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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
LSI LOGIC CORPORATION
LSI MERGER SUBSIDIARY, INC.
MINT TECHNOLOGY, INC.
AND
XXXX XXXXXXXX
DATED AS OF JULY 27, 1997
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TABLE OF CONTENTS
PAGE
ARTICLE I - THE MERGER...........................................................................2
1.1 The Merger........................................................................2
1.2 Effective Time....................................................................2
1.3 Effect of the Merger..............................................................2
1.4 Articles of Incorporation; Bylaws.................................................2
1.5 Directors and Officers............................................................2
1.6 Capital Stock Contribution by Holder..............................................3
1.7 Escrow of Portion of Cash Consideration...........................................3
1.8 Effect on Capital Stock...........................................................3
1.9 No Further Ownership Rights in Mint Capital Stock.................................4
1.10 Conversion of Capital Stock of Merger Sub.........................................4
1.11 Taking of Necessary Action; Further Action........................................4
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF MINT AND HOLDER...................................5
2.1 Representations and Warranties of Mint and Holder.................................5
ARTICLE III -REPRESENTATIONS AND WARRANTIES OF THE HOLDER.......................................17
3.1 Additional Representations and Warranties of the Holder..........................17
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF LSI AND MERGER SUB...............................18
4.1 Representations and Warranties of LSI and Merger Sub.............................18
ARTICLE V - COVENANTS OF THE HOLDER AND MINT....................................................19
5.1 Operation of Business............................................................19
5.2 Preservation of Business.........................................................20
5.3 Satisfaction of Conditions; General..............................................20
5.4 Full Access......................................................................20
5.5 Notice of Developments...........................................................20
5.6 Exclusivity; Acquisition Proposals...............................................20
5.7 Confidentiality..................................................................21
5.8 Expenses.........................................................................21
5.9 Public Announcements.............................................................21
5.10 FIRPTA Certificates..............................................................21
5.11 Option Plan......................................................................21
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5.12 Contribution to Capital..........................................................22
5.13 Exercise of Options..............................................................22
5.14 Grant of Options. ...............................................................22
5.15 Bonus Plan.......................................................................22
5.16 Tax Matters......................................................................22
5.17 S Status.........................................................................23
5.18 After Tax Earnings...............................................................23
5.19 Shareholder Consent..............................................................23
5.20 Cooperation......................................................................23
ARTICLE VI - COVENANTS OF LSI...................................................................23
6.1 Satisfaction of Conditions; General..............................................23
6.2 Confidentiality..................................................................24
6.3 Expenses.........................................................................24
6.4 Registration Statement on Form S-8...............................................24
6.5 Public Announcement..............................................................24
6.6 NYSE Listing.....................................................................24
6.7 Notice of Developments...........................................................24
ARTICLE VII - CONDITIONS PRECEDENT..............................................................25
7.1 Conditions to Each Party's Obligations to Effect the Acquisition.................25
7.2 Conditions to Obligations of LSI.................................................25
7.3 Conditions to Obligations of Mint and the Holder.................................26
ARTICLE VIII - INDEMNIFICATION..................................................................27
8.1 Survival of Representations, Warranties, Covenants and Agreements................27
8.2 Indemnification of LSI...........................................................27
8.3 Indemnification of Holder........................................................28
8.4 Indemnification Threshold and Limitations........................................28
8.5 Escrow Fund......................................................................28
8.6 Escrow Period....................................................................29
8.7 Procedures with Respect to Third-Party Claims....................................29
8.8 Procedure For Indemnification....................................................30
8.9 Objections to Claims.............................................................30
8.10 Resolution of Conflicts; Arbitration.............................................30
8.11 Order of Distribution of Funds...................................................31
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ARTICLE IX - GENERAL PROVISIONS.................................................................31
9.1 Termination, Amendment and Waiver................................................31
9.2 Effect of Termination............................................................31
9.3 Amendment........................................................................32
9.4 Extension; Waiver; Delay or Omission.............................................32
9.5 Notices..........................................................................32
9.6 Counterparts.....................................................................33
9.7 Entire Agreement.................................................................33
9.8 No Transfer......................................................................33
9.9 Severability.....................................................................33
9.10 Other Remedies...................................................................34
9.11 Further Assurances...............................................................34
9.12 Absence of Third-Party Beneficiary Rights........................................34
9.13 Mutual Drafting..................................................................34
9.14 Governing Law....................................................................34
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INDEX OF SCHEDULES
SCHEDULE DESCRIPTION
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2.1 Exceptions to Representations and Warranties
of Mint
2.1(b) Capital Stock Ownership
2.1(d) Consents
2.1(i) Material Adverse Change
2.1(j) Liabilities of Mint
2.1(l) Benefit Plans
2.1(m) Major Contracts
2.1(p) Technology; Intellectual Property
2.1(q) Leases; Equipment
2.1(s) Insurance
2.1(u) Key Employees
4.1 Exceptions to Representations and Warranties
of LSI and Merger Sub
5.18 After Tax Earnings
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TABLE OF CONTENTS
(CONTINUED)
PAGE
INDEX OF EXHIBITS
EXHIBIT DESCRIPTION
Exhibit A Escrow Agreement
Exhibit B Xxxxxxxx Employment and Non-competition Agreement
Exhibit C Proprietary Information and Invention Agreement
Exhibit D Key Employees' Employment and Non-competition Agreement
Exhibit E Consent to Amendment of Option Agreement
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of July ____, 1997 by and among LSI Logic Corporation, a Delaware
corporation ("LSI"); LSI Merger Subsidiary, Inc., a Massachusetts corporation
and a wholly-owned subsidiary of LSI ("Merger Sub"); Mint Technology, Inc., a
Massachusetts corporation ("Mint"); and Xxxx Xxxxxxxx, the sole shareholder of
Mint and a signatory hereto (the "Holder").
RECITALS
A. The Boards of Directors of each of Mint, LSI and Merger Sub believe
it is in the best interests of each company and their respective shareholders
that LSI acquire Mint through the statutory merger of Merger Sub with and into
Mint (the "Merger") and, in furtherance thereof, have approved the Merger.
B. Pursuant to the Merger, among other things, and subject to the terms
and conditions of this Agreement, Holder will contribute prior to the Closing
(as defined below) 381,818 shares of the issued and outstanding shares of
capital stock of Mint held by Holder to the capital of Mint ("Capital Stock
Contribution").
C. Pursuant to the Merger, among other things, and subject to the terms
and conditions of this Agreement, LSI will acquire all of the issued and
outstanding shares of capital stock of Mint ("Mint Capital Stock") for cash in
the amount of $7,000,000 (the "Cash Consideration") through a reverse subsidiary
merger of Merger Sub with and into Mint.
D. All outstanding options, warrants and other rights to acquire or
receive shares of Mint Capital Stock shall be converted into the right to
receive shares of Common Stock of LSI ("LSI Common Stock") in amounts determined
in accordance with the Exchange Ratio (as defined in Section 1.8(c)).
E. A portion of the Cash Consideration otherwise paid by LSI in
connection with the Merger shall be placed in escrow by LSI, the release of
which amount shall be contingent upon certain events and conditions, all as set
forth in this Agreement and the Escrow Agreement attached hereto as Exhibit A.
F. Mint, LSI, Merger Sub, and the Holder desire to make certain
representations and warranties and other agreements in connection with the
Merger.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
intending to be legally bound hereby the parties agree as follows:
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ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of the Massachusetts General Laws ("Massachusetts Law"),
Merger Sub shall be merged with and into Mint, the separate corporate existence
of Merger Sub shall cease and Mint shall continue as the surviving corporation
and as a wholly-owned subsidiary of LSI. Mint as the surviving corporation after
the Merger is hereinafter sometimes referred to as the "Surviving Corporation".
1.2 Effective Time. Unless this Agreement is earlier terminated pursuant
to Section 9.1, the closing of the Merger (the "Closing") will take place as
promptly as practicable, but no later than five (5) business days, following
satisfaction or waiver of the conditions set forth in Article VII, at the
offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx,
Xxxxxxxxxx, unless another place or time is agreed to by LSI and Mint. The date
upon which the Closing actually occurs is herein referred to as the "Closing
Date". On the Closing Date, the parties hereto shall cause the Merger to be
consummated by filing an Agreement of Merger (or like instrument) with the
Secretary of State of the Commonwealth of Massachusetts (the "Agreement of
Merger"), in accordance with the relevant provisions of applicable law (the time
of acceptance by the Secretary of State of the Commonwealth of Massachusetts of
such filing being referred to herein as the "Effective Time").
1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of Massachusetts Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, privileges, powers and franchises of
Mint and Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of Mint and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation. All parties to the
Agreement intend that this transaction shall be treated as a taxable purchase of
Mint stock by LSI for cash through a reverse subsidiary merger.
1.4 Articles of Organization; Bylaws.
(a) Unless otherwise determined by LSI prior to the Effective
Time, at the Effective Time, the Articles of Organization of Mint shall be the
Articles of Organization of the Surviving Corporation until thereafter amended
as provided by law and such Articles of Organization.
(b) The Bylaws of Mint, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended.
1.5 Directors and Officers. The director(s) of Merger Sub immediately
prior to the Effective Time shall be the initial director(s) of the Surviving
Corporation, each to hold office in accordance with the Articles of Organization
and Bylaws of the Surviving Corporation. The officers of Merger Sub immediately
prior to the Effective Time shall be the initial officers of the Surviving
Corporation, each to hold office in accordance with the Bylaws of the Surviving
Corporation.
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1.6 Capital Stock Contribution by Holder. Prior to the Closing Date,
Holder shall make the Capital Stock Contribution and shall own 318,182 shares of
the Common Stock of Mint following such capital contribution and at the Closing
Date, which shall constitute all of the outstanding shares of Mint at the
Closing Date.
1.7 Escrow of Portion of Cash Consideration. Ten percent (10%) of the
Cash Consideration (i.e. $700,000) shall be held in escrow, pursuant to the
Escrow Agreement, for a period of 12 months following the Closing Date to
indemnify LSI for all Damages covered by the indemnities provided in Section 8.2
hereof.
1.8 Effect on Capital Stock. Subject to the terms and conditions of this
Agreement, as of the Effective Time, by virtue of the Merger and without any
action on the part of Merger Sub, Mint or the Holder, the following shall occur:
(a) Conversion of Mint Capital Stock. Each share of Mint Capital
Stock issued and outstanding immediately prior to the Effective Time (other than
any shares of Mint Capital Stock to be cancelled pursuant to the Capital Stock
Contribution) shall be converted into the right to receive $22.00 per share (the
"Purchase Price"), with 10% of such per share amount (an aggregate of $700,000)
being deposited pursuant to and subject to the Escrow Agreement (as defined
herein) pursuant to Article VIII below (the "Cash Escrow Fund"). The foregoing
Purchase Price shall be adjusted to reflect fully the effect of any stock split,
reverse stock split, stock dividend, reorganization, recapitalization or other
like change with respect to Mint Capital Stock occurring after the date hereof
and prior to the Effective Time.
