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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
by and among
AMERICAN XTAL Technology, Inc.
MONTEREY Acquisition Corp.
LYTE OPTRONICS, Inc.
and certain stockholders of LYTE OPTRONICS, Inc.
May 27, 1999
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AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "AGREEMENT") is entered
into this 27th day of May 1999, by and among American Xtal Technology, Inc., a
Delaware corporation ("XXX"), Monterey Acquisition Corp., a Delaware corporation
and wholly-owned subsidiary of XXX ("SUB"), Lyte Optronics, Inc., a Nevada
Corporation ("LYTE OPTRONICS"), and the stockholders of Lyte Optronics listed on
Schedule 1 attached hereto ("LYTE OPTRONICS PRINCIPAL STOCKHOLDERS").
RECITALS
A. The Boards of Directors of each of XXX, Sub and Lyte Optronics
believe that it is in the best interests of each such company and its respective
stockholders and shareholders that XXX acquire Lyte Optronics through the
statutory merger of Sub with and into Lyte Optronics (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, all of the issued and outstanding shares of
Class A and Class B Common Stock and Series A Convertible Preferred Stock of
Lyte Optronics shall be converted into the right to receive shares of voting
common stock of XXX ("XXX COMMON STOCK"), and the Series B 5% Preferred Stock of
Lyte Optronics shall be converted into the right to receive shares of preferred
stock of XXX ("XXX PREFERRED STOCK"), and all options exercisable for common
stock of Lyte Optronics outstanding at the Effective Time shall be assumed by
XXX, all as set forth herein.
C. A portion of the shares of XXX Common Stock and XXX Preferred Stock
otherwise issuable by XXX in connection with the Merger shall be placed in
escrow by XXX, and the release of such amount shall be contingent upon certain
events and conditions, all as set forth in Article X below.
D. For federal income tax purposes, it is intended that the Merger shall
qualify as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended.
X. XXX, Sub, Lyte Optronics and the Lyte Optronics Principal
Stockholders agree to make certain representations, warranties and other
agreements in connection with the Merger, and concurrent with the execution of
this Agreement, as a material inducement to XXX and Sub to enter into this
Agreement, certain shareholders of Lyte Optronics are entering into a
Stockholder Voting Agreement in the form attached hereto as Exhibit C ("VOTING
Agreement"), and certain stockholders of Lyte Optronics are entering into
Non-Competition Agreements, each in the form attached as Exhibit D hereto (the
"NON-COMPETITION AGREEMENTS").
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AGREEMENT
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, the parties agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following defined terms have the meanings
indicated below:
1.1 "AAA RULES" has the meaning assigned in Section 11.16.
1.2 "AFFILIATE" shall have the meaning set forth in the rules and
regulations promulgated by the SEC pursuant to the Securities Act.
1.3 "AFFILIATE AGREEMENT" has the meaning assigned in Section
7.13.
1.4 "AGGREGATE XXX PREFERRED NUMBER" shall equal 985,444 shares
of newly issued XXX Preferred Stock (representing 1,000,000 shares less 14,556
shares representing the Xxxx Deducted Preferred Shares) less the Preferred
Portion of the Deducted Excess Fee Shares, if any.
1.5 "AGGREGATE XXX COMMON SHARE NUMBER" shall equal 2,368,309
shares of newly issued XXX Common Stock (representing 2,403,292 shares less
34,983 shares representing the Xxxx Deducted Common Shares), less the Common
Portion of the Deducted Excess Fee Shares, if any.
1.6 "AGGREGATE LYTE OPTRONICS COMMON NUMBER" shall mean the
aggregate number of shares of Lyte Optronics Class A Common Stock (assuming the
conversion of all of the issued and outstanding Lyte Optronics Class B Common
Stock, Lyte Optronics Series A Convertible Preferred Stock and Lyte Optronics
Warrants into Lyte Optronics Class A Common Stock) outstanding immediately prior
to the Effective Time.
1.7 "AGGREGATE LYTE OPTRONICS OPTION NUMBER" shall mean the
aggregate number of shares of Lyte Optronics Common Stock issuable upon the
exercise of all Lyte Optronics Options and Lyte Optronics Warrants, and other
rights to acquire shares of Lyte Optronics Common Stock, issued and outstanding
immediately prior to the Effective Time.
1.8 "AGREEMENT" means this Agreement and Plan of Reorganization
dated as of May 27, 1999 by and among American Xtal Technology, Inc., Monterey
Acquisition Corp. and Lyte Optronics, Inc.
1.9 "AVERAGE PRICE" means $24.30 per share of XXX Common Stock.
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1.10 "XXX COMMON STOCK" means the shares of Common Stock, par
value $0.001 per share, of XXX.
1.11 "XXX FINANCIAL STATEMENTS" has the meaning assigned in
Section 5.4.
1.12 "XXX PREFERRED STOCK" means the Series A Preferred Stock,
par value $0.001 per share, with the terms set forth in the Certificate of
Determination attached hereto as Exhibit L.
1.13 "XXX SEC DOCUMENTS" has the meaning assigned in Section 5.4.
1.14 "XXX SHARES" means collectively the XXX Common Stock and XXX
Preferred Stock issuable pursuant to Section 2.7(a).
1.15 "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and the rules and
regulations promulgated thereunder.
1.16 "CERCLIS" means the Comprehensive Environmental Response and
Liability Information System, as amended by 40 C.F.R. Section 300.5.
1.17 "CERTIFICATES" has the meaning assigned in Section 2.8(c).
1.18 "CLOSING" and "CLOSING DATE" shall have the meanings set
forth in Section 2.2.
1.19 "COBRA" means the Consolidated Omnibus Reconciliation Act of
1985, as amended.
1.20 "CODE" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder.
1.21 "COMMON STOCK EXCHANGE RATIO" shall mean the quotient
obtained by dividing (x) the Aggregate XXX Common Share Number by (y) the sum of
(A) the Aggregate Lyte Optronics Common Number, plus (B) the Aggregate Lyte
Optronics Option Number which based upon the representations set forth in this
Agreement is agreed to be 0.253297.
1.22 "COMMON PORTION OF THE DEDUCTED EXCESS FEE SHARES" has the
meaning assigned in Section 7.6.
1.23 "CONFIDENTIAL INFORMATION" shall have the meaning assigned
in Section 7.9(a).
1.24 "CONTRACT" means any contract, agreement or other document
(including any oral contract or agreement) setting forth an agreement or
understanding between two or more parties intended by such parties to be legally
binding.
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1.25 "DEAL EXPENSES" shall have the meaning assigned in Section
7.6.
1.26 "DEDUCTED PREFERRED SHARES" shall equal the Xxxx Deducted
Preferred Shares, together with the Preferred Portion of the Deducted Excess Fee
Shares deducted pursuant to the provisions of Section 7.6.
1.27 "DEDUCTED COMMON SHARES" shall equal the Xxxx Deducted
Common Shares, together with the Common Portion of the Deducted Excess Fee
Shares deducted pursuant to the provisions of Section 7.6.
1.28 "DELAWARE CERTIFICATE OF MERGER" has the meaning assigned in
Section 2.4.
1.29 "DELAWARE LAW" shall mean the provisions of the Delaware
General Corporation Law, as amended.
1.30 "DISSENTER'S RIGHTS" shall have the meaning assigned in
Section 2.9(a).
1.31 "DISSENTER'S RIGHTS STATUTES" shall mean Sections 92A.300
through 92A.500, inclusive, of the Nevada Revised Statutes.
1.32 "DISSENTING SHARES" shall mean any shares of Lyte Optronics
Capital Stock held by persons who have not voted such shares for approval of the
Merger and with respect to which such persons have become entitled to exercise
dissenter's rights in accordance with Sections 92A.300 to 92A.500 of the Nevada
Revised Statutes.
1.33 "EFFECTIVE TIME" shall mean the time the Merger becomes
effective as defined in Section 2.4.
1.34 "ENCUMBRANCES" means any mortgage, pledge, assessment,
security interest, lease, lien, adverse claim, levy, charge or other encumbrance
of any kind, or any conditional sale contract, title retention contract or other
contract to give any of the foregoing, other than Permitted Encumbrances.
1.35 "ENTITY" shall mean a corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
1.36 "ENVIRONMENTAL ACTIVITY" shall mean, without limitation, any
activity, event or circumstance in respect of a Hazardous Material, including,
without limitation, its storage, use, holding, collection, purchase,
accumulation, assessment, generation, manufacture, construction, processing,
treatment, recycling, stabilization, disposition, handling or transportation or
its affirmative or accidental release into the natural environment including
movement through or in the air, soil, subsoil, surface water or groundwater or
any other activity,
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event or circumstance which is subject to any of the Environmental Laws
including but not limited to noise, vibration, odor or similar nuisance.
1.37 "ENVIRONMENTAL LAW" means any statute, enactment,
administrative agency rule or promulgation, regulation, ordinance, or other law
or Order relating to the regulation or protection of human health, safety or the
environment or to emissions, discharges, generation, releases or threatened
releases of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes into the environment (including, without
limitation, ambient air, soil, surface water, ground water, wetlands, land or
subsurface strata), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of any
Hazardous Material.
1.38 "ENVIRONMENTAL REVIEW" has the meaning assigned in Section
3.22(f).
1.39 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
1.40 "ESCROW AGENT" has the meaning assigned in Section 10.5(a).
1.41 "ESCROW AMOUNT" shall mean, collectively, that number of
shares of XXX Common Stock and of XXX Preferred Stock obtained by multiplying
the Aggregate XXX Common Number (net of the Xxxx Deducted Common Shares and less
the Common Portion of the Deducted Excess Fee Shares, if any) by 0.10, plus the
Aggregate XXX Preferred Number (net of the Xxxx Deducted Preferred Shares and
less the Preferred Portion of the Deducted Excess Fee Shares, if any) by 0.10.
