with respect to any material term thereof.


(c) SECTION 2.7(C) of the Disclosure Schedule sets forth a
-------------- complete list and brief description of all personal property and all other assets not listed in SECTION 2.7(A) or SECTION 2.7(B) of the Disclosure Schedule
-------------- -------------- owned or leased by Acquired Company (including those shown or reflected in the Balance Sheet, except such properties and assets as have been sold or otherwise disposed of in the ordinary course of business since the Balance Sheet Date). Except as indicated in SECTION 2.7(C) of the Disclosure Schedule, such personal
-------------- property and other assets are free and clear of all material mortgages, liens, and encumbrances except those shown or reflected in the Balance Sheet and except liens for taxes not yet due and encumbrances which do not materially reduce the value of such property and assets.


(d) SECTION 2.7(D) of the Disclosure Schedule sets forth a
-------------- complete list of all leases or agreements under which Acquired Company is lessee of or holds or operates any personal property and a brief description of the personal property. Each of such leases is in full force and effect and enforceable in accordance with its terms, and there is not under any of such leases any existing default of Acquired Company (or event or condition which with notice or lapse of time, or both, would constitute a default) with respect to any material term thereof.


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(e) All equipment included in the assets of Acquired Company has been maintained in good repair in accordance with the usual practices in the United States of businesses similar to Acquired Company's business, is in good condition, ordinary wear and tear excepted, and is useable in the ordinary course of Acquired Company's business.


2.8. Transactions with Affiliates. SECTION 2.8 of the Disclosure Schedule
---------------------------- ----------- is a complete list of all executory agreements, contracts or commitments of Acquired Company involving any Affiliate of Acquired Company. Except as set forth in SECTION 2.8 of the Disclosure Schedule, since April, 1993, the Company
----------- has not (i) made purchases or sales of products or services from or to any Affiliate, (ii) transferred any assets to any Affiliate, (iii) entered into, amended or canceled any transaction, contract, agreement or commitment involving any Affiliate, or (iv) used any property, asset, facility, service or personnel which are held, owned, provided or employed by any Affiliate. For purposes hereof, the term "Affiliate" will include the Stockholders and will also mean any member of a Stockholder's family, any entity in which any Stockholder or any member of a Stockholder's family, directly or indirectly or through one or more intermediaries, has a significant interest, and any person who, directly or indirectly or through one or more intermediaries, controls or is controlled by, or is under common control with, the Acquired Company. All transactions between Acquired Company and any Affiliate have been entered into at arm's length, on terms no less favorable to Acquired Company than could be obtained from a third party which is not an affiliate of Acquired Company.


2.9. Accounts Receivable. All of the accounts and notes receivable of
------------------- Acquired Company reflected in the Financial Statements have been collected or are current or collectible at


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the aggregate recorded amounts thereof less any allowance for doubtful accounts reflected in the Financial Statements.


2.10. Inventory. The inventory of Acquired Company is of a quality and
--------- quantity usable or salable in the ordinary course of business, is carried on the Financial Statements and the books of the Company at an amount which is not excessive and reflects valuations determined in accordance with generally accepted accounting principles applied on a consistent basis.


2.11. Absence of Undisclosed Liabilities. As of the Balance Sheet Date,
---------------------------------- Acquired Company:


(a) had no material liabilities of any nature, whether accrued, absolute, contingent, or otherwise (including, without limitation, liabilities for taxes due) other than liabilities reflected or reserved against in the Financial Statements or described in this Agreement;


(b) all tax returns and tax reports required of or in respect of Acquired Company by the laws of the United States or of any other country, or of any state or local governmental body, have been duly filed;


(c) all taxes shown to be due thereon have been paid, and adequate provision has been made in the Financial Statements for the payment of all accrued and unpaid Federal, state, local and foreign taxes, whether or not yet due, for all annual, quarterly, month ended periods prior to the date of Closing; and


(d) except as set forth in the Disclosure Schedule delivered to Parent by Acquired Company, Acquired Company is not a party to any action or proceeding for the assessment or collection of taxes.


