Exhibit 10.2A
LOAN AGREEMENT
LOAN AGREEMENT dated as of January _____________, 2000 ("Agreement") by and
between XXXXXXX COMMUNICATIONS, INC., a Delaware corporation, having an address
at One Xxxx Xxxx Xxxxx, Xxxxx Xxxxx, Xxx Xxxx 00000 (hereafter referred to as
"Xxxxxxx"); and LCS GOLF, INC. a Delaware corporation, having an address at 00
Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (hereafter referred to as "LCSG";
Xxxxxxx and LCSG are sometimes referred to as a "Party" or the "Parties").
W I T N E S S E T H :
WHEREAS, XXXXXXX has agreed to loan LCSG $500,000.00 on the terms provided for
herein.
NOW, THEREFORE, in consideration of the agreements herein set forth and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1Article : DEFINITIONS.
Capitalized terms used in this Agreement shall, unless the context otherwise
requires, have the meanings specified in this Article 1. Certain additional
defined terms are set forth elsewhere in this Agreement.
1.1. Affiliate.
"Affiliate" means, with respect to any Person, any other Person, directly or
indirectly controlling, controlled by or under common control with such Person.
1.2. Balance Sheet Date.
"Balance Sheet Date" means February 28, 1999.
1.3. Blue Sky Filing.
"Blue Sky Filing" means the filing of any application, registration, statement
or other document with any Governmental Body of any state, the District of
Columbia, or any territory or other jurisdiction in the United States necessary
to register or qualify the sale of the Registrable Securities in such
jurisdiction in or through the public securities markets.
1.4. Blue Sky Laws.
"Blue Sky Laws" means the laws of any state, the District of Columbia, or any
territory or other jurisdiction in the United States governing the purchase
and/or sale of securities in such jurisdiction.
1.5. Business Day.
"Business Day" means a day, other than Saturday, Sunday or a day on which banks
in New York City are required or permitted to be closed.
1.6. Closing.
"Closing" means the closing of the transsactions described in this Agreement
pursuant to Section 4 of this Agreement.
1.7. Closing Date.
"Closing Date" means the date of this Agreement.
1.8. Code.
"Code" means the Internal Revenue Code of 1986, as amended.
1.9. Commission.
"Commission" means the United States Securities and Exchange Commission.
1.10. Common Stock.
"Common Stock" means the shares of common stock, par value $.001 per share, of
LCSG.
1.11. Contracts.
"Contracts" means all contracts, leases, licenses, commitments, sales orders,
invoices, purchase orders and other agreements relating to the LCSG Business,
including the agreements listed on Schedule 1.14.
1.12. Exchange Act.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from time
to time.
1.13. Financial Statements.
"Financial Statements" means LCSG's combined balance sheets, combined
statements of income and retained earnings, and combined statements of cash flow
and related footnotes thereto as at and for the twelve (12) month periods ending
February 28, 1999 and February 28, 1998, respectively.
1.14. GAAP.
"GAAP" means U.S. generally accepted accounting principles, consistently
applied.
1.15. Governmental Body.
"Governmental Body" means any applicable court, tribunal, arbitrator or any
government or political subdivision thereof, whether federal, state, county or
local, or any agency, authority, official or instrumentality of any such
government or political subdivision.
1.16. Guaranty.
"Guaranty" means the guaranty of the Note by Dr. Xxxxxxx Xxxxxxxx in the form of
Schedule 1.19 annexed hereto.
1.17. Intellectual Property.
"Intellectual Property" means United States and foreign patents, patent
applications, patent licenses, software licenses and know-how licenses, trade
names, trademarks, copyrights, service marks, trademark registrations and
applications (whether pending or abandoned), service xxxx registrations and
applications, copyright registrations and applications (whether pending or
abandoned), job or shop rights, rights to inventions and all other items of
intellectual property or other intangible property used in the LCSG Business.
1.18. Knowledge.
"Knowledge" of any matter means, with respect to an individual, the actual
knowledge, but not constructive or imputed knowledge, after due inquiry, of such
matter of such Person and, with respect to any Person that is not an individual,
such actual knowledge of each individual that is a director, officer, manager,
employee, counsel, accountant, investment banker or other professional advisor
of such Person.
1.19. LCSG Shares.
"LCSG Shares" means all of the issued and outstanding shares of capital stock of
LCSG.
1.20. Material Adverse Effect.
"Material Adverse Effect" means any change or changes or effect or effects that
individually or in the aggregate are or may reasonably be expected to be
materially adverse to the condition (financial or otherwise) of LCSG.
1.21. Note.
"Promissory Note" means the promissory note, in the form attached hereto as
Schedule 1.21.
1.22. Order.
"Order" means any judgment, writ, decree, injunction or similar order of any
Governmental Body, in each case whether preliminary or final.