1.42 "ESCROW FUND" has the meaning assigned in Section 10.5(a).
1.43 "EXCESS FEES" has the meaning assigned in Section 7.6.
1.44 "EXCHANGE RATIOS" shall mean collectively the Common Stock
Exchange Ratio and the Preferred Stock Exchange Ratio.
1.45 "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended, or any similar federal statute and the rules and regulations
thereunder, all as the same shall be in effect at the time.
1.46 "EXCHANGE AGENT" has the meaning assigned in Section 2.8(a).
1.47 "GAAP" means United States generally accepted accounting
principles, consistently applied throughout the period and in the immediately
prior comparable period.
1.48 "GOVERNMENTAL BODY" shall mean any: (a) nation, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, city, county, municipal,
foreign, provincial or other government or political subdivision; or (c)
governmental or quasi-governmental authority of any nature (including any
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governmental division, department, agency, commission, instrumentality,
official, organization, unit, body, or Entity and any court or other tribunal).
1.49 "GRC" shall mean Xxxx Xxxxxxx & Xxxxxxxxxxx LLP.
1.50 "HAZARDOUS MATERIAL" means without limitation (i) any
pollutants, residues, infectious materials, flammable, dangerous, toxic or
hazardous substances, hazardous waste or materials of any description
whatsoever; (ii) any petroleum or petroleum products, flammable explosives,
radioactive materials, asbestos in any friable form, urea formaldehyde foam
insulation and transformers or other equipment that contain dielectric fluid
containing levels of polychlorinated biphenyls (PCBs); (iii) any chemicals or
other materials or substances which are now or hereafter become defined as or
included in the definition of "hazardous substances", "hazardous wastes",
"hazardous materials", "extremely hazardous wastes", "restricted hazardous
wastes", "toxic substances", "toxic pollutants" or words of similar import under
any Environmental Law; and (iv) any other chemical or other material or
substance, exposure to which is now or hereafter prohibited, limited or
regulated by any Governmental Body under any Environmental Law.
1.51 "HAZARDOUS MATERIAL HANDLING" has the meaning assigned in
Section 3.22(b).
1.52 "HAZARDOUS MATERIAL PRODUCT ACTIVITIES" has the meaning
assigned in Section 3.22(c).
1.53 "INDEBTEDNESS" of any person means (a) each and every
obligation of such person which is either (i) an obligation for borrowed money,
(ii) an obligation evidenced by notes, bonds, debentures or similar instruments
(including banker's usances), (iii) an obligation for the deferred purchase
price of goods or services (other than trade payables or accruals incurred in
the ordinary course of business), (iv) an obligation under capital leases, or
(v) any accrued but unpaid interest or prepayment or other penalties upon any of
the foregoing or any lease termination charges or payments required to take
title to property under a lease, and (b) an obligation in the nature of a
guarantee by such person, or a pledge of assets of such person, in support of
any obligation of any other person that is within the scope of the immediately
preceding clauses (a)(i) through (a)(v).
1.54 "INDEMNIFICATION PERIOD" shall have the meaning set forth in
Section 10.5(d).
1.55 "INDEMNITY ESCROW AGREEMENT" has the meaning assigned in
Section 10.5(a).
1.56 "INTELLECTUAL PROPERTY" shall mean: (a) any patent, patent
application, patent rights, trademark (whether registered or unregistered),
trademark rights, trademark application, trade name, fictitious business name,
service xxxx (whether registered or unregistered), service xxxx application,
copyright (whether registered or unregistered), brand name, trade dress,
business and product name, logo, slogan, trade secret, copyright, copyright
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application, maskwork, maskwork application, know-how, industrial model,
process, methodology, customer list, franchise, system, computer software,
computer program (including all object and source codes), invention, design,
blueprint, engineering drawing, proprietary product, technology, proprietary
right and all related documentation, technical information, manufacturing,
engineering and technical drawings, know-how and all other intellectual property
right or intangible asset of every kind or nature; and (b) any right to use or
exploit any of the foregoing including rights granted by third parties under
license agreements.
1.57 "XXXX" shall mean X. Xxxx & Co.
1.58 "XXXX DEDUCTED EXPENSES" shall mean the sum of $908,320
payable by Lyte Optronics to Xxxx for services rendered in connection with the
transactions contemplated by this Agreement.
1.59 "XXXX DEDUCTED SHARES" shall mean 34,983 shares of XXX
Common Stock deducted from the Aggregate Common Share Number (the "XXXX DEDUCTED
COMMON SHARES") and 14,556 shares of XXX Preferred Stock deducted from the
Aggregate Preferred Number (the "XXXX DEDUCTED PREFERRED SHARES").
1.60 "XXXX DEDUCTED COMMON SHARES" has the meaning assigned in
Section 1.59.
1.61 "XXXX DEDUCTED PREFERRED SHARES" has the meaning assigned in
Section 1.59.
1.62 "LEGAL PROCEEDING" shall mean any action, suit, litigation,
arbitration proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding), hearing, inquiry, audit, examination or
investigation commenced, brought, conducted or heard by or before, or otherwise
involving any court or other Governmental Body or any arbitrator or arbitration
panel.
1.63 "LIABILITY" and "LIABILITIES" mean any and all Indebtedness,
obligations and other liabilities of a person (whether absolute, accrued,
contingent, fixed or otherwise, or whether due or to become due).
1.64 "LOSS" or "LOSSES" has the meaning assigned in Section
10.2(a).
1.65 "LYTE OPTRONICS BALANCE SHEET" has the meaning assigned in
Section 3.4.
1.66 "LYTE OPTRONICS CAPITAL STOCK" shall mean all shares of Lyte
Optronics Common Stock and Lyte Optronics Preferred Stock issued and outstanding
at the Effective Time.
1.67 "LYTE OPTRONICS CLASS A COMMON STOCK" shall mean the shares
of Lyte Optronics Class A Common Stock, par value $0.01 per share, issued and
outstanding as of the Effective Time.
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1.68 "LYTE OPTRONICS CLASS B COMMON STOCK" shall mean the shares
of Lyte Optronics Class B Common Stock, par value $0.01 per share, issued and
outstanding as of the Effective Time.
1.69 "LYTE OPTRONICS COMMON STOCK" shall mean all shares of Lyte
Optronics Class A Common Stock and Lyte Optronics Class B Common Stock, issued
and outstanding as of the Effective Time.
1.70 "LYTE OPTRONICS DISCLOSURE SCHEDULE" has the meaning
assigned in the forepart of Article III.
1.71 "LYTE OPTRONICS EMPLOYEE PLANS" has the meaning assigned in
Section 3.12.
1.72 "LYTE OPTRONICS FINANCIAL STATEMENTS" has the meaning
assigned in Section 3.4(a) and Section 8.3(k).
1.73 "LYTE OPTRONICS INTELLECTUAL PROPERTY" has the meaning
assigned in Section 3.11(a).
1.74 "LYTE OPTRONICS OPTION" shall mean an option to purchase
Lyte Optronics Common Stock prior to Closing.
1.75 "LYTE OPTRONICS OPTIONEE" shall refer to holders of options
to purchase Lyte Optronics Common Stock prior to the Closing.
1.76 "LYTE OPTRONICS PREFERRED STOCK" shall mean all shares of
Series A Convertible Preferred Stock and Series B 5% Preferred Stock of Lyte
Optronics issued and outstanding as of the Effective Time.
1.77 "LYTE OPTRONICS PRINCIPAL STOCKHOLDERS" has the meaning
assigned in the forepart of this Agreement.
1.78 "LYTE OPTRONICS SERIES A CONVERTIBLE PREFERRED STOCK" shall
means all shares of Series A Convertible Preferred Stock of Lyte Optronics
issued and outstanding at the Effective Time.
1.79 "LYTE OPTRONICS SERIES B 5% PREFERRED STOCK" shall mean all
shares of Series B 5% Preferred Stock of Lyte Optronics issued and outstanding
at the Effective Time.
1.80 "LYTE OPTRONICS STOCKHOLDERS" shall mean the holders of all
Lyte Optronics Capital Stock immediately prior to the Effective Time.
1.81 "LYTE OPTRONICS WARRANT" shall mean a warrant convertible
into or exercisable for shares of Lyte Optronics Common Stock issued and
outstanding at the Effective Time.
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1.82 "LYTE OPTRONICS' CONTROLLED GROUP" has the meaning assigned
in Section 3.12.
1.83 "MATERIAL ADVERSE EFFECT" with respect to any person means a
material adverse change in or effect on the business, financial condition,
assets, properties, prospects, operations or results of operations of such
person and all Subsidiaries of such person, taking such person together with
such person's Subsidiaries as a whole.
1.84 "MERGER" shall mean the merger of Sub with and into Lyte
Optronics, on the terms and conditions described herein.
1.85 "NEVADA LAW" means the Nevada Revised Statutes.
1.86 "NEVADA MERGER AGREEMENT" has the meaning set forth in
Section 2.4.
1.87 "NEW SHARES" has the meaning assigned in Section
10.5(b)(ii).
1.88 "NON-COMPETITION AGREEMENT" has the meaning assigned in the
forepart of this Agreement, and is attached hereto as Exhibit D.
1.89 "NPL" means the National Priorities List under CERCLA.
1.90 "OFFICER'S CERTIFICATE" has the meaning assigned in Section
10.5(d)(i).
1.91 "OPTION PLAN" means the Lyte Optronics 1998 Stock Option
Plan.
1.92 "ORDER" means any writ, judgment, decree, injunction or
similar order of any Governmental Body (whether preliminary or final).
1.93 "PACIFIC MEZZANINE" means Pacific Mezzanine Fund, L.P.
1.94 "PAYABLE THIRD PARTY EXPENSES" shall have the meaning set
forth in Section 7.6.