(b) Stock Options. LSI acknowledges that Mint has granted or will
grant prior to Closing to Holder a nonqualified stock option to purchase 424,242
shares of the Common Stock of Mint at an exercise price of $5.50 per share (the
"Xxxxxxxx Option"). The Xxxxxxxx Option vests in equal portions over three
years, with one-third vesting on each of the first, second and third
anniversaries of the Closing Date; provided however, that if Holder is
involuntarily terminated by LSI as an employee of LSI without Cause (as defined
in the Xxxxxxxx Employment and Non-Competition Agreement attached hereto as
Exhibit B) or due to Death or Disability (as defined in that agreement), the
Xxxxxxxx Option shall fully vest and become exercisable immediately. At the
Effective Time, all options (including the Xxxxxxxx Option and the options
issued pursuant to Section 5.14 hereof) to purchase Mint Common Stock (each a
"Mint Option") then outstanding under Mint's 1996 Stock Option Plan as amended
(the "Option Plan"), or otherwise, shall be assumed by LSI in accordance with
provisions described below.
(1) Each Mint Option so assumed by LSI under this
Agreement shall continue to have, and be subject to, the same terms and
conditions set forth in the Option Plan and/or as provided in the respective
option agreements governing such Mint Option immediately prior to the Effective
Time, except that (A) such Mint Option shall be exercisable for that number of
whole shares of LSI Common Stock equal to the product of the number of shares of
Mint Common Stock that were issuable upon exercise of such Mint Option
immediately prior to the Effective Time multiplied by the Exchange Ratio (as
defined below), rounded down to the nearest whole number of
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shares of LSI Common Stock and (B) the per share exercise price for the shares
of LSI Common Stock issuable upon exercise of such assumed Mint Option shall be
equal to the quotient determined by dividing the exercise price per share at
which such Mint Option was exercisable immediately prior to the Effective Time
by the Exchange Ratio, rounded to the nearest whole cent.
(2) The "Exchange Ratio" shall be 0.6286.
(3) It is the intention of the parties that the Mint
Options (other than the Xxxxxxxx Options) assumed by LSI qualify following the
Effective Time as incentive stock options as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), to the extent the Mint
Options were granted as incentive stock options and qualified as incentive stock
options immediately prior to the Effective Time.
(4) Promptly following the Effective Time, LSI will issue
to each holder of an outstanding Mint Option a document evidencing the foregoing
assumption of such Mint Option by LSI.
(5) At the Effective Time, Mint shall assign to LSI any
and all rights of repurchase pertaining to shares of Mint Capital Stock, if any,
issued upon exercise of stock options, pursuant to stock purchase agreements, or
otherwise.
1.9 No Further Ownership Rights in Mint Capital Stock. All Cash
Consideration, stock options of LSI, and other consideration issued upon the
surrender or exchange of shares of Mint Capital Stock or options to purchase
Mint Capital Stock in accordance with the terms hereof shall be deemed to have
been issued in full satisfaction of all rights pertaining to such shares of Mint
Capital Stock.
1.10 Conversion of Capital Stock of Merger Sub. At and as of the
Effective Time, all of the shares of outstanding stock of Merger Sub shall be
converted into one share of Common Stock of the Surviving Corporation.
1.11 Taking of Necessary Action; Further Action. If, at any time after
the Effective Time, any such further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of Mint and Merger Sub, the officers and directors of Mint
and Merger Sub are hereby fully authorized in the names of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF MINT AND HOLDER
2.1 Representations and Warranties of Mint and Holder. Except as
disclosed in Schedule 2.1 or in the other schedules referred to below and
delivered to LSI, Mint and Holder hereby represent and warrant to LSI that:
(a) Organization, Standing and Power. Mint is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, and has all requisite power and authority to
own, operate and lease its properties and to carry on its business as now being
conducted. Mint is duly qualified as a foreign corporation and is in good
standing in each jurisdiction in which the failure to so qualify would have an
Adverse Business Effect on Mint. For purposes of this Agreement, an "Adverse
Business Effect" shall mean a material adverse effect on the business, financial
condition, results of operations, assets and prospects of Mint considered as a
whole. Mint has delivered to LSI complete and correct copies of its Articles of
Organization and Bylaws, as amended to the date hereof; and has delivered or
made available minutes of all of Mint's directors' and shareholders' meetings,
and stock certificate books correctly setting forth the record ownership of all
outstanding shares of Mint capital stock.
(b) Capital Structure. The authorized capital stock of Mint
consists of:
(1) Common Stock. 1,200,000 shares of Common Stock, $0.01
par value ("Mint Common Stock"), of which 700,000 shares are issued and
outstanding and owned, beneficially and of record, as set forth in Schedule
2.1(b) (all but 318,182 of which will be contributed to capital pursuant to the
Capital Stock Contribution prior to Closing);
(2) Options. Except for a total of 1,100,00 shares of
Common Stock reserved for issuance pursuant to Mint's Option Plan of which
735,742 shares are presently subject to outstanding options as set forth in
Schedule 2.1(b), and 364,258 of which remain available for future issuance under
the Option Plan as set forth in this Agreement, there are no outstanding
options, warrants, rights (including conversion or preemptive rights) or
agreements for the purchase or acquisition from Mint of any shares of its
capital stock. Schedule 2.1(b) sets forth for each outstanding Mint Option the
name of the holder of such option, the domicile address of such holder, the
number of shares of Common Stock subject to such option, the exercise price and
the vesting schedule of such option, including the extent vested to date. Except
as described in Schedule 2.1(b), there are no options, warrants, calls, rights,
commitments or agreements of any character, written or oral, to which Mint is a
party or by which it is bound obligating Mint to issue, deliver, sell,
repurchase or redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of the capital stock of Mint. Except as described in
Schedule 2.1(b) or in Sections 1.8(c), 5.11 and 5.14 hereof, there are no
options, warrants, calls, rights, commitments or agreements of any character,
written or oral, to which Mint is a party or by which it is bound obligating
Mint to grant, extend, accelerate the vesting of, change the price of, otherwise
amend or enter into any such option, warrant, call, right, commitment or
agreement. The holders of Mint options or any other options or rights set forth
in Schedule 2.1(b) have been or will be given, or shall have properly waived,
any
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required notice prior to the Merger and any right to exercise option shares not
previously vested in the event of and after consummation of the Merger. As a
result of the Merger, all Mint Capital Stock will be canceled and extinguished.
Mint is not a party or subject to any agreement or understanding, and, to Mint's
knowledge, there is no agreement or understanding between any persons and/or
entities, which affects or relates to the voting or giving of written consents
with respect to any security of Mint or by a director of Mint; and
(3) Preemptive Rights. All outstanding shares of Mint
Common Stock are duly authorized, validly issued, fully paid and non-assessable
and not subject to preemptive rights created by statute, the Articles of
Organization or Bylaws of Mint or any agreement to which Mint is a party or by
which it is bound.
(c) Subsidiaries. Mint has no subsidiaries or any direct or
indirect interest in any corporation, partnership, trust or other business
association or entity.
(d) Authority.
(1) Mint has all requisite power and authority to enter
into this Agreement and to perform its respective obligations hereunder, and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Mint and the performance by Mint of its obligations hereunder,
and the consummation of the transactions contemplated hereby, have been preceded
by all corporate action necessary to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by each of Mint and Holder and is the legal, valid and
binding obligation of each of Mint and Holder and is enforceable against each
such party in accordance with its terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency and other
similar laws affecting creditors' rights generally and by general principles of
equity.
(2) Other than as set forth in the Schedule 2.1(d), the
execution and delivery of this Agreement by Mint does not, and, as of the
Effective Time, the consummation of the transactions contemplated hereby will
not, conflict with, or result in any violation of, or default under (with or
without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
benefit under (any such event, a "Conflict") (i) any provision of the Articles
of Organization or Bylaws of Mint or (ii) any material mortgage, indenture,
lease, contract or other agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Mint or to which Mint is a party or to which it is bound or to
which any of its properties or assets is subject. No consent, waiver, approval,
order or authorization of, or registration, declaration or filing with, any
court, administrative agency or commission or other federal, state, county,
local or foreign governmental authority, instrumentality, agency or commission
("Governmental Entity") or any third party (so as not to trigger any Conflict),
is required by or with respect to Mint in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby, except for (i) the filing of the Certificates of Merger and Agreement of
Merger with the Secretaries of State of the Commonwealth of Massachusetts and
the State of Delaware, (ii) such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings as may be
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required under applicable federal and state securities laws and (iii) such other
consents, waivers, authorizations, filings, approvals and registrations which
are set forth on Schedule 2.1(d).
(e) Financial Statements. Mint has furnished or made available to
LSI audited financial statements of Mint for each of the fiscal years ended on
December 31, 1994, December 31, 1995 and December 31, 1996 (consisting of
balance sheets, statements of income and retained earnings, statements of cash
flows and notes related thereto) (collectively, "Mint Audited Financial
Statements"), the related management letters, and its unaudited balance sheet as
of May 31, 1997 ("Mint Unaudited Balance Sheet") and the related unaudited
statements of income and retained earnings and statement of cash flow for the
five months ended May 31, 1997 (together with the Mint Unaudited Balance Sheet,
the "Mint Unaudited Financial Statements"). The Mint Audited Financial
Statements and the Mint Unaudited Financial Statements (collectively, "Mint
Financial Statements") have been prepared in accordance with generally accepted
U.S. accounting principles ("GAAP") consistently applied and fairly present the
financial condition and operating results of Mint as at the dates thereof and
the results of its operations and cash flows for the periods then ended, except
that the Mint Unaudited Financial Statements have no notes and are subject to
normal year-end adjustments, which will not be material in amount or
significance. Mint has delivered or made available to LSI correct and complete
copies of all correspondence prepared by its counsel for Mint's independent
public accountants in connection with the completed audits of Mint's Financial
Statements and any such correspondence since the date of the last such audit.
(f) Compliance with Law. Mint is in compliance with, and has
conducted its business so as to comply with all laws, rules and regulations,
judgments, decrees or orders of any Governmental Entity applicable to its
operations or with respect to which compliance is a condition of engaging in the
business thereof, except to the extent that failure to comply would,
individually or in the aggregate, not have had and is not expected to have an
Adverse Business Effect. There are no material judgments or orders, injunctions,
decrees, stipulations or awards (whether rendered by a court or administrative
agency or by arbitration) against Mint or against any of Mint's properties or
assets.
(g) No Defaults. Mint is not and has not received notice that it
is or would be with the passage of time, (a) in violation of any provision of
its Articles of Organization or Bylaws or other charter documents, as
applicable, or (b) in default or violation of any term, condition or provision
of (i) any judgment, decree, order, injunction or stipulation applicable to Mint
or (ii) any agreement, note, mortgage, indenture, contract, lease or instrument,
permit, concession, franchise or license to which Mint is a party or by which
Mint or its properties or assets may be bound, which violation or default would,
individually or in the aggregate, have an Adverse Business Effect.