1.23. Other Documents.
"Other Documents" means all Schedules and Exhibits to this Agreement and all
other instruments, agreements and documents executed or to be executed by any
party hereto in connection with the transactions contemplated hereby.
1.24. Person.
"Person" means and includes an individual, a partnership, a joint venture, a
joint stock company, a corporation, a limited liability company, a trust, an
unincorporated association or organization and a government or a department or
agency, authority, official or instrumentality thereof, or any group of the
foregoing acting in concert.
1.25. Pledge Agreement.
"Pledge Agreement" means the agreement by Dr. Xxxxxxx Xxxxxxxx in the form of
Schedule 1.29 annexed hereto pledging _______ shares of common stock of Procept,
Inc. to secure his obligations under the Guaranty.
1.26. Register; Registered; Registration; Registration Statement.
The terms "register," "registered," "registration" and "registration statement"
shall refer to a registration of securities to be offered and sold under a
registration statement filed with the Commission, that becomes effective
pursuant to the Securities Act or the Exchange Act and the applicable rules and
regulations under either such Act.
1.27. Registrable Securities.
"Registrable Securities" has the meaning given in Section 3.1.
1.28. Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
1.29. Shares.
"Shares" means any of the Shares of Common Stock into which the Shares are
convertible.
2Article : LOAN BY XXXXXXX.
2.1. Loan.
Concurrently herewith Xxxxxxx has loaned to LCSG and LCSG has borrowed from
Xxxxxxx the sum of Five Hundred Thousand Dollars ($500,000.00), evidenced by the
Note, which has been executed and delivered by LCSG concurrently herewith. The
Note will come due on July __ , 2000, and will bear no interest until the
earlier of maturity or default. The principal amount of the Note is convertible,
at any time at Xxxxxxx'x option into that number of shares of Common Stock which
constitute ___ percent of LCSG's issued and outstanding shares of voting stock
of all classes on the date of conversion on a fully diluted basis including the
shares of Common Stock issuable upon conversion of the Note.
2.2. Guaranty.
Concurrently herewith, Dr. Xxxxxxx Xxxxxxxx has executed and delivered the
Guaranty to Xxxxxxx.
3Article : REGISTRATION OF SHARES
3.1. Demand Registration Right.
If all or any portion of the Note is converted into Common Stock, Xxxxxxx shall
have the one-time right at any time to make a written request that LCSG register
the Shares (the "Registrable Securities"), and LCSG thereafter agrees to use its
best efforts to file a registration statement with the Commission and to have
such registration statement declared effective, to permit, when such
registration statement becomes effective, the sale of the Registrable Securities
in the public securities markets. .
3.2. Piggy Back Registration Right.
If at any time LCSG proposes to register any of its securities under the
Securities Act (other than pursuant to a Registration Statement on Form X-0, X-0
or similar or successor form), LCSG shall give notice of such intention to
Xxxxxxx, and, if, within ten (10) business days thereafter LCSG receives a
written request by Xxxxxxx to register the Registrable Securities (which request
shall specify the Registrable Securities intended to be sold or disposed of and
shall state the intended method of disposition of the Registrable Securities by
LCSG), LCSG will use its best efforts to register such Registrable Securities
with the securities being registered by LCSG to permit the sale or other
disposition of the Registrable Securities (in accordance with the intended
methods thereof of which LCSG has been given notice) by LCSG. In the event that
the proposed registration under this Section 3.2 is, in whole or in part, an
underwritten public offering of Common Stock of LCSG, any request pursuant to
this Section 3.2 to register Registrable Securities
may specify that such Registrable Securities are to be included in the
underwriting on the same terms and conditions as the shares of Common Stock, if
any, otherwise being sold through underwriters under such registration;
provided, however, that as to any registration pursuant to this Section 3.2, (i)
if the managing underwriter determines and advises Xxxxxxx in writing that the
inclusion of all Registrable Securities proposed to be included in the
underwritten public offering and other issued and outstanding shares of Common
Stock proposed to be included therein by persons other than LCSG or Xxxxxxx (the
"Other Shares") would interfere with the successful marketing of such
securities, then the number of Registrable Securities and Other Shares excluded
from such registration shall be allocated pro rata among the holders of the
Other Shares (based on the number of shares of Common Stock requested by the
holders thereof to be registered in such offering, except for Other Shares
included therein at the request of holders thereof exercising demand
registration rights with respect to such other Shares), and (ii) in each case
those shares of Common Stock that are excluded from the underwritten public
offering pursuant to this Section 3.2 shall be withheld from the market by the
holders thereof and Xxxxxxx for such period that the managing underwriter
reasonably determines is necessary in order to effect the underwritten public
offering.