1.95 "PERMIT" and "PERMITS" mean any and all permits, licenses,
certificates of authority, authorizations, approvals, registrations, franchises
and similar consents granted or issued by any Governmental Body.
1.96 "PERMITTED ENCUMBRANCE" means any of the following: (i) any
Encumbrance for Taxes not yet due or delinquent or being contested in good faith
by appropriate proceedings for which adequate reserves have been established in
accordance with GAAP, (ii) any statutory Encumbrance arising in the ordinary
course of business by operation of law with respect to a Liability that is not
yet due or delinquent, or (iii) any minor imperfection of title or similar
Encumbrance which does not materially impair Lyte Optronics's use of the
property subject to such Encumbrance.
1.97 "PERSON" shall mean any individual, Entity or Governmental
Body.
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1.98 "PREFERRED PORTION OF THE DEDUCTED EXCESS FEE SHARES" has
the meaning assigned in Section 7.6.
1.99 "PREFERRED STOCK EXCHANGE RATIO" shall mean 0.25.
1.100 "RECEIVING PARTY" has the meaning assigned in Section
7.9(a).
1.101 "RELEASE" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, leaching or migration into the
indoor or outdoor environment, including, without limitation, the movement of
Hazardous Material through ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata.
1.102 "REPRESENTATIVES" shall mean officers, directors,
employees, agents, consultants, attorneys, accountants and advisors.
1.103 "SEC" shall mean the Securities and Exchange Commission.
1.104 "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations
thereunder, all as the same shall be in effect at the time.
1.105 "STOCKHOLDER REPRESENTATIVE" has the meaning assigned in
Section 10.6.
1.106 "STOCKHOLDER'S QUESTIONNAIRE" has the meaning assigned in
Section 7.3(b) and is attached hereto as Exhibit E.
1.107 "SUB" has the meaning assigned in the forepart of this
Agreement.
1.108 "SUBSIDIARY" and "SUBSIDIARIES" mean any and all
corporations or other Entities more than fifty percent (50%) of the voting power
of which or ownership interest in is owned directly, or indirectly through one
or more intermediate corporations or entities which are so owned, by a party or
other relevant person, as the context requires.
1.109 "SURVIVING CORPORATION" has the meaning set forth in
Section 2.1.
1.110 "TAX RETURNS" means a report, return or other information
required to be supplied to a Governmental Body with respect to Taxes of Lyte
Optronics or any of its Subsidiaries, including combined or consolidated returns
for any group of entities that includes Lyte Optronics.
1.111 "TAX" or "TAXES" shall mean all federal, territorial,
state, county, municipal, local or other taxes, charges, levies, duties or other
assessments, including without limitation income, capital, sales and use taxes,
ad valorem or value added and goods and services taxes, excise taxes, transfer
and stamp taxes, custom duties and franchise taxes, real and personal property
taxes and payroll taxes (including tax withholdings, employer health taxes,
workers' compensation assessments and ERISA plans and unemployment insurance
premiums, contributions and remittances and the U.S. equivalents thereof),
capital stock, production,
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business and occupation, and penalties (civil or criminal), interest and
surcharges in respect of any of the foregoing, and any expenses incurred in
connection with the determination, settlement or litigation of any tax
liability, and all words derived from or including the word "Tax," such as
"Taxing" and "Taxation" shall bear a corresponding meaning.
1.112 "THIRD PARTY" means any person (including a Governmental
Body) not an Affiliate of the referenced person or persons.
1.113 "THIRD PARTY INTELLECTUAL PROPERTY" has the meaning
assigned in Section 3.11(c).
1.114 "TRANSACTION DOCUMENTS" shall mean all documents or
agreements required to be delivered by any party hereunder including the
Agreement of Merger.
1.115 "USTs" has the meaning assigned in Section 3.22(d).
1.116 "VOTING AGREEMENT" has the meaning assigned in the forepart
of this Agreement and is attached hereto as Exhibit C.
1.117 "YEAR 2000 COMPLIANT" has the meaning assigned in Section
3.24.
1.118 CONSTRUCTION OF CERTAIN TERMS AND PHRASES. Unless the
context of this Agreement otherwise requires: (i) words of any gender include
each other gender; (ii) all references to monetary amounts are in U.S. dollars,
unless expressly stated to refer to another currency; (iii) the terms "hereof,"
"herein," "hereby," "hereunder," and similar words refer to this entire
Agreement; (iv) the terms "Article" or "Section" refer to the specified Article
or Section of this Agreement; (v) the phrase "ordinary course of business"
refers to the businesses of Lyte Optronics and its Subsidiaries; (vi) whenever
the words "include," "includes" or "including" are used in this Agreement they
shall be deemed to be followed by the words "without limitation"; (vii) whenever
this Agreement refers to a number of days, such number shall refer to calendar
days unless Business Days are specified; (viii) the phrases "the date of this
Agreement," "the date hereof," and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to May 27, 1999; (ix) all
accounting terms used herein and not expressly defined herein shall have the
meanings given to them under GAAP; and (x) the table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
ARTICLE II
THE MERGER
2.1 THE MERGER. At the Effective Time and subject to and upon the terms
and conditions of this Agreement and the applicable provisions of the Delaware
General Corporation Law ("DELAWARE LAW") and the Nevada Revised Statutes
("NEVADA LAW"), Sub shall be merged with and into Lyte Optronics, the separate
corporate existence of Sub shall cease and Lyte Optronics shall continue as the
surviving corporation and as a wholly-owned subsidiary of XXX.
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Lyte Optronics as the surviving corporation after the Merger is hereinafter
sometimes referred to as the "SURVIVING CORPORATION".
2.2 THE CLOSING. Subject to termination of this Agreement as provided in
Article IX below, the closing of the transactions contemplated by this Agreement
(the "CLOSING") shall take place at the offices of Xxxx Xxxx Xxxx & Freidenrich
LLP, 000 Xxxxxxxx Xxxxxx, Xxxx Xxxx, Xxxxxxxxxx 00000, at 10:00 a.m. local time
as soon as practicable after the last of the conditions to closing set forth in
Article VIII either have been satisfied or waived, or such other place, time and
date as XXX and Lyte Optronics may mutually select. The date upon which the
Closing actually occurs is herein referred to as the "CLOSING DATE".
2.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of Nevada Law. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time all of the property, rights, privileges, powers and franchises, and all
property, real, personal and mixed, of Lyte Optronics and Sub shall vest in the
Surviving Corporation, and all debts, Liabilities and duties of Lyte Optronics
and Sub shall become the debts, Liabilities and duties of the Surviving
Corporation.
2.4 PLAN OF MERGER. On the Closing Date, the parties hereto shall cause
the Merger to be consummated by filing a Certificate of Merger (or like
instrument), duly prepared, executed and acknowledged by Lyte Optronics, Sub and
such other parties as may be appropriate, together with an officer's certificate
of each of Sub and Lyte Optronics, in substantially the form set forth as
Exhibit A hereto, with the Secretary of State of the State of Delaware (the
"DELAWARE CERTIFICATE OF MERGER"), and an Agreement of Merger, duly prepared,
executed and acknowledged by Lyte Optronics, Sub and such other parties as may
be appropriate, together with an officer's certificate of each of Sub and Lyte
Optronics, in substantially the form of Exhibit B hereto (the "NEVADA MERGER
AGREEMENT") with the Secretary of State of the State of Nevada in accordance
with the applicable provisions of Delaware Law and Nevada Law, respectively. The
Merger shall become effective upon the latest of: (x) the date and time of the
filing and effectiveness of the Delaware Certificate of Merger with the
Secretary of State of the State of Delaware, or (y) the date and time of filing
the Nevada Merger Agreement with the Secretary of State of the State of Nevada
(the "EFFECTIVE TIME").
2.5 ARTICLES OF INCORPORATION AND BYLAWS. Unless otherwise determined by
XXX prior to the Effective Time, at the Effective Time, the Articles of
Incorporation and the Bylaws of Lyte Optronics as in effect immediately prior to
the Effective Time shall be the provisions of the Articles of Incorporation and
Bylaws, respectively, of the Surviving Corporation after the Effective Time
unless and until further amended as provided by law and such Articles of
Incorporation or Bylaws; provided, however, that Article Fourth of the Articles
of Incorporation of the Surviving Corporation shall automatically be amended to
read in its entirety as follows: "The total number of shares of all classes of
capital stock which the Corporation shall have authority to issue is 1,000
shares of Common Stock, par value $0.001 per share".
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2.6 DIRECTORS AND OFFICERS. The directors of Sub immediately prior to
the Effective Time shall be the initial directors of the Surviving Corporation
after the Effective Time. Such directors shall hold office until the election
and qualification of their respective successors or until their tenure is
otherwise terminated in accordance with the Articles of Incorporation and Bylaws
of the Surviving Corporation. The officers of 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.
2.7 CANCELLATION OF SHARES AND DELIVERY OF CONSIDERATION. The number of
shares of XXX Common Stock to be issued (which shall include (and shall not be
increased for) all XXX Common Stock to be reserved for issuance upon exercise of
all Lyte Optronics Options) shall be equal to the Aggregate XXX Common Share
Number. The number of shares of XXX Preferred Stock to be issued shall be equal
to the Aggregate XXX Preferred Number. 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 Sub, Lyte Optronics or the holder of any shares of
Lyte Optronics Capital Stock, the following shall occur:
(a) CONVERSION OF LYTE OPTRONICS CAPITAL STOCK.
(i) Other than Dissenting Shares (as defined and to the
extent provided in Section 2.9(a), (a) each share of Lyte Optronics Class A
Common Stock issued and outstanding immediately prior to the Effective Time will
be canceled and extinguished and be converted automatically into the right to
receive that number of shares of XXX Common Stock equal to the Common Stock
Exchange Ratio, and (b) each share of Lyte Optronics Class B Common Stock and
Lyte Optronics Series A Preferred Stock issued and outstanding immediately prior
to the Effective Time will be canceled and extinguished and be converted
automatically into the right to receive that number of shares of XXX Common
Stock equal to (x) the number of shares of Lyte Optronics Class A Common Stock
into which such shares are convertible multiplied by (y) the Common Stock
Exchange Ratio.