(h) Litigation. There is no action, suit, proceeding, claim,
arbitration or investigation pending or, to Mint's knowledge, threatened against
Mint or Holder which would be reasonably likely to, individually or in the
aggregate, have an Adverse Business Effect or which in any manner challenges or
seeks to prevent, enjoin, alter or materially delay any of the transactions
contemplated hereby as the case may be. Neither Mint nor Holder is the plaintiff
or petitioner in any litigation or proceeding relating to the business of Mint
which could, individually or in the aggregate, have an Adverse Business Effect.
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(i) No Material Adverse Change. Except as set forth on Schedule
2.1(i), since May 31, 1997, the date of the Mint Unaudited Financial Statements,
Mint has conducted business in the ordinary course and, except as contemplated
herein, there has not occurred:
(1) Any material adverse change in the business condition
of Mint;
(2) Any transaction by Mint except in the ordinary course
of business as conducted on that date and consistent with past practices;
(3) Any amendments or changes in the Articles of
Organization or Bylaws of Mint;
(4) Any damage, destruction or loss, whether covered by
insurance or not, after giving effect to any insurance proceeds received as a
result of such loss, materially and adversely affecting any of the properties or
assets of Mint;
(5) Except for the Capital Stock Contribution and as
contemplated by Section 5.14 hereof and the Xxxxxxxx Option referred to in
Section 1.8(c) hereof and except for option grants in connection with newly
hired employees in the ordinary course of business, any issuance, redemption,
repurchase or other acquisition of shares of capital stock of Mint, or any
options, warrants or rights to acquire capital stock of Mint, or except for the
distribution contemplated by Section 5.19, any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the capital stock of Mint;
(6) Any increase in or modification of the compensation or
benefits payable or to become payable by Mint to any of its directors, officers
or employees, except in the ordinary course of business consistent with past
practice;
(7) Any increase in or modification of any bonus, pension,
insurance or other employee benefit plan, payment or arrangement (including, but
not limited to, the granting of stock options, restricted stock awards or stock
appreciation rights) made to, for or with any of Mint's employees, except for
the Xxxxxxxx Option or pursuant to Section 5.14 hereof except for the
distribution contemplated by Section 5.19 and option grants in connection with
any newly hired employees or in the ordinary course of business consistent with
past practice;
(8) Any sale of the property or assets of Mint
individually in excess of $20,000 or in the aggregate in excess of $50,000,
except in the ordinary course of business;
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(9) Any alteration in any term of any outstanding security
of Mint (excluding for such purpose the amendment to the Option Plan and related
agreements required by Section 5.11);
(10) Any (A) incurrence, assumption or guarantee by Mint
of any debt for borrowed money, (B) issuance or sale of any securities
convertible into or exchangeable for debt securities of Mint; or (C) issuance or
sale of options or other rights to acquire from Mint directly or indirectly,
debt securities of Mint or any securities convertible into or exchangeable for
any such debt securities;
(11) Any creation or assumption by Mint of any mortgage,
pledge, security interest or lien or other encumbrance on any asset (other than
liens arising under existing lease financing arrangements, liens arising by
operation of law, liens arising in the ordinary course of Mint's businesses
which in the aggregate are not material and liens for taxes not yet due and
delinquent);
(12) Any making of any loan, advance or capital
contribution to, or investment in, any person in an aggregate amount which
exceeds $30,000 outstanding at any time;
(13) Any entry into, amendment of, relinquishment,
termination or non-renewal by Mint of any contract, lease transaction,
commitment or other right or obligation other than in the ordinary course of
business;
(14) Any transfer or grant of a right under the Mint
Intellectual Property Rights (as defined in Section 2.1(p) hereof) other than
those transferred or granted in the ordinary course of business;
(15) Any labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or representative
thereof to organize any employees of Mint;
(16) Any violation of or conflict with any applicable
laws, statutes, orders, rules and regulations promulgated or judgment entered by
any Governmental Entity which, individually or in the aggregate would have an
Adverse Business Effect; or
(17) event or condition of any character that has or
reasonably would be expected to have an Adverse Business Effect on Mint; or
(18) agreement by Mint or any officer or employees thereof
to do any of the things described in the preceding clauses (1) through (17)
(other than negotiations with LSI and its representatives regarding the
transactions contemplated by this Agreement).
(j) Absence of Undisclosed Liabilities. Except as set forth in
Schedule 2.1(j) or as to matters encompassed by other representations and
warranties and in the schedules thereto, the Company does not have any
liability, indebtedness, obligation, expense, claim, deficiency, guaranty or
endorsement of any type, whether accrued, absolute, contingent, matured,
unmatured or otherwise
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required to be reflected in financial statements in accordance with GAAP, except
for (i) liabilities reflected in the Mint Unaudited Balance Sheet and/or (ii)
liabilities which have arisen in the ordinary course of Mint's business since
May 31, 1997 consistent in nature and amount with past practices.
(k) Certain Agreements. Except as contemplated by this Agreement,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (a) result in any payment (including,
without limitation, severance, unemployment compensation, golden parachute,
bonus, acceleration of vesting of opition shares or otherwise) becoming due to
any director, officer or employee of Mint under any Plan (as defined in Section
2.1(k) hereof) or otherwise, (b) materially increase any benefits otherwise
payable under any Plan, or (c) result in the acceleration of the time of payment
or vesting of any such benefits.
(l) Plans. Schedule 2.1(l) lists all employee benefit plans,
programs, policies, commitments or other arrangements (whether or not set forth
in a written document) covering any active, former or retired employee or
consultant of Mint (the "Plans"). To the extent applicable, to Mint's knowledge,
the Plans materially comply with the requirements of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and the Internal Revenue Code
of 1986, as amended (the "Code"), and any Plan intended to be qualified under
Section 401(a) of the Code has either obtained a favorable determination letter
as to its qualified status from the Internal Revenue Service or still has a
remaining period of time under applicable Treasury Regulations or Internal
Revenue Service pronouncements in which to apply for such determination letter
and to make any amendments necessary to obtain a favorable determination. To the
extent any Plan with an existing determination letter from the Internal Revenue
Service must be amended to comply with the applicable requirements of the Tax
Reform Act of 1986 and subsequent legislation, the time period for effecting
such amendments will not expire prior to the Effective Time. The Holders have
caused Mint to furnish or make available to LSI copies of the most recent
Internal Revenue Service letters and Forms 5500 with respect to any such Plan.
No Plan is covered by Title IV of ERISA or Section 412 of the Code. Neither Mint
nor any officer or director of Mint has incurred any material liability or
penalty under Sections 4975 through 4980 of the Code or Title I of ERISA. Each
Plan has been maintained and administered in all material respects in compliance
with its terms and with the requirements prescribed by any and all statutes,
orders, rules and regulations, including but not limited to ERISA and the Code,
which are applicable to such Plans. No suit, action or other litigation
(excluding claims for benefits incurred in the ordinary course of Plan
activities) has been brought, or to the knowledge of Mint is threatened, against
or with respect to any such Plan. All contributions, reserves or premium
payments required to be made or accrued as of the date hereof to the Plans have
been made or accrued.
(m) Major Contracts. Except as disclosed in Schedule 2.1(m) or as
contemplated herein, Mint is not a party to:
(1) Any union contract or any employment or consulting
contract or arrangement providing for future compensation, written or oral, with
any officer, consultant, director or employee which is not terminable by Mint
(both under the terms of the contract and under the laws of the territory to
which the contract relates) on thirty (30) days' notice or less without penalty
or obligation to make payments related to such termination;
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(2) Any plan, contract or arrangement, whether written or
oral, providing for bonuses, pensions, deferred compensation, severance pay or
benefits, retirement payments, profit-sharing, or the like;
(3) Any joint venture contract or arrangement or any other
agreement which has involved or is expected to involve a sharing of profits with
other persons;
(4) Any individual customer purchase order for the sale of
goods or services in excess of $50,000;
(5) Any lease for real or personal property in which the
amount of payments which Mint are required to make on an annual basis exceeds
$10,000;
(6) Except for trade indebtedness and employee expense
reimbursements incurred in the ordinary course of business, any instrument
evidencing or related in any way to indebtedness incurred in the acquisition of
companies or other entities or indebtedness for borrowed money by way of direct
loan, sale of debt securities, purchase money obligation, conditional sale,
guarantee, leasehold obligations or otherwise;
(7) Any material license agreement, either as licensor or
licensee (excluding nonexclusive software licenses granted to customers or
end-users in the ordinary course of business), excluding for such purposes,
licenses granted by Governmental Entities;
(8) Any insurance policy or fidelity or surety bond
requiring the payment of a premium by Mint in excess of $10,000 per year;
(9) Any agreement of indemnification (other than in
purchase orders or sales agreements relating to sales of Mint's products);
(10) Any agreement, contract or commitment involving
payments individually in excess of $25,000;
(11) Any other agreement, contract or commitment of Mint
which is material to Mint.
Each agreement, contract, mortgage, indenture, plan,
lease, instrument, permit, concession, franchise, arrangement, license and
commitment listed on Schedule 2.1(m) pursuant to this Section 2.1(m) is valid
and binding on Mint, and is in full force and effect, and neither Mint, nor to
the knowledge of Mint, any other party thereto, has materially breached, nor
does Mint have any knowledge of any facts which would lead it to believe that it
has breached, any provision of, or is in material default under the terms of,
any such agreement, contract, mortgage, indenture, plan, lease, instrument,
permit, concession, franchise, arrangement, license or commitment. To the
knowledge of Mint, no such agreement, contract or commitment contains any
material liquidated damages, penalty or similar provision. Mint has not received
notice from any of the other parties to any such
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contract, agreement or instrument stating that such party intends to cancel,
withdraw, modify or amend such contract, agreement or arrangement.
(n) Taxes.
(1) For purposes of this Agreement, "Tax" (and, with
correlative meaning, "Taxes" and "Taxable") means (i) any net income,
alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax governmental fee
or other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by any
Governmental Entity (a "Taxing Authority") responsible for the imposition of any
such tax (domestic or foreign), (ii) any liability for the payment of any
amounts of the type described in (i) as a result of being a member of an
affiliated, consolidated, combined or unitary group for any Taxable period and
(iii) any liability for the payment of any amounts of the type described in (i)
or (ii) as a result of any express or implied obligation to indemnify any other
person.