3.3. Preparation and Filing of Registration Statement.
With respect to any registration statement to be prepared by LCSG under this
Agreement, LCSG shall, at its sole expense, as expeditiously as practicable:
3.3.1.1 prepare and file with the Commission a registration statement
necessary to permit the sale of the Registrable Securities in the
public securities markets when such registration statement becomes
effective, and such amendments and supplements to such registration
statement and the prospectus included therein as may be necessary,
to the extent reasonably practicable, to cause such registration
statement to become effective; to cause such registration statement
to become effective; and to maintain the effectiveness of such
registration statement and to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable
Securities covered by such registration statement, in accordance
with the intended methods of disposition thereof; provided that LCSG
shall not be required to maintain such effectiveness for any time
after (a) the disposition of the Registrable Securities in
accordance with the intended methods of disposition thereof as set
forth therein or (b) nine months after the date of effectiveness of
such Registration Statement;
3.3.1.2 furnish to Xxxxxxx such number of conformed copies of such
registration statement and of each amendment or supplement thereto
(in each case including all exhibits and documents incorporated
therein by reference), such number of copies of any prospectus
included in such registration statement and such other documents, in
each case, as Xxxxxxx may reasonably request in order to facilitate
the sale of the Registrable Securities in the public securities
markets;
3.3.1.3 register or qualify the Registrable Securities under the Blue Sky
Laws of each state governing further purchase or sale of securities
as Xxxxxxx may reasonably request, keep such registration or
qualification in effect for so long as such registration statement
remains in effect and take any other action that may be reasonably
necessary or advisable to enable Xxxxxxx to consummate the
disposition in such states of the Registrable Securities; provided
that LCSG shall not be required to keep such registration or
qualification in effect at any time after (a) the disposition of the
Registrable Securities in accordance with the manner of disposition
set forth in the registration statement relating thereto or (b) nine
months after the date such registration statement becomes effective;
and provided, further, that LCSG will not be required to (A) qualify
generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph or (B)
subject itself to taxation in any such jurisdiction;
3.3.1.4 notify Xxxxxxx promptly, and confirm such advice in writing:
(a) when the registration statement or any amendment thereto
has been filed and when it has become effective;
(b) of the issuance by the Commission of any stop order
suspending the effectiveness of the registration
statement or the initiation of any proceedings for that
purpose; and
(c) of the registration or qualification of the Registrable
Securities for sale under the Blue Sky Laws of any
jurisdiction affecting such registration or
qualification;
3.3.1.5 make every reasonable effort to obtain the withdrawal of any Order
suspending the effectiveness of the registration statement;
3.3.1.6 cause all of the Registrable Securities covered by the registration
statement to be listed on each securities exchange, or designated
for inclusion in each automated interdealer quotation system, on
which the Common Stock is listed or included;
3.3.1.7 provide and cause to be maintained a transfer agent for all
Registrable Securities covered by the registration statement from
and after a date not later than the effective date of the
registration statement;
3.3.1.8 cause all Registrable Securities covered by such registration
statement to be registered with or approved by such other
Governmental Bodies as may be reasonably necessary to enable each
holder thereof to consummate the disposition of such Registrable
Securities; provided that LCSG shall not be required to maintain
such registration or approval for any time after (a) the disposition
of the Registrable Securities in accordance with the intended
methods of disposition thereof as set forth therein or (b) nine
months after the date of effectiveness of such registration
statement;
3.3.1.9 furnish to Xxxxxxx a signed counterpart, addressed to Xxxxxxx (and
the underwriters, if any), of an opinion of counsel for LCSG, dated
the effective date of such registration statement (or, if such
registration relates to an underwritten public offering, dated the
date of any closing under the underwriting agreement), if and in the
form delivered to any underwriter or other purchaser of securities
offered thereunder, covering substantially the same matters with
respect to such registration statement (and the prospectus included
therein) as are customarily covered in opinions of issuer's counsel
delivered to the underwriters in underwritten public offerings of
securities;
3.3.1.10 notify each holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which any prospectus included
in such registration statement, as then in effect, includes an
untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading, and at the request of any such
holder promptly prepare and furnish to such holder a reasonable
number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to
the purchasers of such securities, such prospectus shall not include
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; and
3.3.1.11 comply with all applicable rules and regulations of the Commission,
and make available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at least
twelve (12) months, but not more than eighteen (18) months,
beginning with the first full calendar month after the effective
date of such registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder.
3.4. Preparation; Reasonable Investigation.
In connection with the preparation and filing of the registration statement and
any amendments thereto and any Blue Sky Filing, LCSG will give Xxxxxxx and its
counsel and accountant the opportunity to review, in each case, a reasonable
time prior to their filing, the registration statement, each prospectus included
therein or filed with the Commission, each document incorporated by reference
therein and each amendment thereof or supplement thereto and any Blue Sky Filing
in order to verify the accuracy of any factual information concerning Xxxxxxx.