(ii) Each share of Lyte Optronics Series B 5% Preferred
Stock issued and outstanding immediately prior to the Effective Time (other than
Dissenting Shares (as defined and to the extent provided in Section 2.9(a)) will
be canceled and extinguished and be converted automatically into the right to
receive that number of shares of new XXX Preferred Stock equal to the Preferred
Stock Exchange Ratio.
(iii) Such shares shall be issued upon surrender of the
certificate representing such shares of Lyte Optronics Capital Stock in the
manner provided in Section 2.8(c) below; provided, however, that to the extent
that shares of Lyte Optronics Capital Stock were subject to vesting or
repurchase by Lyte Optronics immediately prior to the Effective Time, the shares
of XXX Common Stock or XXX Preferred Stock received pursuant to this Section
2.7(a) shall be subject to the provisions of the agreement governing such
vesting or repurchase by Lyte Optronics, except that any reference in such
agreement to Lyte Optronics shall mean the Surviving Corporation or XXX.
(b) STOCK OPTIONS AND WARRANTS. At the Effective Time, all
options
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to purchase Lyte Optronics Common Stock then outstanding under Lyte
Optronics's 1998 Stock Option Plan (the "OPTION PLAN") or otherwise, shall be
assumed in accordance with the provisions described below.
(i) At the Effective Time, each outstanding option or
other right to purchase shares of Lyte Optronics Common Stock (each a "LYTE
OPTRONICS OPTION") under the Option Plan, or otherwise, whether vested or
unvested, and any outstanding Monterey Warrants that are exercisable or
convertible after the Effective Date, to the extent so exercisable or
convertible, shall be, in connection with the Merger, assumed by XXX. Each Lyte
Optronics Option or Lyte Optronics Warrant so assumed by XXX 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 or warrant agreements governing such Lyte Optronics Option or
Lyte Optronics Warrant immediately prior to the Effective Time, except that (A)
each such Lyte Optronics Option and Warrant shall be exercisable (when vested)
for that number of whole shares of XXX Common Stock equal to the product of the
number of shares of Lyte Optronics Class A Common Stock that were issuable upon
exercise or conversion of such Lyte Optronics Option or Warrant immediately
prior to the Effective Time multiplied by the Common Stock Exchange Ratio,
rounded down to the nearest whole number of shares of XXX Common Stock and (B)
the per share exercise price for the shares of XXX Common Stock issuable upon
exercise of such assumed Lyte Optronics Option or Warrant shall be equal to the
quotient determined by dividing the exercise price per share of Lyte Optronics
Class A Common Stock or Class B Common Stock at which such Lyte Optronics Option
was exercisable or convertible immediately prior to the Effective Time by the
Common Stock Exchange Ratio, rounded up to the nearest whole cent.
(ii) It is the intention of the parties that the Lyte
Optronics Options assumed by XXX 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 that such Lyte Optronics Options
qualified as incentive stock options immediately prior to the Effective Time.
(iii) XXX shall take all necessary corporate action to
reserve for issuance from the Aggregate XXX Common Share Number a sufficient
number of shares of XXX Common Stock for delivery upon exercise of Lyte
Optronics Options or exercise or conversion of such Lyte Optronics Warrant
assumed in accordance with this Section 2.7(b).
(c) CANCELLATION OF LYTE OPTRONICS-OWNED STOCK. At the Effective
Time, each share of Lyte Optronics Capital Stock, if any, that is owned by Lyte
Optronics or any direct or indirect wholly-owned subsidiary of Lyte Optronics,
shall be canceled and extinguished without any conversion thereof, and no cash
or other consideration shall be delivered in exchange therefor.
(d) CAPITAL STOCK OF SUB. At the Effective Time, each share of
capital stock of Sub outstanding immediately prior to the Merger shall, by
virtue of the Merger, and without further action on the part of any holder
thereof, be converted into and exchanged for one
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validly issued, fully paid and nonassessable share of Common Stock of the
Surviving Corporation. Each stock certificate of Sub evidencing ownership of any
such shares of common stock of Sub shall, as of the Effective Time, evidence
ownership of such shares of common stock of the Surviving Corporation.
(e) ADJUSTMENTS TO EXCHANGE RATIOS. The Exchange Ratios shall be
adjusted to reflect fully the effect of any stock split, reverse split, stock
dividend (including any dividend or distribution of securities convertible into
XXX Common Stock or Lyte Optronics Capital Stock), reorganization,
recapitalization or other like change with respect to XXX Common Stock or Lyte
Optronics Capital Stock occurring after the date hereof and prior to the
Effective Time.
(f) FRACTIONAL SHARES. No fraction of a share of XXX Common Stock
shall be issued, but in lieu thereof each holder of Lyte Optronics Common Stock
or Lyte Optronics Series A Preferred Stock who would otherwise be entitled to a
fraction of a share of XXX Common Stock (after aggregating all fractional shares
of XXX Common Stock to be received by such holder) shall receive from XXX an
amount of cash (rounded to the nearest whole cent) equal to the product of (i)
such fraction, multiplied by (ii) the Average Price. No fraction of a share of
XXX Preferred Stock shall be issued, but in lieu thereof each holder of Lyte
Optronics Series B 5% Preferred Stock who would otherwise be entitled to a
fraction of a share of XXX Preferred Stock (after aggregating all fractional
shares of XXX Preferred Stock to be received by such holder) shall receive from
XXX an amount of cash (rounded to the nearest whole cent) equal to the product
of (i) such fraction, multiplied by (ii) the per share liquidation value of such
XXX Preferred Stock plus accrued but unpaid dividends thereon.
(g) ACCRUED DIVIDENDS. Any accrued but unpaid dividends
outstanding on the Lyte Optronics Preferred Stock shall be assumed by XXX.
2.8 EXCHANGE PROCEDURES.
(a) EXCHANGE AGENT. Prior to the Closing Date, XXX shall appoint
a bank or transfer agent to act as exchange agent (the "EXCHANGE AGENT") in the
Merger.
(b) XXX TO PROVIDE STOCK. As soon as practicable after the
Effective Time, XXX shall make available to the Exchange Agent for exchange in
accordance with this Section 2.8 the aggregate number of XXX Shares issuable
pursuant to Section 2.7(a) in exchange for outstanding shares of Lyte Optronics
Capital Stock; provided, however, that on behalf of the holders of Lyte
Optronics Capital Stock, XXX shall deposit into an escrow account a number of
shares of XXX Common Stock and XXX Preferred Stock equal to the Escrow Amount
out of the aggregate number of shares of XXX Common Stock and XXX Preferred
Stock otherwise issuable pursuant to Section 2.7(a). The portion of the Escrow
Amount contributed on behalf of each holder of Lyte Optronics Capital Stock
shall be in proportion to the aggregate number of shares of XXX Common Stock or
XXX Preferred Stock, respectively, which such holder would otherwise be entitled
to receive under Section 2.7(a) by virtue of ownership of outstanding shares of
Lyte Optronics Capital Stock.
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(c) SURRENDER OF CERTIFICATES. As soon as practicable after the
Effective Time, the Surviving Corporation shall cause to be mailed to each
holder of record of certificate(s) or other documents which represent Lyte
Optronics Capital Stock (the "CERTIFICATES"), to be exchanged pursuant to
Section 2.7 hereof (i) a letter of transmittal (which shall specify that, with
respect to the Certificates, delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the Certificates to
the Exchange Agent and shall be in such form and have such other provisions as
XXX shall reasonably agree) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for XXX Shares. Upon surrender of a
Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by XXX, together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto,
the holder of such Certificates shall be entitled to receive in exchange
therefor a certificate representing the number of whole shares of XXX Common
Stock or XXX Preferred Stock (less the number of shares of XXX Common Stock or
XXX Preferred Stock, as the case may be, if any, to be deposited in the Escrow
Fund on such holder's behalf pursuant to Article X hereof), plus cash in lieu of
fractional shares in accordance with Section 2.7(f), to which such holder is
entitled pursuant to Section 2.7(a). Certificates so surrendered pursuant to
this Section 2.8(c) shall forthwith be canceled (if not otherwise canceled or
terminated in accordance with their terms). As soon as practicable after the
Effective Time, and subject to and in accordance with the provisions of Article
X hereof, XXX shall cause to be distributed to the Escrow Agent certificates
representing that number of shares of XXX Common Stock and XXX Preferred Stock
equal to the Escrow Amount, which certificates shall be registered in the name
of the Escrow Agent. Such shares shall be beneficially owned by the holders on
whose behalf such shares were deposited in the Escrow Fund and shall be
available to compensate XXX as provided in Article X. Until surrendered as
contemplated by this Section 2.8(c), each Certificate that, prior to the
Effective Time, represented shares of Lyte Optronics Capital Stock will be
deemed from and after the Effective Time, for all corporate purposes, to
represent solely the right to receive upon such surrender that number of XXX
Shares (without interest and subject to applicable withholding, escheat and
other laws) into which such shares of Lyte Optronics Capital Stock shall have
been converted together with the right to receive an amount in cash in lieu of
any fractional shares in accordance with Section 2.7(f).
(d) DISTRIBUTIONS ON UNEXCHANGED SHARES. No dividends or other
distributions with respect to XXX Common Stock or XXX Preferred Stock declared
or made after the Effective Time and with a record date after the Effective Time
will be paid to the holder of any unsurrendered Certificate with respect to the
shares of XXX Common Stock or XXX Preferred Stock represented thereby until the
holder of record of such Certificate shall surrender such Certificate. Subject
to applicable law, following surrender of any such Certificate, there shall be
paid to the record holder of the certificates representing whole shares of XXX
Common Stock or XXX Preferred Stock issued in exchange therefor, without
interest, at the time of such surrender, the amount of dividends or other
distributions with a record date after the Effective Time theretofore payable
with respect to such whole shares of XXX Common Stock or XXX Preferred Stock.