(2) All Tax returns, statements, reports and forms
(including estimated Tax returns and reports and information returns and
reports) required to be filed with any Taxing Authority with respect to any
Taxable period ending on or before the Closing, by or on behalf of Mint
(collectively, the "Mint Returns"), have been or will be filed when due
(including any extensions of such due date), and all amounts shown due thereon
on or before the Effective Time have been or will be paid on or before such
date. The Mint Unaudited Balance Sheet (i) fully accrues all actual and
contingent liabilities for Taxes (or for dividend distributions in respect of
Taxes) with respect to all periods through May 31, 1997 and Mint will not incur
any Tax liability in excess of the amount reflected on the Mint Unaudited
Balance Sheet with respect to such periods, and (ii) properly accrues in
accordance with GAAP all liabilities for Taxes (or for dividend distributions in
respect of Taxes) payable with respect to all transactions and events occurring
on or prior to such date.
(3) No material Tax liability since May 31, 1997 has been
incurred other than in the ordinary course of business and adequate provision
has been made for all Taxes (or dividend distributions in respect of Taxes)
since that date in accordance with GAAP on at least a quarterly basis. Mint has
withheld and paid to the applicable financial institution or Taxing Authority
all amounts required to be withheld. No Mint Return is currently under audit or
examination by any Tax Authority. Mint has not agreed to any extension or waiver
of any statute of limitation or applicable period of assessment for any Mint
Return. Mint has not granted any extension or waiver of the limitation period
applicable to any Mint Returns.
(4) There is no material claim, audit, action, suit,
proceeding, or investigation now pending or, to the knowledge of Mint,
threatened against or with respect to Mint in respect of any Tax or assessment.
No notice of deficiency or similar document of any Tax Authority has been
received by Mint, and there are no liabilities for Taxes (including liabilities
for interest, additions to tax and penalties thereon and related expenses) with
respect to the issues that have been raised (and are currently pending) by any
Tax Authority that would, if determined adversely to Mint, have an Adverse
Business Effect. Neither Mint nor any other person on behalf of
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Mint, has entered into nor will enter into any agreement or consent pursuant to
Section 341(f) of the Code. There are no liens for Taxes upon the assets of
Mint. Except as may be required as a result of the transactions contemplated by
this Agreement, Mint has not been and will not be required to include any
material adjustment in Taxable income for any Tax period (or portion thereof)
pursuant to Section 481 or 263A of the Code or any comparable provision under
state or foreign Tax laws as a result of transactions, events or accounting
methods employed prior to the Closing.
(5) There is no contract, agreement, plan or arrangement,
including but not limited to the provisions of this Agreement and agreements
entered into in connection herewith, covering any employee or independent
contractor or former employee or independent contractor of Mint that,
individually or collectively, could give rise to the payment of any amount that
would not be deductible pursuant to Section 280G or Section 162 of the Code.
Other than pursuant to this Agreement, Mint is not a party to or bound by (and
prior to the Effective Time will not become a party to or be bound by) any tax
indemnity, tax sharing or tax allocation agreement (whether written, unwritten
or arising under operation of federal law as a result of being a member of a
group filing consolidated tax returns, under operation of certain state laws as
a result of being a member of a unitary group, or under comparable laws of other
states or foreign jurisdictions) which includes a party other than Mint. Mint
has heretofore provided or made available to LSI true and correct copies of all
material Tax Returns of Mint, and, as reasonably requested by LSI prior to or
following the date hereof, information statements, reports, work papers, Tax
opinions and memoranda and other Tax data and documents.
(6) S Status. Mint has been an S Corporation within the
meaning of Section 1361 of the Code since its formation.
(o) Interests of Officers. None of Mint's officers or directors
has any interest in any property, real or personal, tangible or intangible, used
in or pertaining to Mint's business, including any interest in the Intellectual
Property Rights, except for rights as a shareholder, and except for rights under
any Plan.
(p) Technology.
(1) Mint owns, or is licensed or otherwise entitled to
exercise, all rights under or with respect to all material patent rights,
patents, trademarks, trade names, service marks, copyrights, and any
applications therefor, formulae, processes, designs, schematics, compositions,
ideas, technology, know-how and tangible or intangible proprietary information,
trade secrets or material that is necessary to conduct the business of Mint as
currently conducted (the "Intellectual Property Rights"). Schedule 2.1(p) lists
all patents, trademarks, registered and unregistered copyrights, trade names and
service marks, and any applications therefor included in the Intellectual
Property Rights and specifies the jurisdictions in which each such Intellectual
Property Right has been issued or registered or in which an application for such
issuance and registration has been filed, including the respective registration
or application numbers. Schedule 2.1(p) also lists all material licenses,
sublicenses and other agreements as to which Mint is a party and pursuant to
which Mint or any other person owns or is licensed or is otherwise authorized or
obligated with respect to any Intellectual Property Right and includes the
identity of all parties thereto. Mint is not, and as a result
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of the execution and delivery of this Agreement or the performance of the
Holder's or Mint's obligations hereunder will not be, in violation of any
license, sublicense or other agreement applicable to it, whether or not
described in Schedule 2.1(p). Except to the extent disclosed in Schedule 2.1(p),
Mint is the sole and exclusive owner or licensee of, with the right, title and
interest in and to (free and clear of any liens or encumbrances), the
Intellectual Property Rights described in Schedule 2.1(p), and has sole and
exclusive rights and is not contractually obligated to pay any compensation to
any third party in respect thereof. To the knowledge of Mint, no employee of
Mint is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere with
the use of such employees' best efforts to promote the interests of Mint or that
would conflict with the business of Mint as now conducted. Mint does not now,
and does not currently believe it will in the future be necessary to utilize any
inventions of any of its employees made prior to their employment or consulting
which have not previously been assigned to Mint.
(2) No claims with respect to the Intellectual Property
Rights have been asserted or, to the knowledge of Mint after reasonable
investigation, have been threatened by any person, nor does Mint know of any
grounds for any claims now or in the future (i) to the effect that any business
of Mint as currently conducted infringes on or misappropriates any Intellectual
Property Rights in which a third party has any rights, or (ii) challenging the
ownership, validity or effectiveness of any of the Intellectual Property Rights.
To Mint's knowledge all Intellectual Property Rights are valid and subsisting
and there is no material unauthorized use, infringement or misappropriation of
any of the Intellectual Property Rights by any third party, including any
employee or former employee of Mint. Mint has not been sued or charged in
writing as a defendant in any claim, suit, action or proceeding that involves a
claim of infringement or misappropriation that has not been finally terminated
prior to the date hereof. Mint has no knowledge of any infringement liability
with respect to, or infringement or misappropriation by, Mint of any patent,
trademark, service xxxx or copyright of another. No Intellectual Property Right
is subject to any outstanding order, judgment, decree, stipulation or agreement
restricting in any manner the licensing or exploitation thereof by Mint. Mint
has not entered into any agreement to indemnify any other person against any
charge of infringement relating to any Intellectual Property Right. To Mint's
knowledge, no employee of Mint is in violation of any term of any employment
contract (whether written or verbal), patent disclosure agreement or any other
contract or agreement relating to the relationship of any such employee with
Mint or any other party (including prior employers) because of the nature of the
business conducted or proposed to be conducted by Mint.
(q) Title to Properties; Absence of Liens and Encumbrances;
Condition of Equipment.
(1) Mint does not own real property, and Schedule 2.1(q)
lists all material real estate leases and, with respect to real estate leases,
the aggregate annual rental or other recurring fees payable, the length of all
real estate leases and the number of extensions available.
(2) Mint has good and valid title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used in its business, free and
clear of any liens (other than liens for taxes that are not yet delinquent),
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charges, pledges, security interests or other encumbrances, except as reflected
in the Mint Financial Statements and except for such imperfections of title and
encumbrances, if any, which are not substantial in character, amount or extent,
and which do not materially detract from the value to Mint, or interfere with
the present use by Mint, of the property subject thereto or affected thereby.
(3) The equipment owned or leased by Mint (the
"Equipment") is, (i) adequate for the conduct of the business of Mint consistent
with their past practices, (ii) suitable for the uses to which it is currently
employed, (iii) in good operating condition, subject to normal wear and tear,
(iv) regularly and properly maintained, (v) not obsolete or in need of renewal
or replacement, except for renewal or replacement in the ordinary course of
business, and (vi) free from any defects, except, with respect to clauses (iii)
through (vi) of this Section 2.1(q)(3), as would not have an Adverse Business
Effect.
(r) Environmental Matters.
(1) Mint has received no notice that it is liable for any
cost to undertake remedial measures or investigate, and is not aware of any
violation with respect to any substance that is regulated by any Governmental
Entity or that has been designated by any Governmental Entity to be radioactive,
toxic, hazardous or otherwise a danger to health or the environment (a
"Hazardous Material"), with respect to, or that is present in, on or under any
property that Mint has at any time owned, operated, occupied or leased.
(2) Mint has not transported, stored, used, manufactured,
released or exposed its employees or any other person to any Hazardous Material
in violation of any applicable statute, rule, regulation, order or law, except
where such violation would not have an Adverse Business Effect.
(3) Mint has obtained all permits, consents, waivers,
exemptions, licenses, approvals and other authorizations ("Environmental
Permits") required to be obtained by it under the laws of any Governmental
Entity relating to land use, public and employee health and safety, pollution or
protection of the environment (collectively, "Environmental Laws"), except where
the failure to obtain such Environmental Permit would not have an Adverse
Business Effect. Mint (i) is in compliance in all material respects with all
terms and conditions of the Environmental Permits and (ii) is in compliance in
all material respects with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in the Environmental Laws or contained in any regulation, code, plan,
order, decree, judgment, notice or demand letter issued, entered, promulgated or
approved thereunder. Mint has not received any notice nor is it aware of any
past or present condition or practice of the businesses conducted by Mint which
forms or is reasonably likely to form the basis of any material claim, action,
suit, proceeding, hearing or investigation against Mint under the Environmental
Laws arising out of the manufacture, processing, distribution, use, treatment,
storage, spill, disposal, transport, or handling, or the emission, discharge,
release or threatened release into the environment, of any Hazardous Material by
Mint.
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(s) Insurance. Schedule 2.1(s): (i) lists and summarizes all
insurance policies and fidelity bonds covering the assets, business, equipment,
properties, operations, employees, officers and directors of Mint; (ii) sets
forth the amounts of coverage under each such policy and bond of Mint; and (iii)
lists any claim by Mint under any such policy (or predecessor policy) during the
last three (3) years in an amount exceeding $10,000. Within the last four (4)
years, Mint has not been refused any requested coverage or denied renewal of any
then existing policy or bond. There is no claim by Mint pending under any of
such policies or bonds as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or bonds. All premiums payable
under all such policies and bonds have been paid and Mint is in material
compliance with the terms of such policies and bonds (or other policies and
bonds providing substantially similar insurance coverage). Such policies of
insurance and bonds are of the type and in amounts customarily carried by
persons conducting businesses similar to those of Mint. Mint has not received
any notice or threat of termination of, or of a material premium increase with
respect to, any of such policies.