LCSG will make available for inspection by Xxxxxxx, any underwriter
participating in any disposition pursuant to such registration statement and any
attorney, accountant or other agent retained by Xxxxxxx or any such underwriter
(collectively, the "Inspectors"), all financial and other records, pertinent
corporate documents and properties of LCSG (collectively, the "Records") as
shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause LCSG's officers, directors and employees to supply all
information reasonably requested by any such Inspector in connection with such
registration statement and permit the Inspectors to participate in the
preparation of such registration statement and any prospectus contained therein
and any amendment thereof or supplement thereto. Records which LCSG determines,
in good faith, to be confidential and which it notifies the Inspectors are
confidential shall not be disclosed by the Inspectors unless (i) the disclosure
of such Records is necessary to avoid or correct a misstatement or omission in
the registration statement, (ii) the release of such Records is ordered pursuant
to a subpoena or other Order from a court of competent jurisdiction, or (iii)
the information in such Records has been made generally available to the public.
The seller of Registrable Securities agrees by acquisition of such Registrable
Securities that it will, upon learning that disclosure of such Records is sought
in a court of competent jurisdiction, give notice to LCSG and allow LCSG, at
LCSG's expense, to undertake appropriate action to prevent or limit disclosure
of the Records deemed confidential. LCSG shall pay for all registration and
filing fees, printing expenses and fees and disbursements of LCSG's counsel and
one counsel for Xxxxxxx and Xxxxxxx'x Accountants in connection with the
preparation, review and filing of the registration statement or any Blue Sky
Filing pursuant to this Article 3; provided, however, that LCSG shall pay
underwriting discounts and commissions applicable to the sale of the Registrable
Securities.
3.5. Future Agreements
LCSG shall not hereafter agree with the holders of any securities issued or to
be issued by LCSG to register or qualify such securities under the Securities
Act or any Blue Sky Law unless such agreement specifically provides that (a)
such holder of such securities may not participate in any registration under
Section 3.1 except as provided in the proviso to Section 3.1, and (b) the holder
of such securities may not participate in any registration under Section 3.2
except as provided in Section 3.2.
3.6. Other Conditions and Limitations.
Any other provision hereof notwithstanding:
(a) Xxxxxxx'x registration rights under this Section 3 are subject to the
conditions that (i) in the case of a Registration under Section 3.1 relating to
an underwritten offering of Registrable Securities, the underwriting agreement
and other documents to which LCSG is a party or which purport to obligate LCSG
with respect to any matter be reasonably satisfactory to LCSG, and (ii) in the
case of a registration under Section 3.2 relating to an underwritten offering of
securities of LCSG, Xxxxxxx agrees to the terms and conditions of, and executes
and delivers the underwriting agreement, a custody or deposit agreement and a
power of attorney, each in the customary form required by the underwriters, and
such other underwriting documents as the underwriters may reasonably require as
a condition to effecting the offering or the inclusion of Registrable Securities
therein;
(b) the registration rights pursuant to Section 3.1 or 3.2 and LCSG's
obligations under this Article 3 shall be suspended at any time when LCSG does
not have a class of equity securities (as defined in Section 3(a)(11) of the
Exchange Act and Rule 3a11-1 thereunder) registered under Section 12(b) or 12(g)
of the Exchange Act; and
(c) notwithstanding that a demand for registration has been duly made pursuant
to Section 3.1 or 3.2, LCSG shall not be obligated to prepare or file a
registration statement under the Securities Act with respect to any Registrable
Securities as to which such demand relates, or to register or to qualify any
such Registrable Securities under any applicable Blue Sky Law, and if such a
registration statement has been filed or Blue Sky Filing has been made, LCSG may
suspend or withdraw such registration statement or Blue Sky Filing, if the Board
of Directors of LCSG determines in good faith that such registration would or
could reasonably be expected to interfere with or adversely affect the prospects
of consummating, or result in terms or conditions less favorable to LCSG
relating to, any material acquisition or disposition of assets (within the
meaning and scope of Item 2 of Form 8-K under the Exchange Act) or any public or
private financing as to which LCSG has entered into a definitive agreement or is
engaged in substantive negotiations for a period of 180 days after such demand
for registration is made; provided that LCSG may not so delay or suspend such
registration on more than one occasion in any period of twelve (12) consecutive
months.
3.7. Application to Subsequent Holders.
The provisions of this Article 3 shall inure to the benefit of and be binding
upon any holder of Registrable Securities; provided that all such holders shall
be deemed to be represented by and act through Xxxxxxx and any notice or other
documents required or permitted to be given or delivered pursuant to the
provisions of this Article 3 to or by LCSG shall be deemed to be duly so given
or delivered if given to or by Xxxxxxx in accordance with Section 10.5, and any
right of the holders of Registrable Securities, including in connection with the
preparation of any documents or any investigation pursuant to Section 3.5
relating to any registration, shall be exercised or effected by or through
Xxxxxx (or such successor).