(e) TRANSFERS OF OWNERSHIP. If any certificate for shares of XXX
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Common Stock or XXX Preferred Stock is to be issued in a name other than that in
which the Certificate surrendered in exchange therefor is registered, it will be
a condition of the issuance thereof that the Certificate so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the person
requesting such exchange will have paid to XXX or any agent designated by it any
transfer or other taxes required by reason of the issuance of a certificate for
shares of XXX Common Stock or XXX Preferred Stock in any name other than that of
the registered holder of the Certificate surrendered, or established to the
satisfaction of XXX or any agent designated by it that such tax has been paid or
is not payable.
(f) NO LIABILITY. Notwithstanding anything to the contrary in
this Section 2.8, none of the Exchange Agent, the Surviving Corporation or any
party hereto shall be liable to a holder of shares of Lyte Optronics Capital
Stock for any amount properly paid to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(g) NO FURTHER OWNERSHIP RIGHTS IN LYTE OPTRONICS CAPITAL STOCK.
The XXX Shares issued upon the surrender for exchange of shares of Lyte
Optronics Capital Stock in accordance with the terms hereof (including any cash
paid in respect thereof) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such Lyte Optronics Capital Stock, and
there shall be no further registration of transfers on the records of the
Surviving Corporation of Lyte Optronics Capital Stock which was outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided herein.
(h) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates evidencing Lyte Optronics Capital Stock shall have been lost,
stolen or destroyed, the Exchange Agent shall issue in exchange for such lost,
stolen or destroyed Certificates, upon the making of an affidavit of that fact
by the holder thereof, such holder's pro rata allocation of XXX Shares, as may
be required pursuant to Section 2.7(a); provided, however, that XXX may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificates to deliver a bond in such
sum as it may reasonably direct as indemnity against any claim that may be made
against XXX or the Exchange Agent with respect to the Certificates alleged to
have been lost, stolen or destroyed.
2.9 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the
contrary, any shares of Lyte Optronics Capital Stock held by a holder who, as of
the Effective Time, has not effectively withdrawn or lost (through failure to
perfect or otherwise) appraisal or dissenters' rights ("DISSENTER'S RIGHTS")
pursuant to Sections 92A.300 through 92A.500, inclusive of the Nevada Revised
Statutes (the "DISSENTER'S RIGHTS STATUTES") (hereinafter referred to as
"DISSENTING SHARES") shall not be converted into or represent a right to receive
XXX Common Stock pursuant to Section 2.7(a) above, but the holder thereof shall
only be entitled to such rights as are granted by the Dissenter's Rights
Statutes.
(b) Notwithstanding the provisions of subsection (i) above, if
after the Effective Time any holder of Dissenting Shares shall effectively
withdraw or lose (through
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failure to perfect or otherwise) such holder's Dissenter's Rights, then, as of
the occurrence of such event, such holder's shares shall automatically be
converted into and represent only the right to receive XXX Shares and payment
for any fractional share as provided in Section 2.7(f) above, without interest
thereon, upon surrender of the certificate representing such shares.
(c) Lyte Optronics shall give XXX (A) prompt notice of any
written notices, demands or claims given under the Dissenter's Rights Statutes
or any other provisions of Nevada Law with respect to any shares of Lyte
Optronics Capital Stock, withdrawals of such notices, demands, or claims and any
other instruments served pursuant to Nevada Law (including without limitation
instruments concerning appraisal or dissenters' rights) and received by Lyte
Optronics and (B) the opportunity to participate in all negotiations and
proceedings with respect to Dissenter's Rights. Lyte Optronics shall not, except
with the prior written consent of XXX, voluntarily make any payment with respect
to any demands under any the Dissenter's Rights Statutes relating to any shares
of Lyte Optronics Capital Stock or offer to settle or settle any such demands.
2.10 TAX AND ACCOUNTING CONSEQUENCES. It is intended by the parties
hereto that the Merger shall (i) constitute a reorganization within the meaning
of Section 368 of the Code and (ii) qualify for accounting treatment as a
pooling of interests.
2.11 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
Lyte Optronics and Sub, the officers and directors of Lyte Optronics and Sub are
fully authorized in the name of their respective corporations or otherwise to
take, and will take, all such lawful and necessary action.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LYTE OPTRONICS
AND THE LYTE OPTRONICS PRINCIPAL SHAREHOLDERS
Except as otherwise disclosed in a disclosure schedule dated as of the
date hereof referring specifically (referencing the appropriate schedule or
section number) to representations, warranties or covenants in this Agreement
which reasonably identifies the basis for an exception to a representation,
warranty or covenant in this Agreement and which is delivered by Lyte Optronics
to XXX prior to the execution of this Agreement (the "LYTE OPTRONICS DISCLOSURE
SCHEDULE"), Lyte Optronics and each of the Lyte Optronics Principal Stockholders
represent and warrant to XXX and Sub that each of the statements set forth below
are true and correct. No fact or circumstance disclosed to XXX by Lyte Optronics
or the Lyte Optronics Principal Stockholders shall constitute an exception to
these representations and warranties unless such fact or circumstance is set
forth in the Lyte Optronics Disclosure Schedule.
3.1 ORGANIZATION. Lyte Optronics is a corporation duly organized,
validly existing and in good standing under the laws of the state of Nevada and
has the corporate power and authority to own its properties and to carry on its
business as it is now being conducted and
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as it is proposed to be conducted. Lyte Optronics is duly qualified, licensed or
admitted to do business and is in good standing in each jurisdiction in which
the ownership, use or leasing of its assets and properties or the conduct of its
business makes such qualification, licensing or admission necessary except where
the failure to be so qualified does not have a Material Adverse Effect on Lyte
Optronics or its Subsidiaries. The Lyte Optronics Disclosure Schedule contains a
true and complete listing of the locations of all sales offices, manufacturing
facilities, and any other offices or facilities of Lyte Optronics and a true and
complete list of all jurisdictions in which Lyte Optronics maintains any
employees. The Lyte Optronics Disclosure Schedule contains a true and complete
list of all jurisdictions in which Lyte Optronics is duly qualified to transact
business as a foreign corporation. True and complete copies of Lyte Optronics's
charter documents as in effect on the date hereof and as to be in effect
immediately prior to the Closing, have been provided to XXX or its
Representatives.
3.2 CAPITALIZATION.
(a) CAPITAL STOCK. The authorized capital stock of Lyte Optronics
consists of 22,000,750 shares of authorized Capital Stock, of which 12,000,000
shares are designated Class A voting common stock, par value $0.01 per share, of
which 3,509,383 shares are issued and outstanding; 6,000,000 shares are
designated Class B voting Common Stock, par value $0.01 per share, of which
5,034,840 shares are issued and outstanding; 750 shares are designated as Series
A Convertible Preferred Stock, par value $0.01 per share, of which 750 shares
are issued and outstanding; and 4,000,000 shares are designated Series B 5%
Preferred Stock, par value $0.01 per share, of which 4,000,000 shares are issued
and outstanding. The Lyte Optronics Class B Common Stock is convertible into
5,034,840 shares of Lyte Optronics Class A Common Stock. The Lyte Optronics
Series A Convertible Preferred Stock is convertible into 487,387 shares of Lyte
Optronics Class A Common Stock. The Lyte Optronics Capital Stock is held of
record by Lyte Optronics Stockholders, with the addresses of record and in the
amounts set forth and identified in Section 3.2(a) of the Lyte Optronics
Disclosure Schedule, and, with the exception of 137,116 shares of Class A Common
Stock held by Pacific Mezzanine, which shall be repurchased by Lyte Optronics
prior to the Effective Time, all shares of Lyte Optronics Capital Stock are
fully vested and are not subject to any rights of repurchase held by Lyte
Optronics or any other Entity. All outstanding shares of Lyte Optronics Capital
Stock are duly authorized, validly issued, fully paid and non-assessable and not
subject to preemptive rights created by statute, the Articles of Incorporation
or Bylaws of Lyte Optronics or any agreement to which Lyte Optronics is a party
or by which it is bound. All Lyte Optronics Capital Stock has been issued in
compliance with all applicable laws. No shares of Lyte Optronics Capital Stock
are held in treasury of Lyte Optronics or any Subsidiary. There are no
obligations, contingent or otherwise, of Lyte Optronics or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of Lyte
Optronics Capital Stock. Except as set forth in this Section 3.2(a), no other
shares of Lyte Optronics Capital Stock are issued or outstanding. As a result of
the Merger, XXX will be the record and sole beneficial owner of all Lyte
Optronics Capital Stock and rights to acquire or receive such Lyte Optronics
Capital Stock.