(t) Labor Matters. Mint is in compliance in all material respects
with all currently applicable laws and regulations respecting employment,
discrimination in employment, terms and conditions of employment and wages and
hours and occupational safety and health and employment practices, and is not
engaged in any unfair labor practice. Mint has not received any notice from any
Governmental Entity, and to the knowledge of Mint there has not been asserted
before any Governmental Entity, any claim, action or proceeding to which Mint is
a party or involving Mint, and there is neither pending nor to the knowledge of
Mint threatened, any investigation or hearing concerning Mint arising out of or
based upon any such laws, regulations or practices.
(u) Key Employees. Schedule 2.1(u) is a list identifying all key
employees of Mint, including all officers of Mint (the "Key Employees"), and
setting forth the job title of each such employee, total compensation paid to
each such employee during the fiscal year ended December 31, 1996, and the first
five (5) months of the current fiscal year. None of such Key Employees has
delivered notice to Mint indicating a present intention to resign or retire.
(v) Restrictions on Business Activities. There is no agreement
(noncompete or otherwise), judgment, injunction, order or decree to which Mint
is a party or otherwise binding upon Mint which has or reasonably would be
expected to have the effect of prohibiting or impairing any business practice of
Mint, any acquisition of property (tangible or intangible) by Mint or the
conduct of business by Mint. Without limiting the foregoing, Mint has not
entered into any agreement under which Mint is restricted from selling,
licensing or otherwise distributing any of its products or services to any class
of customers, in any geographic area, during any period of time or in any
segment of the market.
(w) Disclosure. No representation or warranty made by Mint or
Holder in this Agreement contains or will contain any untrue statement of a
material fact, or omits or will omit to state a material fact necessary to make
the statements or facts contained herein or therein not misleading in light of
the circumstances under which they were made.
(x) Brokers or Finders. No agent, broker, investment banker or
other firm or person is or will be entitled to any broker's or finder's fee or
any other commission or similar fee in
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connection with any of the transactions contemplated by this Agreement except
for fees of Xxxxx, Xxxxxxxx & Xxxx which are to be paid by Mint pursuant to
Section 5.8 and 5.18 hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE HOLDER
3.1 Additional Representations and Warranties of the Holder. The Holder
hereby individually represents and warrants as follows:
(a) Title. Holder has and at the Closing will have good,
marketable and valid title to all of the outstanding shares of capital stock of
Mint.
(b) Authority. Holder has all requisite capacity, power and
authority to enter into this Agreement and to perform her obligations hereunder,
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by Holder and the performance by Holder of her
obligations hereunder, and the consummation of the transactions contemplated
hereby, have been preceded by all action necessary to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. This Agreement
is the legal, valid and binding obligation of the Holder and is enforceable
against Holder in accordance with its terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency and other
similar laws affecting creditors' rights generally and by general principles of
equity.
(c) No Default. The consummation by Holder of the transaction
contemplated herein and the fulfillment by Holder of the terms hereof do not and
will not result in a breach of or violation of any of the terms and provisions
of, or constitute a default under, any indenture, mortgage, deed of trust or
other agreement or instrument to which Holder is a party.
(d) Governmental Consents. Other than as stated in this Section
3.1(d), in Section 2.1 or the Schedules hereto or thereto, no consent, approval,
order or authorization of, or registration, qualification, designation,
declaration or filing with, any Governmental Entity on the part of the Holder is
required in connection with the valid execution, delivery or performance of this
Agreement, or agreements or documents evidenced as exhibits hereto.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF LSI AND MERGER SUB
4.1 Representations and Warranties of LSI and Merger Sub. Except as
disclosed in Schedule 4.1 referring specifically to the representations and
warranties in this Agreement and delivered to the Holder, LSI and Merger Sub
represent and warrant to the Holder and Mint that:
(a) Organization; Standing and Power. LSI is a corporation
validly existing and in good standing under the laws of Delaware and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its businesses as now being conducted. Merger Sub is a
corporation validly existing and in good standing under the laws of
Massachusetts and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
(b) Authority.
(1) LSI and Merger Sub have all requisite corporate power
and authority to enter into this Agreement and to perform their obligations
hereunder, and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by LSI and Merger Sub and the performance of
their obligations hereunder, and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of LSI and Merger Sub. This Agreement has been duly executed and
delivered by each of Mint and Holder and is the legal, valid and binding
obligation of each of LSI and Merger Sub and is enforceable against each of such
parties in accordance with its terms, except to the extent that such enforcement
may be limited by applicable bankruptcy, insolvency and other similar laws
affecting creditors' rights generally and by general principles of equity.
(2) Other than as set forth in Schedule 4.1, the execution
and delivery of this Agreement by LSI and Merger Sub does not, and, as of the
Effective Time, the consummation of the transactions contemplated hereby will
not result in a Conflict under (i) any provision of the Articles of
Incorporation or Organization or Bylaws of LSI or Merger Sub or (ii) any
material mortgage, indenture, lease, contract or other agreement or instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to which LSI or Merger Sub is a party
by which either is bound or to which any of their properties or assets are
subject. Other than as set forth in Schedule 4.1, no consent, waiver, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Entity is required by or with respect to LSI or Merger Sub in
connection with the execution and delivery of this Agreement by LSI and Merger
Sub or the consummation by LSI and Merger Sub of the transactions contemplated
hereby, except for (i) the filing of the Certificates of Merger and the
Agreement of Merger with the Secretaries of State of the Commonwealth of
Massachusetts and the State of Delaware, which will be effected as set forth in
Section 1.2 hereof, (ii) such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal and state securities laws and (iii) filings with the New York
Stock Exchange.
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(c) Purchase Entirely for Own Account. LSI hereby confirms that
the capital stock to be received by LSI will be acquired for investment for
LSI's own account, not as a nominee or agent, and not with a view to the resale
or distribution of any part thereof, and that LSI has no present intention of
selling, granting any participation in, or otherwise distributing the same. By
executing this Agreement, LSI and Merger Sub further represent that LSI and
Merger Sub do not have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participation to such person or to any
third person, with respect to any of the capital stock.
(d) Brokers or Finders. No agent, broker, investment banker or
other firm or person is or will be entitled to any broker's or finder's fee or
any other commission or similar fee in connection with any of the transactions
contemplated by this Agreement.
(e) SEC Documents; LSI Financial Statements. LSI has furnished or
made available to Mint and Holder true and complete copies of all reports filed
by it with the U.S. Securities and Exchange Commission (the "SEC") under the
Securities Exchange Act of 1934 (the "Exchange Act") for all periods subsequent
to December 31, 1995, all in the form so filed (all of the foregoing being
collectively referred to as the "SEC Documents"). As of their respective filing
dates, the SEC Documents complied in all material respects with the requirements
of the Exchange Act, and none of the SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading, except to the extent
corrected by a document subsequently filed with the SEC. The financial
statements of LSI, including the notes thereto, included in the SEC Documents
(the "LSI Financial Statements") comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with GAAP
consistently applied (except as may be indicated in the notes thereto) and
present fairly the consolidated financial position of LSI at the dates thereof
and of its operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal audit adjustments). There has been no
change in LSI accounting policies except as described in the notes to the LSI
Financial Statements. Since the last filing with the SEC by LSI, there has been
no material adverse change in the business or financial condition of LSI.
ARTICLE V
COVENANTS OF THE HOLDER AND MINT
5.1 Operation of Business. During the period from the date hereof and
continuing until the earlier of the termination of this Agreement or the
Effective Time, without the prior written consent of LSI, neither the Holder nor
Mint will engage in any practice, take any action or enter into any transaction
outside the ordinary course of business except for the transactions contemplated
by this Agreement. Without limiting the generality of the foregoing, neither the
Holder nor Mint will, nor cause Mint to (a) declare, set aside or pay any
dividend or make any distribution with respect to its capital stock or redeem,
purchase or otherwise acquire any of its capital stock or the capital stock of
Mint (other than dividends in respect of taxes and as contemplated in this
Agreement), (b) sell,
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transfer or otherwise dispose of any material amount of its inventory, supplies
or personal property outside of the ordinary course of business (except for
sales of obsolete assets at fair market value), or (c) otherwise engage in any
practice, take any action or enter into any transaction of the type described in
Section 2.1(i) (other than as contemplated in this Agreement). Mint shall not
agree to any material audit assessment by any Tax Authority, make any material
Tax election or file any material Tax return without first allowing LSI
reasonable opportunity to review and comment on same.
5.2 Preservation of Business. Holder and Mint will use reasonable
efforts to keep the business and properties of Mint substantially intact,
including Mint's present operations, physical facilities, working conditions,
and goodwill and relationships with lessors, licensors, suppliers, customers and
employees.
5.3 Satisfaction of Conditions; General. Subject to Sections 7.1 and 7.3
hereof, Holder and Mint will use all reasonable efforts (a) to fulfill the
conditions set forth in Sections 7.1 and 7.2 of this Agreement and (b) to take
all actions and to do all things necessary, proper or advisable in order to
consummate the transactions contemplated by this Agreement, including (i) giving
any notices to third parties, (ii) using all reasonable efforts to obtain any
third-party consents, (iii) giving any notices to, making any filings with and
using all reasonable efforts to obtain any required authorizations, consents and
approvals of Government Entities and (iv) removing any injunctions or other
impediments or delays, legal or otherwise.
5.4 Full Access. The Holder and Mint will permit representatives of LSI
to have full access at all reasonable times, and in a manner so as not to
interfere with the normal business operations of Mint, to all premises,
properties, personnel, books, records (including Tax records), contracts and
documents of Mint. The Holder and Mint will promptly furnish to LSI such
information in the possession of the Holder or Mint concerning the operations of
Mint as LSI may reasonably request.
5.5 Notice of Developments. Mint and Holder will give prompt written
notice to LSI of any adverse development causing a material breach of any of the
representations and warranties in Article II or Article III, respectively. No
notice of any adverse development shall be deemed to waive any condition to the
Closing under Article VII.
5.6 Exclusivity; Acquisition Proposals. Unless and until this Agreement
shall have been terminated by either party pursuant to Section 9.1 hereof,
neither the Holder nor Mint shall, directly or indirectly, through any officer,
director, agent or otherwise, (a) solicit, initiate or encourage submission of
proposals or offers from any person relating to (1) any acquisition or purchase
of all or substantially all of the assets of, or any equity interest in, Mint or
any merger, consolidation, business combination or similar transaction with
Mint, or (2) any other material transaction incompatible with this Agreement
(including, without limitation, a joint venture or other similar transaction),
or (b) participate in any discussions or negotiations regarding, furnish to any
other person any confidential information with respect to, or otherwise
cooperate in any way with, or participate in, facilitate or encourage, any
effort or attempt by any other person to do or seek any of the foregoing. In the
event the Holder or Mint prior to termination of this Agreement receive from
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any third party any offer or indication of interest regarding any of the
transactions referred to in the foregoing sentence, or any request for
information about Mint with respect to any of the foregoing, then such
indication of interest, or request, including the identity of the third party,
shall be communicated promptly to LSI.