4Article : XXXXXXXXXXXXXXX XXX XXXXXXXXXX XX XXXX
XXXX represents and warrants to Xxxxxxx the following:
4.1. Existence and Good Standing.
Each of LCSG and its subsidiaries is a corporation, duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and has all requisite corporate power and authority to own, lease
and operate all its properties and to carry on its business as now being
conducted. Each of LCSG and its subsidiaries is duly qualified and in good
standing in each jurisdiction in which the failure to qualify would have a
Material Adverse Effect.
4.2. Capital Stock.
The outstanding shares of LCSG and its subsidiaries have been duly authorized
and validly issued and are fully paid and non-assessable, and have not been
issued in violation of any preemptive rights of stockholders. There are no
outstanding options, warrants, rights, calls, commitments, conversion rights,
rights of exchange, plans or other agreements of any character providing for the
purchase, issuance or sale of any shares of the capital stock of LCSG except as
set forth in the Form 10SB filed _______, 1999 with the Commission and on
Schedule 4.2. Xxxxxxxx owns his shares of Common Stock free and clear of any
liabilities, liens, security interests, pledges, or encumbrances.
4.3. Financial Statements.
4.3.1. The Financial Statements, including the footnotes thereto, are true
and correct in all material respects. The balance sheets included in
the Financial Statements, taken together, fairly present in all
material respects the financial condition of LCSG as at the
respective dates thereof and, except as indicated therein, in all
material respects all known claims against and all debts and
liabilities of LCSG, fixed or contingent, as at the date thereof,
required by GAAP to be shown thereon and the related statements of
operations and cash flows for the periods indicated, taken together,
fairly present, in all material respects the results of operations
and financial condition for such periods.
4.3.2. Since the Balance Sheet Date, except as set forth on Schedule 4.3.2
there has been (a) no materially adverse change in the assets or
liabilities, or in the business or financial condition, or in the
results of operations of LCSG, and (b) to the knowledge of LCSG, no
fact or condition exists or is contemplated or threatened which
might cause such a materially adverse change in the future.
4.4. Contracts.
Except as set forth in Schedule 4.6 or any other schedule annexed hereto, LCSG
is not a party to or bound by any agreement, contract or commitment relating to
any collective bargaining agreement, any bonus, deferred compensation, pension,
profit sharing, stock option, retirement or other employee benefit plan; any
loan or advance to, or investment in, any other Person or any agreement relating
to the making of any such loan, advance or investment; any guarantee or other
contingent liability in respect of any indebtedness or obligation of any other
Person (other than the endorsement of negotiable instruments for collection in
the ordinary course of business); any management service, employment, consulting
or any other similar type of contract; any agreement, contract or commitment
limiting the freedom of LCSG to engage in any line of business or to compete
with any other Person; any secrecy or confidentiality agreement with any Person,
including any employee of or consultant to LCSG; any agreement, contract or
commitment which involves the payment by LCSG of Twenty-Five Thousand Dollars
($25,000) or more, in the aggregate, and is not cancelable without penalty
within thirty (30) days; any agreement with any officer or director of LCSG; any
licensing or franchise agreement; or any contract with customers or other third
parties for the delivery of goods or performance of services which involves
payment by LCSG of more than Twenty Five Thousand Dollars ($25,000.00).
Except as set forth on Schedule 4.6, there exists no default or event of default
by LCSG, or occurrence, condition, or act (including this transaction) which,
with the giving of notice, the lapse of time or the happening of any other event
or condition, would become a default or event of default thereunder. Except as
set forth on Schedule 4.6, LCSG has not violated any material terms or
conditions of any Contract which would permit termination or modification of any
such Contract, there are no outstanding written claims of breach or
indemnification or written notice of default or termination of any such Contract
and, to the knowledge of LCSG, all of the covenants to be performed by any other
party thereto have been substantially performed.
4.5. Litigation.
Except as set forth in Schedule 4.5, there is no action, suit, proceeding at law
or in equity by any Person, or any arbitration or any administrative or other
proceeding by or before any Governmental Body, pending or, to the knowledge of
LCSG, threatened since the Balance Sheet Date, against or affecting LCSG or any
of its properties or rights or the operation of its business, and to the
knowledge of LCSG, there is no valid basis for any such action, proceeding or
investigation. Except as disclosed on Schedule 4.5, none of LCSG or any
Controlled Company is subject to any Order entered in any lawsuit or proceeding
which has a Material Adverse Effect or which would prevent or interfere with the
consummation of the transactions contemplated hereby.