(b) OPTIONS AND WARRANTS. Lyte Optronics has reserved 107,511
shares of Lyte Optronics Class B Common Stock subject to issuance upon exercise
or conversion
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of Lyte Optronics Warrants, half of which Warrants will terminate and expire as
a result of the Merger. Lyte Optronics has reserved 276,185 shares of Class A
Common Stock and 352,890 shares of Class B Common Stock for issuance to
employees and consultants pursuant to the Option Plan, of which 101,695 shares
of Class A Common Stock and 300,000 shares of Class B Common Stock are subject
to outstanding, unexercised options, 227,380 shares remain available for future
grant and no shares have been issued pursuant to the exercise of options issued
under the Option Plan. Section 3.2(b) of the Lyte Optronics Disclosure Schedule
sets forth for each outstanding Lyte Optronics Option or Lyte Optronics Warrant
the name of the holder of such Lyte Optronics Option or Lyte Optronics Warrant,
the domicile address of such holder, the number of shares of Capital Stock
subject to such Lyte Optronics Option or Lyte Optronics Warrant, the exercise
price of such Lyte Optronics Option or Lyte Optronics Warrant, the vesting
schedule for such Lyte Optronics Option or Lyte Optronics Warrant, including the
extent vested to date and whether the exercisability of such Lyte Optronics
Option or Lyte Optronics Warrant will be accelerated and become exercisable by
reason of the transactions contemplated by this Agreement. Except for such Lyte
Optronics Options and Lyte Optronics Warrants, there are no outstanding options,
warrants, calls, rights, commitments, conversion rights, rights of exchange,
plans or other agreements of any character to which Lyte Optronics or any Lyte
Optronics Principal Stockholder is a party or by which it is bound obligating
Lyte Optronics to issue, deliver, sell, repurchase or redeem, or cause to be
issued, delivered, sold, repurchased or redeemed, any shares of the capital
stock of Lyte Optronics, or obligating Lyte Optronics 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. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or other similar rights with respect to Lyte Optronics. Except as
contemplated hereby, to Lyte Optronics's knowledge there are no voting trusts,
buy-sell or other similar agreements in place with respect to the voting stock
of Lyte Optronics.
(c) SUBSIDIARIES. Section 3.2(c) of the Lyte Optronics Disclosure
Schedule sets forth a list of all Subsidiaries of Lyte Optronics, including the
name of each Subsidiary and the jurisdiction in which such Subsidiary is
organized. There are no outstanding subscriptions, options, calls, contracts,
voting trusts, proxies or other commitments, understandings, restrictions,
arrangements, rights or warrants with respect to any such Subsidiary's capital
stock, including any right obligating any such Subsidiary to issue, deliver, or
sell additional shares of its capital stock, and no obligations, contingent or
otherwise, of Lyte Optronics or any of its Subsidiaries to repurchase, redeem,
or otherwise acquire any shares of the capital stock of any Subsidiary of Lyte
Optronics or make any investment (in the form of a loan, capital contribution or
otherwise) in any such Subsidiary or any other entity other than guarantees of
bank obligations of such Subsidiaries entered into in the ordinary course of
business. All of the outstanding shares of capital stock of each Subsidiary of
Lyte Optronics are duly authorized, validly issued, fully paid and
nonassessable, and all such shares are owned by Lyte Optronics or another
Subsidiary of Lyte Optronics free and clear of all security interests, liens,
claims, pledges, agreements, limitations on Lyte Optronics's voting rights,
charges or other encumbrances of any nature. Neither Lyte Optronics nor any of
its Subsidiaries directly or indirectly owns any equity or similar interest in,
or any interest convertible into or exchangeable or exercisable for any such
equity or similar interest in, any corporation, limited liability
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company, partnership, joint venture or other business association or entity.
3.3 POWER, AUTHORITY AND VALIDITY. Lyte Optronics has all requisite
corporate power and authority to enter into this Agreement and the other
Transaction Documents to which it is a party and to carry out its obligations
hereunder and thereunder. The execution and delivery of this Agreement and the
Transaction Documents to which it is a party and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Lyte Optronics, subject only to the
approval of the Merger and this Agreement by Lyte Optronics's shareholders. The
board of directors of Lyte Optronics has unanimously approved the Merger and
this Agreement. The vote required of Lyte Optronics's shareholders to duly
approve the Merger and this Agreement is the affirmative vote of a majority of
the outstanding shares of Lyte Optronics Class A Common Stock and Lyte Optronics
Series A Convertible Preferred Stock voting together as a class, the affirmative
vote of a majority of the outstanding shares of Lyte Optronics Class B Common
Stock voting separately as a class, and the affirmative vote of a majority of
the outstanding shares of the Lyte Optronics Series B 5% Preferred Stock voting
together as a separate class. This Agreement has been duly executed and
delivered by Lyte Optronics and constitutes the valid and binding obligation of
Lyte Optronics, enforceable in accordance with its terms, except (i) as limited
by applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting enforcement of creditors' rights generally and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies. Subject only to the approval of
the Merger and this Agreement by Lyte Optronics's shareholders, the execution
and delivery of this Agreement by Lyte Optronics 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
Incorporation or Bylaws of Lyte Optronics or any of its Subsidiaries or (ii) any
mortgage, indenture, lease, Contract or other agreement or instrument, Permit,
concession, franchise, license, judgment, Order, decree, statute, law,
ordinance, rule or regulation applicable to Lyte Optronics or any of its
Subsidiaries or their respective properties or assets. No consent, waiver,
approval, Order or authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or other Governmental Body
or any Third Party (so as not to trigger any Conflict) is required by or with
respect to Lyte Optronics or any of its Subsidiaries 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 Nevada Merger Agreement
with the Nevada Secretary of State and the Delaware Certificate of Merger with
the Delaware Secretary of State, (ii) such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal and state securities laws, and (iii) such other consents,
waivers, authorizations, filings, approvals and registrations which are set
forth on Section 3.3 of the Lyte Optronics Disclosure Schedule.
3.4 FINANCIAL STATEMENTS.
(a) Attached hereto as Section 3.4(a) of the Lyte Optronics
Disclosure
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Schedule are the following: (i) Lyte Optronics's audited consolidated balance
sheet and consolidated statements of income, shareholder's equity and changes in
financial condition for the fiscal years ended December 31, 1997 and 1996, (ii)
Lyte Optronics's consolidated unaudited balance sheet dated as of December 31,
1998 (the December 31, 1998 balance sheet being hereafter referred to as the
"LYTE OPTRONICS BALANCE SHEET") and consolidated statements of income,
shareholders' equity and changes in financial position for the period then
ended, and (iii) Lyte Optronics's unaudited balance sheet as of March 31, 1999
and the related unaudited statements of income, shareholder's equity and changes
in financial condition for the three-month period then ended (the financial
statements described in clauses (i), (ii) and (iii) collectively, the "LYTE
OPTRONICS FINANCIAL STATEMENTS").
(b) The Lyte Optronics Financial Statements present fairly in all
material respects the financial position, results of operations and cash flows
of Lyte Optronics and its Subsidiaries as of their historical dates and during
the periods indicated therein, and have been prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a basis consistent
throughout the periods indicated and consistent with each other. Except and to
the extent reflected or reserved against in the Lyte Optronics Balance Sheet,
neither Lyte Optronics nor any of its Subsidiaries has, as of the date of such
balance sheet, any Liabilities or obligations (absolute or contingent) of a
nature required or customarily reflected in a balance sheet (or the notes
thereto). The aggregate reserves, if any, reflected on the Lyte Optronics
Financial Statements are adequate in light of the contingencies with respect to
which they are made.
3.5 ABSENCE OF UNDISCLOSED LIABILITIES. Lyte Optronics does not have any
Liability, Indebtedness, obligation, expense, claim, deficiency, guaranty or
endorsement or obligation of any nature, whether accrued, absolute, contingent,
matured or unmatured (whether or not required to be reflected in financial
statements in accordance with GAAP), and whether due or to become due, which
individually or in the aggregate is not material, has not been reflected in the
Lyte Optronics Balance Sheet. All Indebtedness, Liabilities, and obligations
incurred after the date of the Lyte Optronics Balance Sheet in an amount in
excess of $25,000, whether absolute or contingent, were incurred in the ordinary
course of business and are usual and normal in amount.
3.6 TAX MATTERS.
(a) Each of Lyte Optronics and its Subsidiaries has fully and
timely, properly and accurately prepared and filed all Tax Returns, including
federal, state, local and foreign returns, estimates, information statements and
reports relating to any and all Taxes concerning or attributable to Lyte
Optronics or its Subsidiaries or its operations for all years and periods for
which any such returns or reports were due in all jurisdictions under applicable
law and all such Tax Returns are true and correct and have been completed in
accordance with applicable law, subject to the reserves established by Lyte
Optronics on its Financial Statements. The Lyte Optronics Tax Returns and all
other Tax Returns and reports filed by Lyte Optronics were prepared in the
manner required by applicable law.
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(b) Each of Lyte Optronics and its Subsidiaries, as of the
Effective Time: (A) will have paid or accrued all Taxes it is required to pay or
accrue and (B) will have withheld with respect to its employees all federal and
state income taxes, FICA, FUTA and other Taxes required to be withheld.
(c) Neither Lyte Optronics nor any of its Subsidiaries have been
delinquent in the payment of any Tax nor is there any Tax deficiency
outstanding, proposed or assessed against Lyte Optronics or its Subsidiaries,
nor has Lyte Optronics or any of its Subsidiaries executed any waiver of any
statute of limitations on or extending the period for the assessment or
collection of any Tax.
(d) No audit or other examination of any Tax Return of Lyte
Optronics or its Subsidiaries is currently in progress, nor has Lyte Optronics
or its Subsidiaries been notified of any request for such an audit or other
examination.
(e) Neither Lyte Optronics nor any of its Subsidiaries has any
Liabilities for unpaid federal, state, local and foreign Taxes which have not
been accrued or reserved against on the Balance Sheet, whether asserted or
unasserted, contingent or otherwise, and Lyte Optronics does not have any
knowledge of any basis for the assertion of any such liability attributable to
Lyte Optronics or its Subsidiaries, or their respective assets or operations.
(f) Lyte Optronics has provided or made available to XXX copies
of all federal and state income and state sales and use Tax Returns for all
periods since the date of Lyte Optronics's incorporation.
(g) There are (and as of immediately following the Effective Time
there will be) no Encumbrances (other than as a result of actions or
circumstances of XXX) of any sort on the assets of Lyte Optronics or its
Subsidiaries relating to or attributable to Taxes other than liens for Taxes not
yet due.
(h) Lyte Optronics does not have any knowledge of any basis for
the assertion of any claim relating or attributable to Taxes which, if adversely
determined, would result in any Encumbrance on the assets of Lyte Optronics or
its Subsidiaries.