5.7 Confidentiality. Holder, Mint and its accountants, attorneys,
employees, and other agents each agrees to treat and protect as such all of the
LSI Confidential Information (as defined below) in the same manner in which it
treats and protects its own confidential information, to refrain from using any
of the LSI Confidential Information except in connection with this Agreement and
the transactions contemplated hereby and to deliver promptly to LSI or to
destroy, at LSI's option and request, all tangible embodiments (and all copies)
of the LSI Confidential Information which are in its possession in the event
that this Agreement is terminated and the transactions contemplated hereby are
not consummated. For the purposes of this Agreement, "LSI Confidential
Information" means any written or oral information concerning (a) the business
and affairs of LSI or any of its affiliates or (b) the negotiation of this
Agreement and the transactions relating to this Agreement, which, in any case,
is not already generally available to the public. This Section 5.7 shall survive
indefinitely, whether or not the transactions contemplated by this Agreement are
consummated.
5.8 Expenses. All costs and expenses incurred by the Holder or Mint in
connection with this Agreement and the transactions contemplated hereby shall be
paid by Mint or Holder.
5.9 Public Announcements. Mint and Holder will consult in advance with
LSI concerning the timing and content of any announcements, press releases and
public statements concerning the transactions contemplated by this Agreement and
will not make any such announcement, release or statement without LSI's consent;
provided, however, that Holder or Mint may make any public statement concerning
the transactions contemplated by this Agreement without the consent of LSI if,
in the reasonable opinion of counsel for Holder or Mint, such statement or
announcement is required to comply with applicable law.
5.10 FIRPTA Certificates. At the Closing, Mint agrees to deliver to LSI
a statement executed on its behalf by its chief executive officer or president
in such form as reasonably requested by counsel for LSI conforming to the
requirements of Treasury Regulation Section 1.897-2(h)(1)(i). Mint further
agrees to provide in a timely manner such notification to the Internal Revenue
Service pursuant to Treasury Regulation Section 1.897-2(h)(2), if any, as may be
requested by LSI.
5.11 Option Plan. Prior to the Closing, Mint shall amend the Option Plan
and shall obtain the written consent to such amendment from the Holder as well
as substantially all persons holding options granted under such Option Plan, to
provide that the vesting of the options granted thereunder shall not be
accelerated by virtue of the Merger and the closing of the transactions
contemplated hereby. In addition, the Option Plan shall be amended (and the
approval of the Board of Directors of Mint and the shareholders of Mint shall be
obtained) to reserve an additional number of shares sufficient to allow for the
grant of options to Holder and the other Mint employees in accordance with
Section 5.14 below.
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5.12 Contribution to Capital. Prior to the Closing, Holder shall make
the Capital Stock Contribution.
5.13 Exercise of Options. Mint shall not permit any optionee or
warrantholder to exercise any outstanding option between the date of the Term
Sheet and the Closing Date. As of the Closing Date, there shall be outstanding
318,182 shares of Mint Common Stock and options to purchase no more than an
aggregate of 311,500 shares of Mint Common Stock (excluding the options granted
pursuant to Section 5.14 below, the Xxxxxxxx Option and options granted in
connection with new hires in the ordinary course of business).
5.14 Grant of Options. Immediately prior to the Closing, Mint shall
grant options to purchase Mint Common Stock pursuant to the Option Plan to the
employees of Mint, contingent upon and effective immediately prior to the
Closing (the "Contingent Options"), in such numbers, on such terms and to such
persons as reasonably agreed by the management of Mint and LSI, so that upon
multiplication of the total numbers of shares subject to such grants by the
Exchange Ratio, the total number of shares of LSI Common Stock purchasable on
exercise of such options would be equal to 200,500 shares of LSI Common Stock,
with an exercise price equal to the fair market value of LSI Common Stock
immediately prior to the Closing Date (after dividing the exercise price of the
Contingent Options by the Exchange Ratio), such options to be assumed by LSI in
the Merger.
5.15 Bonus Plan. Prior to the Closing, Mint shall establish a bonus
plan, on terms reasonably acceptable to LSI, which shall provide for the payment
of cash bonuses in the aggregate amount of $2,500,000 to be awarded to the
employees of Mint in individual amounts determined by management of Mint, with
the approval of LSI. Such bonuses will be payable over three years after the
Closing Date. One quarter will be payable on the next regular payday following
the Closing Date, with one quarter becoming payable on each of the next three
anniversaries of the Closing Date, provided that the employee remains an
employee of the Surviving Corporation, LSI or any of LSI's affiliates on and as
of each such payment date.
5.16 Tax Matters.
(a) Tax Returns. The Holder and Mint shall be responsible for
timely filing all federal and state income tax returns of Mint for taxable
periods ending on or prior to the Closing Date and shall have paid or will pay
all income taxes attributable to the income of Mint for such periods. Such
returns will be prepared and filed in accordance with applicable law and in a
manner consistent with past practices and shall be subject to review and
approval LSI. After the Closing Date, LSI and the Surviving Corporation, on the
one hand, and the Holder, on the other hand, will make available to the other,
as reasonably requested, all information, records or documents relating to the
liability for Taxes of Mint for all periods ending on or prior to the Closing
Date and will preserve such information, records or documents until the
expiration of any applicable statute of limitations or extensions thereof.
(b) Election Under Section 338(h)(10). Holder shall join with LSI
in making a joint election on Form 8023-A for Mint under Section 338(h)(10) of
the Code, under Treasury Regulation Section 1.338(h)(10)-1(d) and under any
applicable similar provisions of state law with
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respect to the purchase of the Shares ("Section 338 Election"), if LSI chooses
to make such election. LSI shall timely prepare IRS Form 8023-A (and any
required attachments) and any similar state and local tax forms (and any
required attachments) required to make the Section 338 Election.
(c) Liability for Taxes. Holder shall bear any and all tax
liabilities (of whatever nature) of Mint occurring prior to and up to and
including the close of the transaction. Holder and the respective option holders
shall each individually bear their own income and capital gains tax consequences
as a result of this transaction. Mint, Holder and LSI will cooperate to minimize
tax consequences of the parties hereto in the aggregate to the greatest extent
allowable.
5.17 S Status. The Holder and Mint shall maintain Mint's tax status as
an S Corporation up to the Closing Date, and the Holder and Mint shall not
revoke or otherwise terminate the election of Mint to be treated as an S
Corporation.
5.18 After Tax Earnings. All after tax earnings of Mint as of June 30,
1997, as set forth in the attached Schedule 5.18, on an accrual basis (the
"After Tax Earnings"), shall be paid to Holder prior to the Closing Date without
taking into account any gain arising from the sale of assets. Brokers' fees,
accountant's fees and fees of counsel to Mint related to this transaction shall
be paid by Mint and shall be deducted from the After Tax Earnings before being
paid to Holder.
5.19 Shareholder Consent. By signing this Agreement, Holder, as sole
shareholder of Mint, consents to the Merger as contemplated by this Agreement
and the related agreements, consents to the Escrow as set forth in the Escrow
Agreement, and consents to all other transactions contemplated by this Agreement
and necessary to effect the Merger.
5.20 Cooperation. From time to time on or before the first anniversary
of the Effective Time, Holder shall cooperate with LSI and Mint by providing
information reasonably requested by LSI or Mint regarding certain issues arising
out of the conduct of the business of Mint which are identified prior to the
first anniversary of the Effective Time but which, by their nature, will not be
resolvable prior to the first anniversary of the Effective Time, to mitigate the
adverse impact of such issues on LSI, Merger Sub or Mint. Holder agrees that
failure to cooperate reasonably in providing such information to mitigate such
issues will result in damage to LSI, Merger Sub and Mint compensable in
accordance with Section 8.2 hereof to the extent of the estimated potential
liability resulting from such issues as determined by an independent certified
public accountant.
ARTICLE VI
COVENANTS OF LSI
6.1 Satisfaction of Conditions; General. Subject to Sections 7.1 and 7.2
hereof, LSI will use all reasonable efforts (a) to fulfill the conditions set
forth in Article VII of this Agreement and (b) to take all action and to do all
things necessary, proper or advisable in order to consummate and make effective
the transactions contemplated by this Agreement, including (i) giving any
notices to third parties, (ii) using all reasonable efforts to obtain any third
party consents and (iii) giving any
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notice to, making any filings with and using all reasonable efforts to obtain
any authorizations, consents and approvals of Government Entities.
6.2 Confidentiality. LSI and its accountants, attorneys, employees and
other agents agree to treat and protect as such all of Mint's Confidential
Information (as defined below) in the same manner in which it treats and
protects its own confidential information, to refrain from using any of Mint's
Confidential Information except in connection with this Agreement and the
transactions contemplated hereby and to deliver promptly to Mint or to destroy,
at Mint's option and request, all tangible embodiments (and all copies) of
Mint's Confidential Information which are in its possession in the event that
this Agreement is terminated and the transactions contemplated hereby are not
consummated. For the purposes of this Agreement, "Mint's Confidential
Information" means any written or oral information concerning (a) the business
and affairs of Mint or (b) the negotiation of this Agreement, which, in any
case, is not already generally available to the public. This Section 6.2 will
survive indefinitely, whether or not the transactions contemplated by this
Agreement are consummated.
6.3 Expenses. All costs and expenses incurred by LSI in connection with
this Agreement and the transactions contemplated hereby shall be paid by LSI.
6.4 Registration Statement on Form S-8. Following the Closing but in no
event later than sixty (60) days thereafter, LSI shall take all such actions as
shall be necessary to register the LSI shares of Common Stock issuable on
exercise of the Mint Options under the Securities Act of 1933, as amended.
6.5 Public Announcement. LSI will consult in advance with Mint
concerning the timing and content of any announcements, press releases and
public statements concerning the transactions contemplated by this Agreement and
will not make any such announcement, release or statement without Mint's
consent, which shall not unreasonably be withheld; provided, however, that LSI
may make any public statement concerning the transactions contemplated by this
Agreement without the consent of the Holder or Mint if, in the reasonable
opinion of counsel for LSI, such statement or announcement is required to comply
with applicable law.
6.6 NYSE Listing. LSI shall authorize for listing on the New York Stock
Exchange the shares of LSI Common Stock issuable upon exercise of the Mint
Options assumed in the Merger, upon official notice of issuance.
6.7 Notice of Developments. LSI will give prompt written notice to Mint
Holder of any adverse developments causing a material breach of any of the
representations and warranties in Article IV. No notice of any adverse
development shall be deemed to waive any condition to the Closing under Article
VII.
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ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligations to Effect the Acquisition.