4.6. Liabilities.
To the knowledge of LCSG, there are no outstanding claims, liabilities or
indebtedness, contingent or otherwise against LCSG, except as set forth in
Schedule 4.6 other than (i) liabilities incurred subsequent to the Balance Sheet
Date in the ordinary course of business and consistent with past practice and
other liabilities which in the aggregate do not have a Material Adverse Effect,
or (ii) liabilities set forth on any Schedule hereto or which are not required
to be set forth on any Schedule hereto because such liabilities are specifically
excluded from disclosure on the Schedules provided for by the provisions of this
Agreement. Schedule 4.6 sets forth a list of all current arrangements of LCSG
for borrowed money and all outstanding balances as of the date hereof with
respect thereto, but excluding accounts payable, wages payable and operating
expenses payable. LCSG is not in material default in respect of the terms or
conditions of any such indebtedness.
4.7. Intellectual Property.
Schedule 4.7 contains a materially accurate and complete list of all
Intellectual Property owned or used or anticipated to be used by LCSG in the
development, production, marketing and sale of the products and services offered
as part of the LCSG Business. Except as set forth on Schedule 4.10, to the
knowledge of LCSG, no written claim of infringement or misappropriation of
Intellectual Property has been made against LCSG and, LCSG does not infringe or
misappropriate any Intellectual Property of any third party.
4.8. Compliance with Laws.
To the knowledge of LCSG, except with respect to any Environmental Law, LCSG is
in compliance with all applicable material federal, state and local laws,
regulations and Orders and all other applicable requirements of any Governmental
Body having jurisdiction. Except with respect to any Environmental Law, LCSG is
not now charged with, and, to the knowledge of LCSG, LCSG is not now under
investigation with respect to, any violation of any law, regulation, or Order
affecting its business, and LCSG has filed all material reports required to be
filed with any Governmental Body.
4.9. Licenses.
To the knowledge of LCSG, LCSG has all licenses and permits and other
governmental certificates, authorizations and approvals (collectively,
"Licenses") required by any Governmental Body for the development, production,
marketing and sale of the products and services offered as part of the LCSG
Business and the use of its properties as presently operated or used, except
where the failure to have such Licenses would not have a Material Adverse
Effect. To the knowledge of LCSG, all of such Licenses are in full force and
effect and no action or claim is pending to revoke or terminate any of the
Licenses or declare any License invalid.
4.10. Supplier and Customer Relations.
Schedule 4.10 lists the ten largest suppliers and customers of LCSG, as at the
date hereof. Except as set forth on Schedule 4.10, to the knowledge of LCSG,
none of these current suppliers and none of these current customers has advised
LCSG, orally or in writing, formally or informally, that (i) it is terminating
or considering terminating, or is
materially dissatisfied with its business relationship with LCSG, as a whole or
in respect of any particular product or service, or (ii) any of these current
customers is contemplating reducing or discontinuing in any material respect its
purchases from LCSG, or that any of these suppliers is contemplating reducing or
discontinuing in any material respect its services or sales to LCSG.
4.11. No Changes Since the Balance Sheet Date.
Since the Balance Sheet Date, except as specifically stated on Schedule 4.3.2 or
Schedule 4.11 or reflected on the Closing Date Balance Sheet, LCSG has not
incurred any liability or obligation of any nature (whether accrued, absolute,
contingent or otherwise), except in the ordinary course of LCSG's business;
permitted any of its assets to be subjected to any mortgage, pledge, lien,
security interest, encumbrance, restriction or charge of any kind, other than
Permitted Liens; sold, transferred or otherwise disposed of any assets except in
the ordinary course of LCSG's business; made any single capital expenditure or
commitment therefor involving the expenditure of more than Fifty Thousand
Dollars ($50,000.00); made any bonus or profit sharing distribution or payment
of any kind; granted any increase in the rate of wages, salaries, bonuses or
other remuneration of any employee who after giving effect to such increase or
prior thereto receives compensation at an annual rate of $80,000.00 or more,
except pursuant to a prior obligation or employment policy in the ordinary
course of LCSG's business; canceled or waived any claims or rights of
substantial value; made any change in any method of accounting or auditing
practice; otherwise conducted its business or entered into any transaction,
except in the usual and ordinary manner and in the ordinary course of its
business; amended or terminated any agreement which is material to the business
of LCSG; renewed, extended or modified any Lease or, except in the ordinary
course of business, any lease of personal property; or agreed, whether or not in
writing, to do any of the foregoing; and there has been no adverse change in the
financial condition or results of operations of LCSG, which changes, in the
aggregate, do not have a Material Adverse Effect.