(i) None of Lyte Optronics's or its Subsidiaries' assets are
treated as "tax-exempt use property" within the meaning of Section 168(h) of the
Code.
(j) As of the Effective Time, there will not be any contract,
agreement, plan or arrangement to which Lyte Optronics or any of its
Subsidiaries is a party, including but not limited to the provisions of this
Agreement, covering any employee or former employee of Lyte Optronics or its
Subsidiaries that, individually or collectively, could give rise to the payment
of any amount that would not be deductible pursuant to Sections 404, 280G or 162
of the Code.
(k) Neither Lyte Optronics nor any of its Subsidiaries has filed
any consent agreement under Section 341(f) of the Code or agreed to have Section
341(f)(2) of the
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Code apply to any disposition of a subsection (f) asset (as defined in Section
341(f)(4) of the Code) owned by Lyte Optronics or its Subsidiaries.
(l) Neither Lyte Optronics nor any of its Subsidiaries is a party
to any tax sharing or allocation agreement or similar arrangement with any other
party nor does Lyte Optronics or any of its Subsidiaries owe any amount under
any such agreement.
(m) At no time has Lyte Optronics or any of its Subsidiaries been
included in the consolidated Tax Return of any affiliated group of corporations.
(n) Neither Lyte Optronics nor any of its Subsidiaries is, nor
has it been at any time, a "United States real property holding corporation".
(o) Neither Lyte Optronics nor any of its Subsidiaries will be
required to include any adjustment in taxable income for any Tax period (or
portion thereof) ending after the Closing Date pursuant to Section 481(c) of the
Code or any provision of the Tax laws of any jurisdiction requiring Tax
adjustments as a result of a change in method of accounting implemented by Lyte
Optronics or any of its Subsidiaries prior to the Closing Date for any Tax
period (or portion thereof) ending on or before the Closing Date or pursuant to
the provisions of any agreement entered into by Lyte Optronics or any of its
Subsidiaries prior to the Closing Date with any taxing authority with regard to
the Tax Liability of Lyte Optronics or any of its Subsidiaries for any Tax
period (or portion thereof) ending on or before the Closing Date.
(p) Neither Lyte Optronics nor any of its Subsidiaries is
currently under any contractual obligation to pay to any Governmental Body any
Tax obligations of, or with respect to any transaction relating to, any other
person or to indemnify any other person with respect to any Tax.
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the Lyte
Optronics Balance Sheet, Lyte Optronics and its Subsidiaries have conducted
their businesses only in the ordinary course in a manner consistent with past
practice and since such date Lyte Optronics and its Subsidiaries have not:
(a) suffered any Material Adverse Effect in its financial
condition or in the operations of its business, nor any Material Adverse Effect
in its balance sheet, including but not limited to cash distributions or
decreases in the net assets of Lyte Optronics, or any fact or circumstances that
could reasonably be expected to result in a Material Adverse Effect;
(b) suffered any damage, destruction or loss, whether or not
covered by insurance, individually in an amount in excess of $10,000, and of
amounts less than $10,000 that collectively aggregate more than $25,000;
(c) granted or agreed to make any increase in the compensation
payable or to become payable by Lyte Optronics or its Subsidiaries to their
respective officers or directors, or any increase in the compensation payable or
to become payable to employees other than officers or directors collectively in
excess of two percent (2%) of the entire aggregate
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payroll of employees excluding officers and directors, or the declaration,
payment or commitment or obligation of any kind for the payment of a bonus or
other additional salary or compensation to any person other than wages in the
ordinary course consistent with past practice;
(d) declared, set aside or paid any dividend or made any other
distribution on or in respect of the shares of the capital stock of Lyte
Optronics or any of its Subsidiaries or declared any direct or indirect
redemption, retirement, purchase or other acquisition by Lyte Optronics or any
of its Subsidiaries of such shares, or any split, combination or
reclassification in respect of any shares of Lyte Optronics Capital Stock;
(e) issued any shares of Lyte Optronics Capital Stock or any
warrants, rights, options, calls, puts, or convertible instruments or entered
into any commitment to issue relating to Lyte Optronics Capital Stock;
(f) made any change in the accounting methods or practices
followed by Lyte Optronics or its Subsidiaries, whether for general financial or
Tax purposes, or any change in depreciation or amortization policies or rates
adopted therein;
(g) sold, leased, abandoned or otherwise disposed of any real or
personal property or assets or any machinery, equipment or other operating
property, other than inventory in the ordinary course of business consistent
with past practice, with a value in excess of $10,000 individually or of
individual amounts less than $10,000 that collectively aggregate more than
$25,000;
(h) sold, assigned, transferred, licensed or otherwise disposed
of any Intellectual Property with a value in excess of $10,000 individually or
of individual amounts less than $10,000 that collectively aggregate more than
$25,000;
(i) had any labor trouble or claim of wrongful discharge or other
unlawful labor practice or action or suffered any other dispute involving any
employee that Lyte Optronics reasonably expects to result in an individual claim
of more than $10,000 or of claims that individually are less than $10,000 but
are in excess of $50,000 collectively;
(j) entered into any commitment or transaction (including without
limitation any borrowing or capital expenditure), other than (a) its borrowing
from XXX, and (b) transactions in the ordinary course of business of individual
amounts less than $50,000;
(k) incurred any Liabilities in excess of $10,000 individually or
of individual amounts less than $10,000 but collectively in excess of $50,000,
absolute or contingent, except for Liabilities that have been incurred by Lyte
Optronics since the date of the Lyte Optronics Balance Sheet in the ordinary
course of business and consistent with Lyte Optronics's past practices;
(l) permitted or allowed any of its property or assets to become
subjected to any mortgage, deed of trust, pledge, lien, security interest or
other Encumbrance,
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other than Permitted Encumbrances, of any kind, other than any purchase money
security interests incurred in the ordinary course of business;
(m) made any capital expenditure or commitment for additions to
property, plant or equipment in excess of $10,000 individually or of individual
amounts less than $10,000 but collectively in excess of $25,000;
(n) paid, loaned or advanced any amount to, or sold, transferred
or leased any properties or assets to, or entered into any agreement or
arrangement with any of its Affiliates, officers, directors or shareholders or
any Affiliate of any of the foregoing;
(o) made any amendment to or terminated any agreement (other than
terminations occurring according to the terms of such agreement in the ordinary
course) which, if not so amended or terminated, would be required to be
disclosed in the Lyte Optronics Disclosure Schedule, or waived or released any
right or claim of Lyte Optronics, including any write-off or other compromise of
any account receivable of Lyte Optronics, other than write-offs or compromises
of amounts not exceeding $10,000 individually or of amounts less than $10,000
that collectively aggregate more than $25,000;
(p) initiated, had initiated against them, or received notice of
any lawsuit or proceeding pending against or investigation of Lyte Optronics or
any of its Subsidiaries or affairs, or to Lyte Optronics's knowledge is any such
lawsuit, proceeding or investigation threatened, or did any reasonable basis
exist for any of the foregoing, that would likely result in a Material Adverse
Effect on Lyte Optronics;
(q) received notice of any claim or potential claim of ownership
by a third party of Lyte Optronics Intellectual Property or of infringement by
Lyte Optronics of any third party's intellectual property rights;
(r) entered into any partnership or joint venture agreements, or
any merger, recapitalization or other business combination other than as
contemplated by this Agreement; or
(s) agreed to take any action described in this Section 3.7 or
outside of its ordinary course of business or which would constitute a breach of
any of the representations contained in this Agreement.
3.8 TITLE AND RELATED MATTERS. Lyte Optronics and its Subsidiaries each
has good and marketable title to or valid leaseholds in all the properties,
interests in properties and assets, real and personal, reflected in the Lyte
Optronics Financial Statements or acquired after the date of the Lyte Optronics
Financial Statements (except properties, interests in properties and assets sold
or otherwise disposed of since the date of the Lyte Optronics Financial
Statements in the ordinary course of business), free and clear of all
Encumbrances of any kind or character, except for Permitted Encumbrances and
encumbrances created by the applicable community property laws of any state. The
equipment of Lyte Optronics and its Subsidiaries used in the operation of its
business is, taken as a whole, in good operating condition and repair, normal
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wear and tear excepted. All real or personal property leases to which Lyte
Optronics or its Subsidiaries is a party are valid, binding, enforceable and
effective in accordance with their respective terms, subject to (i) laws of
general application relating to bankruptcy, insolvency, and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies. There is not under any of such leases any existing
default by Lyte Optronics or any of its Subsidiaries or any other event of
default or event which, with notice or lapse of time or both, would constitute a
default by any other party to such leases.
3.9 REAL PROPERTY. Section 3.9 of the Lyte Optronics Disclosure Schedule
contains a description of all real and personal property leased or owned by Lyte
Optronics or any of its Subsidiaries, describing its interest in said property
and with respect to real property a description of each parcel and a summary
description of the buildings, structures and improvements thereon. True and
correct copies of all such leases have been provided to XXX or its
Representatives.
3.10 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no Contract,
(non-compete or otherwise), commitment, or Order to which Lyte Optronics or any
of its Subsidiaries is a party or otherwise binding upon Lyte Optronics or its
Affiliates which has or reasonably could be expected to have the effect of
prohibiting or materially impairing any business practice of Lyte Optronics or
its Affiliates, any acquisition of property (tangible or intangible) by Lyte
Optronics or its Affiliates or the conduct of its business by Lyte Optronics or
its Subsidiaries. Without limiting the foregoing, neither Lyte Optronics nor any
of its Subsidiaries has entered into any agreement under which Lyte Optronics or
its Subsidiaries is restricted from selling, licensing or otherwise distributing
any of its products to any class of customers, in any geographic area, during
any period of time or in any segment of the market.