The respective obligations of each party to effect the transactions contemplated
by this Agreement shall be, at the election of either party (except where the
fulfillment of a condition is exclusively within the control of one party in
which case only the noncontrolling party's obligation at its election, shall
be), subject to the fulfillment at or prior to the Closing of the following
conditions:
(a) Orders. No order shall have been entered, and not vacated, by
a court or administrative agency of competent jurisdiction, in any action or
proceeding which enjoins, restrains or prohibits consummation of the Agreement
or the transactions contemplated hereby.
(b) Securities and Antitrust Laws. Except for the Certificates of
Merger and Agreement of Merger and all related documents required to be filed
with the Secretaries of State of the Commonwealth of Massachusetts and the State
of Delaware, LSI, Merger Sub, Mint and the Holder shall have received any and
all permits, authorizations, approvals, consents and orders required to be
obtained by such parties under all applicable state and foreign securities laws,
antitrust laws, statutes, codes, ordinances, rules and regulations in order to
consummate the transactions contemplated by this Agreement, and all such
filings, registrations, permits, authorizations, consents and approvals shall be
in full force and effect at the Closing.
(c) Proceedings. There shall be no litigation pending or
threatened by any regulatory body or private party in which (i) an injunction is
or may be sought against the transactions contemplated hereby, or (ii) relief is
or may be sought against any party hereto as a result of this Agreement, and in
which, in the good faith judgment of the Board of Directors of either LSI or
Mint (relying on the advice of their respective legal counsel), such regulatory
body or private party has a reasonable possibility of prevailing and such relief
would have a material adverse effect upon either party.
7.2 Conditions to Obligations of LSI. The obligation of LSI to effect
the transactions contemplated by this Agreement shall be, at the election of LSI
(except where the fulfillment of a condition is exclusively within the control
of such party), subject to the fulfillment at or prior to the Closing of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of Mint and the Holder contained in Article II and in Article III as
modified by the applicable schedules shall be true in all material respects on
and as of the Closing.
(b) Performance. Mint and the Holder shall have performed and
complied in all material respects with all agreements, obligations, covenants
and conditions contained in this Agreement that are required to be performed or
complied with by it on or before the Closing.
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(c) Compliance Certificate. Mint and Holder shall cause to be
delivered to LSI at the Closing a certificate certifying that the conditions
specified in Sections 7.2(a) and 7.2(b) have been fulfilled.
(d) Consents. Mint shall have procured all of the third party
consents material to the business or operations of Mint that are necessary,
proper or advisable in order to consummate the transactions contemplated by this
Agreement, including the consents of any Governmental Entity listed in Schedule
2.1, or an opinion that no such consents are required.
(e) Opinion of Counsel. LSI shall have received from Ropes &
Xxxx, counsel for the Holder and Mint, an opinion, dated as of the Closing, in
form and substance reasonably satisfactory to LSI.
(f) Proprietary Information and Invention Agreement. Each
employee of Mint shall have executed a Proprietary Information and Invention
Agreement in substantially the form attached hereto as Exhibit C.
(g) Employment Agreements. On or prior to the Closing, Holder and
each of the Key Employees shall have entered into employment and non-competition
agreements, in substantially the forms attached hereto as Exhibit B and Exhibit
D respectively; and Holder and all Key Employees shall have thereby committed to
remain with LSI.
(h) Employment Commitments. On or prior to the Closing, at least
90% of the employees of Mint who are not Key Employees shall have committed in a
manner reasonably acceptable to LSI to remain with LSI and Merger Sub as of the
Closing Date.
(i) Option Amendment. On or prior to the Closing, all of the
employees of Mint at the Closing Date who have been granted options shall have
consented to amendment of their option agreement letter in substantially the
form attached hereto as Exhibit E.
(j) Escrow Agreement. On or prior to the Closing, the Holder
shall have entered into the Escrow Agreement in substantially the form attached
hereto as Exhibit A (the "Escrow Agreement").
(k) Mint Stock Certificate. On or prior to the Closing, the
Holder shall have transferred to LSI all stock certificates evidencing
outstanding shares of Mint Capital Stock, duly endorsed for transfer, for the
purpose of cancellation.
7.3 Conditions to Obligations of Mint and the Holder. The obligation of
Mint and the Holder to effect the transactions contemplated by this Agreement
shall be, at the election of the Holder (except where the fulfillment of a
condition is exclusively within the control of such party), subject to the
fulfillment at or prior to the Closing of the following conditions:
(a) Representations and Warranties. The representations and
warranties of LSI contained in Article IV shall be true in all material respects
on and as of the Effective Time.
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(b) Performance. LSI shall have performed and complied in all
material respects with all agreements, obligations and conditions contained in
this Agreement that are required to be performed or complied with by it on or
before the Closing.
(c) Payment of Purchase Price. LSI shall have delivered with
respect to the Mint Common Stock, the Cash Consideration, net of the Cash Escrow
Fund, to the Holder in cash or by check, and deposited the Cash Escrow Funds
with the Escrow Agent under the Escrow Agreement.
(d) Compliance Certificate. LSI shall cause to be delivered to
Mint and Holder at the Closing a certificate certifying that the conditions
specified in Sections 7.3(a) and 7.3(b) have been fulfilled.
(e) Opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx. Mint shall have
received from Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, counsel for LSI, an opinion,
dated as of the Closing, in form and substance reasonably satisfactory to Mint
and Holder.
(f) Escrow Agreement. On or prior to the Closing, LSI and Merger
Sub shall have entered into the Escrow Agreement in substantially the form
attached hereto as Exhibit A.
(g) Employment Agreements. On or prior to the Closing, Holder and
each of the Key Employees shall have entered into employment and non-competition
agreements in substantially the forms attached hereto as Exhibit B and Exhibit D
respectively.
ARTICLE VIII
INDEMNIFICATION
8.1 Survival of Representations, Warranties, Covenants and Agreements.
(a) Notwithstanding any investigation conducted at any time with
regard thereto by or on behalf of any party, and except as otherwise provided
herein, all representations, warranties, covenants, and agreements in this
Agreement or in any instruments delivered pursuant to this Agreement, shall be
conditions of the transactions contemplated hereby and survive the execution,
delivery, and performance of this Agreement, and the transactions consummated
hereby, until the first anniversary of the Effective Time. All representations
and warranties set forth in this Agreement shall be deemed to have been made
again at and as of the Closing.
(b) As used in this Article VIII, except as otherwise indicated
in this Article VIII, any reference to a representation, warranty, agreement, or
covenant contained in any section of this Agreement shall include the schedule
relating to such section.
8.2 Indemnification of LSI. Holder hereby agrees to indemnify and hold
harmless LSI and its affiliates against any and all losses, liabilities,
damages, demands, claims, suits, actions, judgments, causes of action,
assessments, costs, and expenses, including, without limitation,
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attorneys' fees, any and all expenses incurred in investigating, preparing, and
defending against any litigation, commenced or threatened, and any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation which settlement was either (i) approved in writing in advance by
Holder, or (ii) if such settlement is not agreed upon by the parties, then in
accordance with the decision of the arbitrator pursuant to Section 8.10 hereof
(including any award of fees and expenses pursuant to such Section)
(collectively, "Damages"), asserted against, resulting from, imposed upon, or
incurred or suffered by LSI or its affiliates, or by Mint, directly or
indirectly, as a result of or arising from any inaccuracy in or breach or
nonfulfillment of any of the representations, warranties, covenants, or
agreements made by Mint or Holder contained herein or from any Tax liability of
the Holder or Mint arising from the transactions contemplated in this Agreement
or any Employment Agreement entered into with Holder or Key Employees pursuant
to this Agreement; any inaccuracy in or breach or nonfulfillment of any
certificate, instrument, schedule, exhibit or document delivered by Mint or
Holder in connection with this Agreement or the Merger; or any inaccuracy in or
breach or nonfulfillment of any of the representations and warranties, covenants
or agreements made by such Holder in Article III of this Agreement, or any facts
or circumstances constituting such an inaccuracy, breach, or nonfulfillment (all
of which shall be referred to as "Indemnifiable Claims").
8.3 Indemnification of Holder. LSI hereby agrees to indemnify and hold
harmless the Holder against any and all losses, liabilities, damages, demands,
claims, suits, actions, judgments, causes of action, assessments, costs, and
expenses, including, without limitation, attorneys' fees, any and all expenses
incurred in investigating, preparing, and defending against any litigation,
commenced or threatened, and any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation which settlement was either (i)
approved in writing in advance by LSI, or (ii) if such settlement is not agreed
upon by the parties, then in accordance with the decision of the arbitrator
pursuant to Section 8.10 (including any award of fees and expenses pursuant to
such Section) (collectively, also "Damages"), asserted against, resulting from,
imposed upon, or incurred or suffered by any of the Holder directly or
indirectly, as a result of or arising from any inaccuracy in or breach or
nonfulfillment of any of the representations, warranties, covenants, or
agreements made by LSI in this Agreement or from any Tax liability of LSI or any
of its affiliates arising from the transactions contemplated in this Agreement
(all of which shall also be referred to as "Indemnifiable Claims").
8.4 Indemnification Threshold and Limitations. All Indemnifiable Claims
must be asserted prior to or upon the termination of the Cash Escrow Period (as
hereinafter defined). Notwithstanding Section 8.2 hereof, the Holder shall have
no liability under this Article VIII unless and until the aggregate amount of
Damages exceeds $25,000, in which event the Holder shall be liable for the full
amount of the Damages.
8.5 Escrow Fund. Upon compliance with the terms hereof, LSI shall be
entitled to obtain (and shall be required first to seek) indemnity from the Cash
Escrow Fund (as hereinafter defined) for all Damages covered by the indemnity
provided for in Section 8.2. As security for such indemnity, LSI shall retain
and deposit $700,000 with Xxxxxxxx & Ilsley Trust Company (or other institution
selected by LSI with the reasonable consent of the Holder), as escrow agent (the
"Escrow Agent"), and thereby establish an escrow fund (the "Cash Escrow Fund")
to be governed by the terms set forth herein and in the Escrow Agreement.
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8.6 Escrow Period. The escrow period for the cash deposited in the Cash
Escrow Fund shall terminate on the first anniversary of the Effective Time (the
"Cash Escrow Period").
8.7 Procedures with Respect to Third-Party Claims.
(a) If LSI or any of its affiliates determines to seek
indemnification under this Article VIII with respect to Indemnifiable Claims
resulting from the assertion of liability by third parties, LSI shall promptly
give written notice to the Holder within ten (10) days of receipt of actual
notice of such third party claim; the notice shall set forth such material
information with respect thereto as is then reasonably available to LSI. In case
any such liability is asserted against LSI or its affiliates, and LSI notifies
the Holder thereof, the Holder will be entitled, if such Holder so elects by
written notice delivered to LSI within thirty (30) days after receiving LSI's
notice, to assume the defense thereof with counsel satisfactory to LSI.