4.12. Valid Agreements; Restrictive Documents.
LCSG has corporate authority, and Xxxxxxxx has the full legal right and
capacity, to execute, deliver and perform their respective obligations under
this Agreement and the Other Documents (including but not limited to the Note,
the Guaranty and the Pledge Agreement) to which it or he is a party, and all of
the foregoing have been duly authorized by all necessary shareholder and
corporate action of LCSG. This Agreement and the Other Documents to which LCSG
is a party (including but not limited to the Note) have been duly executed and
delivered by LCSG,, and constitute the valid and binding obligation of LCSG,,
enforceable against LCSG,, in accordance with their respective terms. Except as
set forth in Schedule 4.14, or in any other Schedule to this Agreement, LCSG is
not subject to, or a party to, any charter, by-law, mortgage, lien, lease,
license, permit, contract, instrument, law, regulation or, to the knowledge of
LCSG, Order or any other restriction of any kind or character, which has a
Material Adverse Effect, or which would prevent consummation of the transactions
contemplated by this Agreement and the Other Documents or compliance by LCSG
with the terms, conditions and provisions of this Agreement and the Other
Documents. The execution, delivery and performance of this Agreement and the
Other Documents (including but not limited to the Note) and the consummation of
the transactions contemplated hereby and thereby will not violate, conflict with
or result in the breach of any provision of the charter documents or by-laws of
LCSG; violate, conflict with or result in the breach or material modification of
any of the terms of, or constitute (or with notice or lapse of time or both
constitute) a default under, or otherwise give any other contracting party the
right to accelerate or terminate, any material obligation, contract, agreement,
lien, Order or other instrument to which LCSG is a party or by or to which it or
any of its respective assets or properties may be bound or subject; violate any
Order of any Governmental Body against, or binding upon LCSG or upon any of its
Assets and which violation would have a Material Adverse Effect; or violate any
statute, law or regulation of the U.S. or New York or Florida and, which
violation would have a Material Adverse Effect.
4.13. Required Approvals, Notices and Consents.
Except as set forth on Schedule 4.19, or elsewhere in this Agreement, no consent
or approval of, other action by, or notice to, any Governmental Body, or any
third party is required in connection with the execution and delivery by LCSG of
this Agreement and the Other Documents or the consummation by LCSG of the
transactions contemplated hereby or thereby.
4.14. Disclosure.
This Agreement, the Financial Statements, or any Schedule hereto, or any
certificate, document or statement in writing to be delivered as required under
this Agreement by or on behalf of LCSG does not contain, or will not contain,
any untrue statement of a material fact, or omits, or will omit, any statement
of a material fact required to be stated or necessary in order to make the
statements contained herein or therein not misleading. To the knowledge of LCSG,
there is no fact which materially adversely affects the business or financial
condition of LCSG which has not been set forth in this Agreement or any Other
Document.
4.15. Copies of Documents.
LCSG has caused to be made available for inspection and copying by Xxxxxxx or
its officers or advisers, true and correct copies of all documents referred to
in this Article 4 or in any Schedule furnished pursuant to this Article 4.
4.16. No Brokers.
No broker, finder, agent or similar intermediary has acted on behalf of LCSG in
connection with this Agreement or the transactions contemplated hereby, and
there are no brokerage commissions, finder's fees or similar fees or commissions
payable in connection therewith based on any agreement, arrangement or
understanding with LCSG, or any action taken by LCSG.
4.17. Securities Laws.
The offering, issuance and delivery to Xxxxxxx by LCSG of the Promissory Note
and any Shares delivered upon conversion of the Note are not, and will not be,
required to be registered under the Securities Act or any applicable Blue Sky
Laws.
5Article : REPRESENTATIONS OF XXXXXXX.
XXXXXXX represents and warrants to LCSG as follows:
5.1. Existence and Good Standing.
Xxxxxxx is a corporation duly organized, validly existing and in good standing
under the laws of Delaware and has all requisite corporate power and authority
to own, lease and operate all its properties and to carry on its business as now
being conducted.
5.2. Valid Agreements; Restrictive Documents.
Xxxxxxx has the corporate authority to execute, deliver and perform its
obligations under this Agreement and the Other Documents to which it is a party,
including the Promissory Note, and all of the foregoing have been duly
authorized by all necessary stockholder and corporate action. This Agreement and
the Other Documents to which Xxxxxxx is a party have been duly executed and
delivered by Xxxxxxx, and constitute a valid and binding agreement of Xxxxxxx,
enforceable against it in accordance with their respective terms. Xxxxxxx is not
subject to, or a party to, any charter, by-law, mortgage, lien, lease, license,
permit, contract, instrument, law, rule, ordinance, regulation, or, to their
knowledge, Order or any other restriction of any kind or character, which would
prevent consummation of the transactions contemplated by this Agreement and the
Other Documents, or compliance by Xxxxxxx with with the terms, conditions and
provisions of this Agreement and the Other Documents. The execution, delivery
and performance of this Agreement and the Other Documents, and the consummation
of the transactions contemplated hereby and thereby will not (i) violate,
conflict with or result in the breach of any provision of the charter documents
or by-laws of Xxxxxxx; (ii) violate, conflict with or result in the breach or
material modification of any of the terms of, or constitute (or with notice or
lapse of time or both constitute) a default under, or otherwise give any other
contracting party the right to accelerate or terminate, any material obligation,
contract, agreement, lien, Order or other instrument to which Xxxxxxx is a party
or by or to which Xxxxxxx may be bound or subject; (iii) violate any Order of
any Governmental Body against, or binding upon, Xxxxxxx or any of their assets
which violation will or may reasonably be expected to be materially adverse to
the condition (financial or otherwise) of Xxxxxxx in the aggregate; or (iv)
violate any statute, law or regulation of the United States, Delaware or New
York which violation will or may reasonably be expected to be materially adverse
to the condition (financial or otherwise) of Xxxxxxx in the aggregate.