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2.12. Absence of Certain Changes. Except as set forth in SECTION 2.12 of
-------------------------- ------------ the Disclosure Schedule, Acquired Company has not since March 31, 1996:


(a) Suffered any material adverse change in its financial condition, assets, liabilities, or business, or become aware of any event which Acquired Company has reasonably grounds to believe could result in any such material and adverse change;


(b) Permitted any mortgage, encumbrance, or lien to be placed on any of its assets;


(c) Entered into any agreement guaranteeing the obligations of any third person or agreeing to indemnify any third person;


(d) Incurred any material liability or obligation except current liabilities incurred in the ordinary course of business, or issued any notes or other corporate debt securities;


(e) Sold or otherwise disposed of, or entered into any agreement or other arrangement for the sale or other disposition of, any material item of its assets other than in the ordinary course of its business;


(f) Suffered any damage, destruction, or casualty loss, whether or not covered by insurance;


(g) Declared or set aside or paid any dividend, made any other distribution in respect of its capital stock, redeemed, purchased, or otherwise acquired any of its capital stock, or issued any stock or other securities or options or other rights to acquire the same;


(h) Made any change in the compensation payable to any officer, employee, or agent other than normal increases or bonuses in accordance with its usual compensation practices;


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(i) Entered into any transaction other than in the ordinary course of business;


(j) Been a party to any other event, condition, or state of facts of any character which has had or could have a material adverse effect on the results of operations, business, financial condition, or assets of Acquired Company; or


(k) Entered into any agreement with respect to any of the foregoing.


2.13. Patents, Trademarks and Copyrights. SECTION 2.13 of the Disclosure
---------------------------------- ------------ Schedule is a complete list of all domestic and foreign patents, patent applications, trademarks, trade names, inventions, discoveries, confidential know-how, copyrights and licenses (the "Proprietary Rights") therefor which are owned by or registered in the name of Acquired Company and which are material to its business. Acquired Company owns or is licensed under all Proprietary Rights necessary for and material to the operation of its business as presently conducted, all of which are in good standing and uncontested. There is no material claim pending or, to the knowledge of Acquired Company or the Stockholders, threatened against Acquired Company with respect to the ownership or used thereof by Acquired Company by any third party nor to the knowledge of Acquired Company or the Stockholders is there any basis for such a claim.


2.14. Material Agreements. SECTION 2.14 of the Disclosure Schedule is a
------------------- ------------ list of all material contracts, agreements, and other instruments to which Acquired Company is a party. Except as described in SECTION 2.14 of the
------------ Disclosure Schedule, Acquired Company is not a party to any material contract or agreement or other instrument not entered into in the ordinary course of business, including any of the following:


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(a) Contract for employment of any officer or employee at a salary in excess of $50,000 per year, which is not terminable without liability on not more than thirty days' notice;


(b) Bonus, pension, profit sharing, retirement, stock option, deferred compensation, life, medical, or hospital insurance, or other plan or agreement providing employee benefits;


(c) Contract with any labor organization;


(d) Lease, license, franchise, distributorship, dealer, manufacturer's representative, or sales agency agreement;


(e) Contract for future purchase of materials, supplies, services, machinery, or equipment continuing for a period of more than ninety days or involving more than $50,000;


(f) Guarantee, subordination, or other similar arrangement or undertaking by which Acquired Company is contingently liable upon the indebtedness or obligation of any other person;


(g) Contract or commitment for capital expenditures in excess of Ten Thousand Dollars ($10,000);


(h) Power of attorney for any person, firm or corporation for any purpose whatsoever;


(i) contract, agreement, commitment or business arrangement with or to, and purchases from or other business arrangements with, any current or former principal stockholders, directors or officers of Acquired Company (or any spouse or relative of the foregoing) or interest in any party with which Acquired Company does business;


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(j) Note, mortgage, indenture, deed of trust, credit or loan agreement, or similar instrument under which Acquired Company is indebted for borrowed money, or the price of purchased assets.


To Acquired Company's and the Stockholders' knowledge, Acquired Company has performed in all material respects all obligations required to be performed by it to date under all such contracts and agreements described in the Disclosure Schedule and is not in default in any material respect under any of such contracts or agreements, and to Acquired Company's and the Stockholders' knowledge all parties with whom it has contractual arrangements are in substantial compliance therewith. ...