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Agreement Of Merger & Plan Of Reorganization

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Sectors: Electronics and Miscellaneous Technology
Governing Law: Arizona , View Arizona State Laws
Effective Date: January 15, 1997
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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


================================================================================
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
----------------------------------------------


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
--------


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.
2
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,
3 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
----------------------------------


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.
4
(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
5 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.
6
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
7 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
--------


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:
8
(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).
9
(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, b
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