5.3. Required Approvals, Notices and Consents.
No consent or approval of, other action by, or notice to, any Governmental Body,
or any third party is required in connection with the execution and delivery by
Xxxxxxx of this Agreement and the Other Documents, or the consummation by
Xxxxxxx of the transactions contemplated hereby or thereby.
5.4. No Brokers.
No broker, finder, agent or similar intermediary has acted on behalf of Xxxxxxx
in connection with this Agreement or the transactions contemplated hereby, and
there are no brokerage commissions, finders' fees or similar fees or commissions
payable in connection therewith based on any agreement, arrangement or
understanding with Xxxxxxx, or any action taken by Xxxxxxx.
6Article : MISCELLANEOUS
6.1. Expenses.
Except as otherwise provided herein, the parties hereto shall pay all of their
own expenses relating to the transactions contemplated by this Agreement and the
Other Documents, including, without limitation, the fees and expenses of their
respective counsel and financial advisers.
6.2. Governing Law; Jurisdiction.
The interpretation and construction of this Agreement and the Other Documents,
and all matters relating hereto, shall be governed by the law of the State of
New York, without reference to its conflict of laws provisions. Unless
applicable law requires a different method, any notice that must be given to
LCSG under this Agreement will be given by delivering it or mailing it by first
class mail to LCSG at its address set forth at the beginning of this Agreement
or at such other address as LCSG may give notice of to the holder of this
Agreement. Any action brought to enforce this Agreement may be brought in the
State of New York, and each Party hereby consents to the personal jurisdiction
of the federal and state courts located in the State of New York, and agrees
that unless applicable law requires a different method, service of process in
any such action may be made by first class mail upon a Party at its address set
forth in the beginning of this Agreement or at such other address as a Party
shall advise the other Party by written notice in accordance with this
Agreement.
6.3. Interchangeability of Schedules.
Any information contained on any Schedule to this Agreement or in the Financial
Statements shall be deemed to be contained on each and every other Schedule to
this Agreement.
6.4. Captions.
The article and section captions used herein are for reference purposes only,
and shall not in any way affect the meaning or interpretation of this Agreement.
6.5. Notices.
Any notice or other communications required or permitted hereunder shall be in
writing and shall be deemed effective (a) upon personal delivery, if delivered
by hand; (b) one day after the date of delivery by Federal Express or other
nationally recognized courier service that provides a delivery receipt, if
delivered by priority overnight delivery between any two points within the
United States; or (c) five days after deposit in the mails, if mailed by
certified or registered mail (return receipt requested) between any two points
within the United States, and in each case of mailing, postage prepaid,
addressed to a party at its address first set forth above, with copies to.
Feder, Kaszovitz, Isaacson, Weber, Xxxxx & Bass LLP, 000 Xxxxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000-0000, Attention: Xxxxxxxx X. Xxxx and to
________________________________________________________. or such other address
as shall be furnished in writing by like notice by any such party.
6.6. Parties in Interest.
This Agreement and the Other Documents may not be transferred, assigned, pledged
or hypothecated by any party hereto, other than by operation of law. This
Agreement and the Other Documents shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, successors and permitted assigns. Notwithstanding anything to
the contrary in this Agreement, but subject to the Securities Act, nothing in
this Agreement shall prohibit or in any way restrict the ability of Xxxxxxx or
any of its Affiliates to transfer any or all of the Shares, to one or more
Affiliates of Xxxxxxx.
6.7. Severability.
In the event any provision of this Agreement or the Other Documents is found to
be void and unenforceable by a court of competent jurisdiction, the remaining
provisions of this Agreement or such Other Documents shall nevertheless be
binding upon the parties with the same effect as though the void or
unenforceable part had been severed and deleted.
6.8. Counterparts.
This Agreement may be executed in two or more counterparts, all of which taken
together shall constitute one instrument.
6.9. Entire Agreement; Amendments.
This Agreement, and the Other Documents, contain the entire understanding of the
parties hereto with respect to the subject matter contained herein and therein.
This Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter. This Agreement may not be changed
orally, but only by an agreement in writing signed by all parties.
IN WITNESS WHEREOF, the parties have each caused its corporate name to be
hereunto subscribed by their respective duly authorized officers on the date
first written above.
XXXXXXX COMMUNICATION, INC.
By:
Name:
Title: ____________________
LCS GOLF, INC.
By:
Name:
Title: ____________________