Notwithstanding the foregoing, (i) LSI or its affiliates shall also have the
right to employ their own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of LSI unless (A) LSI and Holder shall have
mutually agreed to the retention of such counsel, (B) the named parties to any
such proceeding (including any impleaded parties) include LSI and Holder and LSI
reasonably determines that representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them and (C) LSI reasonably determines that there is or may be legal defenses
available to LSI different from or in addition to those available to the Holder
in each case the fees and expenses of such counsel will be paid out of the Cash
Escrow Fund as additional Damages, (ii) LSI shall have no obligation to give any
notice of any assertion of liability by a third party unless such assertion is
in writing (provided that LSI may not collect any sum from the Cash Escrow Fund
without giving written notice to the Holder), and (iii) the rights of LSI or any
of its affiliates to be indemnified hereunder in respect of Indemnifiable Claims
resulting from the assertion of liability by third parties shall not be
adversely affected by their failure to promptly give notice pursuant to the
foregoing unless, and, if so, only to the extent that Holder is materially
prejudiced by the delay in giving such notice. With respect to any assertion of
liability by a third party that results in an Indemnifiable Claim, the parties
hereto shall make available to each other all relevant information in their
possession material to any such assertion. Notwithstanding anything to the
contrary herein, it is understood that Holder shall not, in connection with any
proceeding or related proceedings, be liable for the reasonable fees and
expenses of more than one separate counsel for LSI.
(b) In the event that the Holder, within thirty (30) days after
receipt of the aforesaid notice of an Indemnifiable Claim fails to assume the
defense of LSI or any of its affiliates against such Indemnifiable Claim, LSI or
any of its affiliates shall have the right to undertake the defense, compromise,
or settlement of such action on behalf of and for the account, expense, and risk
of Holder.
(c) Notwithstanding anything in this Article VIII to the
contrary, if there is a reasonable probability that an Indemnifiable Claim may
materially adversely affect LSI or any of its affiliates, LSI, or any of its
affiliates shall have the right to participate, at their expense, in such
defense, compromise, or settlement and Holder shall not, without LSI's written
consent (which consent shall not be unreasonably withheld), settle or compromise
any Indemnifiable Claim or
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consent to entry of any judgment in respect thereof unless such settlement,
compromise, or consent includes as an unconditional term thereof the giving by
the claimant or the plaintiff to LSI a release from all liability in respect of
such Indemnifiable Claim.
8.8 Procedure For Indemnification. In the event that LSI asserts the
existence of a claim giving rise to Damages, it shall give written notice to the
Holder and the Escrow Agent on or before the last day of the Escrow Period (1)
stating that LSI has paid, or properly accrued Damages in an aggregate stated
amount in respect of which LSI is entitled to indemnity pursuant to this
Agreement, and (2) specifying in reasonable detail the individual items of such
Damages included in the amount so stated, the date each such item was paid, or
properly accrued, the nature of the misrepresentation, breach of the
representation, warranty or covenant to which such item is related. Such written
notice shall state that it is being given pursuant to this Section 8.8, specify
the nature and amount of the claim asserted and indicate the date on which such
assertion shall be deemed accepted and the amount of the claim which shall be
deemed a valid claim if not disputed as described below (such date to be
established in accordance with the next sentence). If the Holder, within 30 days
after the mailing of notice by LSI, shall not give written notice to LSI and the
Escrow Agent announcing its intent to contest such assertion of LSI, such
assertion shall be deemed accepted and the amount of claim shall be deemed a
valid claim. The Escrow Agent shall deliver to LSI out of the Cash Escrow Fund,
as promptly as practicable following such thirty-day period, cash held in the
Cash Escrow Fund having a value equal to such Damages.
8.9 Objections to Claims. In the event, however, that the Holder
contests the assertion of a claim by giving written notice to LSI and the Escrow
Agent within said period, then the parties shall act in good faith to reach
agreement regarding such claim. If the parties hereto, acting in good faith,
cannot reach agreement with respect to such claim within twenty (20) days after
notice thereof, such claim will be submitted to and settled by arbitration
pursuant to Section 8.10 hereof.
8.10 Resolution of Conflicts; Arbitration.
(a) In case the Holder shall object in writing to the indemnity
of LSI in respect of any claim or claims made in accordance with this Article
VIII, the Holder and LSI shall attempt in good faith to agree upon the rights of
the respective parties with respect to each of such claims. If the Holder and
LSI should so agree, a memorandum setting forth such agreement shall be prepared
and signed by both parties.
(b) If no such agreement can be reached after good faith
negotiation, either LSI or the Holder may demand arbitration of the matter
unless the amount of the Damages is at issue in pending litigation with a third
party, in which event arbitration shall not be commenced until such amount is
ascertained or both parties agree to arbitration; and in either such event the
matter shall be settled by arbitration conducted by one arbitrator to be
selected by the mutual agreement of LSI and the Holder. The decision of the
arbitrator so selected as to the validity and amount of any claim made pursuant
to this Article VIII shall be binding and conclusive upon the parties to this
Agreement.
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(c) Judgment upon any award rendered by the arbitrators may be
entered in any court having jurisdiction. Any such arbitration shall be held
under the commercial rules then in effect of the American Arbitration
Association. The fees of each arbitrator and the administrative fees of the
American Arbitration Association shall be paid out of the Cash Escrow Fund only
if LSI wins the judgment, otherwise such fees shall be paid by LSI. The
arbitrator shall have discretion to allocate payment of all other expenses,
including but not limited to reasonable attorney's fees, between the parties.
8.11 Order of Distribution of Funds. Funds from the Cash Escrow Fund
shall be distributed in the following order of priority until such funds are
fully distributed:
(a) First, from the Cash Escrow Fund by instruction of the
arbitrator, in payment of the arbitrator's fees and the administrative fees of
the American Arbitration Association if permitted by Section 8.10(c) hereof;
(b) Second, in payment of (i) all claims for Damages by LSI in
uncontested notices; (ii) all claims for Damages by LSI accepted by written
agreement of LSI and the Holder; and (iii) all claims for Damages by LSI awarded
and as instructed by the arbitrator;
(c) Third, in payment of all expenses and fees of the Holder;
and
(d) Fourth, in payment to the Holder.
ARTICLE IX
GENERAL PROVISIONS
9.1 Termination, Amendment and Waiver. This Agreement may be terminated
at any time prior to the Effective Time:
(a) by mutual agreement of LSI, Mint and the Holder;
(b) by LSI, Mint or the Holder if (i) the Effective Time shall
not have occurred on or prior to August 31, 1997; (ii) there shall be a
nonappealable order of a federal or state court in effect preventing
consummation of the transactions contemplated by this Agreement, or (iii) there
shall be any non-appealable action taken, or any statute, rule, regulation or
order enacted, promulgated or issued or deemed applicable to the transactions
contemplated by this Agreement by any Governmental Entity that would make
consummation of the transactions contemplated by this Agreement illegal.
9.2 Effect of Termination. In the event of termination of this Agreement
by either LSI, Mint or the Holder pursuant to Section 9.1, this Agreement shall
(except for the provisions of Sections 2.1(x), 4.1(d), 5.7, 5.9, 6.2 and 6.5)
forthwith become void.
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9.3 Amendment. This Agreement may not be amended except by an instrument
in writing signed by LSI, Mint and the Holder.
9.4 Extension; Waiver; Delay or Omission. At any time prior to the
Effective Time, the parties hereto may (i) extend the time for the performance
of any of the obligations or other acts of the other parties hereto, (ii) waive
any inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto, and (iii) waive compliance with any of
the agreements or conditions contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid if set forth in an
instrument in writing signed on behalf of such party. It is agreed that no delay
or omission to exercise any right, power or remedy accruing to any party to this
Agreement upon any breach or default of another party under this Agreement shall
impair any such right, power or remedy, nor shall it be construed to be a waiver
of or acquiescence in any such breach or default or any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring.
9.5 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if (i) delivered personally, upon delivery, or
(ii) if mailed by registered or certified mail (return receipt requested)
postage prepaid, upon the date that is seven (7) days after deposit, to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to LSI, to:
LSI Logic Corporation
0000 XxXxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Attn: Xxxxxx Xxxxxxxxx
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Telephone No.: (000) 000-0000
Attn: Xxxxxx X. X'Xxxxx
(b) if to the Holder to:
Xxxx Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Telephone No.: (000) 000-0000
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with a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxxx Xxxxx, Esq.
Telephone No.: (000) 000-0000
(c) if to Mint to:
Mint Technology, Inc.
0 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxx
Telephone No.: (000) 000-0000
with a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxxx Xxxxx
Telephone No.: (000) 000-0000
9.6 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.
9.7 Entire Agreement. This Agreement and the documents and instruments
and other agreements among the parties delivered pursuant hereto constitute the
entire agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and are not intended to
confer upon any other person any rights or remedies hereunder except as
otherwise expressly provided herein.
9.8 No Transfer; Binding Effect. This Agreement and the rights and
obligations set forth herein may not be transferred or assigned by operation of
law or otherwise without the consent of each party hereto. This Agreement is
binding upon and will inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
9.9 Severability. If any provision of this Agreement, or the application
thereof, will for any reason and to any extent be invalid or unenforceable, the
remainder of this Agreement and application of such provision to other persons
or circumstances will be interpreted so as reasonably to effect the intent of
the parties hereto. The parties further agree to replace such void or
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unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of the void or unenforceable provision.
9.10 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby or by law or equity on
such party, and the exercise of any one remedy will not preclude the exercise of
any other; provided that Article VIII sets forth LSI's, Mint's and the Holder's
exclusive remedy for damages arising from Indemnifiable Claims.
9.11 Further. Each party agrees to cooperate fully with the other
parties and to execute such further instruments, documents and agreements and to
give such further written assurances as may be reasonably requested by any other
party to evidence and reflect the transactions described herein and contemplated
hereby and to carry into effect the intents and purposes of this Agreement.
9.12 Absence of Third-Party Beneficiary Rights. No provision of this
Agreement is intended, nor will be interpreted, to provide to create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, stockholder, employee, partner or any party hereto or any
other person or entity unless specifically provided otherwise herein, and,
except as so provided, all provisions hereof will be personal solely between the
parties to this Agreement.
9.13 Mutual Drafting. This Agreement is the joint product of LSI, Mint
and the Holder and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of LSI, Mint and the Holder and shall
not be construed for or against any party hereto.
9.14 Governing Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
California (without giving effect to its choice of law principles).
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IN WITNESS WHEREOF, LSI, Merger Sub, Mint and Holder have caused this
Agreement to be signed, respectively, by an officer thereunto duly authorized,
and Holder has signed this Agreement, all as of the date first written above.
LSI LOGIC CORPORATION
a Delaware corporation
By
----------------------------------------
Its
---------------------------------------
LSI MERGER SUBSIDIARY
a Massachusetts corporation
By
----------------------------------------
Its
---------------------------------------
MINT TECHNOLOGY, INC.,
a Massachusetts corporation
By
----------------------------------------
Its
---------------------------------------
HOLDER
------------------------------------------
Xxxx Xxxxxxxx
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