3.11 INTELLECTUAL PROPERTY.
(a) Section 3.11(a)(i) of the Disclosure Schedule sets forth,
with respect to all Intellectual Property owned or used by Lyte Optronics or its
Subsidiaries ("LYTE OPTRONICS INTELLECTUAL Property") registered with any
Governmental Body or for which an application has been filed with any
Governmental Body, (i) a brief description of such Lyte Optronics Intellectual
Property, (ii) the names of the jurisdictions covered by the applicable
registration or application, (iii) and any proceedings before any court,
tribunal (including the United States Patent and Trademark Office), Internet
registration authority or equivalent authority anywhere in the world related to
any Lyte Optronics Intellectual Property. Section 3.11(a)(ii) of the Lyte
Optronics Disclosure Schedule identifies and provides a brief description of all
Intellectual Property licensed to Lyte Optronics or any of its Subsidiaries by
any Person (except for any Intellectual Property that is licensed to Lyte
Optronics or any of its Subsidiaries under any third party software license
generally available to the public at a cost of less than Two Thousand Dollars
($2,000)), and identifies the license agreement under which such Intellectual
Property is being licensed to Lyte Optronics or its Subsidiaries. Lyte Optronics
and its Subsidiaries each has good, valid and marketable title to all Lyte
Optronics Intellectual Property identified in Section 3.11(a)(i) of the Lyte
Optronics Disclosure Schedule, free and clear of all liens and other
Encumbrances and of all Third Party licensed technology, and has a valid
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right to use all Intellectual Property identified in Section 3.11(a)(ii) of the
Lyte Optronics Disclosure Schedule. Neither Lyte Optronics nor any of its
Subsidiaries is obligated to make any payment to any Person for the use of any
Intellectual Property. Neither Lyte Optronics nor any of its Subsidiaries has
developed jointly with any other Person any Intellectual Property with respect
to which such other Person has any rights.
(b) Lyte Optronics has taken reasonable and customary measures
and precautions necessary to protect and maintain the confidentiality and
secrecy of all Lyte Optronics Intellectual Property (except Lyte Optronics
Intellectual Property whose value would be unimpaired by public disclosure) and
otherwise to maintain and protect the value of all Lyte Optronics Intellectual
Property.
(c) The operation of the business of Lyte Optronics and its
Subsidiaries as such business is currently conducted or is reasonably
contemplated to be conducted (including, without limitation, products,
technology or services currently under development and the design, development,
manufacture, use, import and sale of the products, technology and services of
Lyte Optronics and its Subsidiaries) does not, and neither Lyte Optronics nor
any of its Subsidiaries has received notice that the operation of the business
of Lyte Optronics and its Subsidiaries as such is currently conducted
(including, without limitation, products, technology or services currently under
development and the design, development, manufacture, use, import and sale of
the products, technology and services of Lyte Optronics or its Subsidiaries),
infringes or misappropriates or makes any unlawful use of, violates the rights
of any person or entity (including rights to privacy or publicity), constitute
unfair competition or trade practices under the laws of any jurisdiction, or
violate the laws or regulations of any jurisdiction, and neither Lyte Optronics
nor any of its Subsidiaries has at any time infringed, misappropriated or made
any unlawful use of, or received any notice or other communication (in writing
or otherwise) of any actual, alleged, possible or potential infringement,
misappropriation or unlawful use of, any Proprietary Asset owned or used by any
other person ("THIRD PARTY INTELLECTUAL PROPERTY").
(d) There are neither Contracts, licenses nor agreements between
Lyte Optronics or any of its Subsidiaries on the one hand and any other Person
on the other with respect to Lyte Optronics Intellectual Property under which
there is any dispute known to Lyte Optronics regarding the scope of such
Contract or performance under such Contract including with respect to any
payments to be made or received by Lyte Optronics or its Subsidiaries
thereunder.
(e) To Lyte Optronics's knowledge, no other Person is infringing,
misappropriating or making any unlawful use of, and no Third Party Intellectual
Property owned or used by any other Person infringes or conflicts with, any Lyte
Optronics Intellectual Property.
(f) Lyte Optronics and its Subsidiaries own, or are licensed or
otherwise possess, legally enforceable rights to use, all Intellectual Property
that is necessary to conduct the business of Lyte Optronics and its Subsidiaries
as currently conducted or planned to be conducted by Lyte Optronics and its
Subsidiaries. Neither Lyte Optronics nor any of its
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Subsidiaries has licensed any of the Lyte Optronics Intellectual Property to any
Person on an exclusive basis, and has not entered into any covenant not to
compete or contract limiting its ability to exploit fully any of the Lyte
Optronics Intellectual Property or to transact business in any market or
geographical area or with any Person.
(g) All current and former employees of Lyte Optronics and its
Subsidiaries have executed and delivered to Lyte Optronics (containing no
exceptions to or exclusions from the scope of its coverage) a form of Employee
Inventions and Proprietary Rights Assignment Agreement; and all current and
former consultants and independent contractors to Lyte Optronics and its
Subsidiaries have executed and delivered to Lyte Optronics (containing no
exceptions to or exclusions from the scope of its coverage) a form of Consultant
Inventions and Proprietary Rights Assignment Agreement.
(h) No Lyte Optronics Intellectual Property or product,
technology or service of Lyte Optronics or its Subsidiaries is subject to any
proceeding or outstanding decree, Order, judgment, agreement or stipulation that
restricts in any manner the use, transfer or licensing thereof by Lyte Optronics
and its Subsidiaries or may affect the validity, use or enforceability of such
Lyte Optronics Intellectual Property.
(i) Neither this Agreement nor the transactions contemplated by
this Agreement, including the assignment by operation of law or otherwise of any
Contracts or agreements to which Lyte Optronics or any of its Subsidiaries is a
party, will result in XXX granting to any Third Party any right to or with
respect to any Intellectual Property owned by, or licensed to, it, or will
result in XXX being bound by, or subject to, any non-compete or other
restriction on the operation or scope of its businesses.
3.12 EMPLOYEE BENEFIT PLANS.
(a) Section 3.12(a) of Lyte Optronics's Disclosure Schedule
contains a complete and accurate list of (i) all employee benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended) ("ERISA"), (ii) any other employee benefits plans, (iii) all bonus,
stock option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance and other similar employee benefit plans, and (iv) all
unexpired severance agreements, written or otherwise, for the benefit of, or
relating to, any current or former employee of Lyte Optronics or any of its
Subsidiaries or any trade or business (whether or not incorporated) which is a
member or which is under common control with Lyte Optronics within the meaning
of Section 414 of the Code ("LYTE OPTRONICS' CONTROLLED GROUP") (together, the
"LYTE OPTRONICS EMPLOYEE PLANS").
(b) With respect to each Lyte Optronics Employee Plan, Lyte
Optronics has provided to XXX true and correct copies of (i) all documents
embodying such Lyte Optronics Employee Plan, including all amendments thereto,
(ii) all material written agreements relating to such Lyte Optronics Employee
Plan, (iii) all employee communications material to any Lyte Optronics Employee
Plan, and (iv) all standard COBRA forms and related notices.
(c) With respect to the Lyte Optronics Employee Plans,
individually
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and in the aggregate, no event has occurred, and there exists no condition or
set of circumstances in connection with which Lyte Optronics or any of its
Subsidiaries could be subject to any material liability. There are no
proceedings, claims or suits pending or threatened by any Governmental Body or
any participant or beneficiary against any of the Lyte Optronics Employee Plans,
the assets of any of the trusts under any of the Lyte Optronics Employee Plans
or the plan sponsor or any fiduciary of any of the Lyte Optronics Employee
Plans.
(d) With respect to the Lyte Optronics Employee Plans,
individually and in the aggregate, there are no funded benefit obligations for
which contributions have not been made or properly accrued, there are no
unfunded benefit obligations which have not been accounted for by reserves on
the financial statements or books of Lyte Optronics, and all contributions
required to be made with respect to all Lyte Optronics Employee Plans relating
to any employee of Lyte Optronics and its Subsidiaries have been made.
(e) Lyte Optronics and its Subsidiaries has performed in all
material respects all obligations required to be performed by it under, is not
in material default or violation of, and has no knowledge of any default or
violation by any other party to, each Lyte Optronics Employee Plan, and each
Lyte Optronics Employee Plan has been established and maintained in all material
respects in accordance with its terms and in compliance in all material respects
with all applicable laws, statutes, orders, rules and regulations, including but
not limited to applicable provisions of ERISA and the Code and all other U.S.
federal and state laws and all local laws applicable in the jurisdiction in
which the Lyte Optronics Employee Plan is maintained. Each Lyte Optronics
Employee Plan intended to qualify under Section 401(a) of the Code and each
trust intended to qualify under Section 501(a) of the Code has either received a
favorable determination letter from the IRS with respect to such plan as to its
qualified status under the Code, including all amendments to the Code effected
by the Tax Reform Act of 1986 and subsequent legislation, or has remaining a
period of time under applicable Treasury regulations or IRS pronouncements in
which to apply for such a determination letter and make any amendments necessary
to obtain a favorable determination. No "prohibited transaction," within the
meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA, and not
otherwise exempt under Section 408 of ERISA, has occurred with respect to any
Lyte Optronics Employee Plan. There are no actions, suits or claims pending, or,
to the knowledge of Lyte Optronics, threatened or reasonably anticipated (other
than routine claims for benefits) against any Lyte Optronics Employee Plan or
against the assets of any Lyte Optronics Employee Plan. Each Lyte Optronics
Employee Plan can be amended, terminated or otherwise discontinued in accordance
with its terms, without liability to XXX, the Surviving Corporation, Lyte
Optronics or any of its Affiliates (other than ordinary administration expenses
typically incurred in a termination event). There are no audits, inquiries or
proceedings pending or, to the knowledge of Lyte Optronics, threatened by the
IRS or the U.S. Department of Labor or any other Governmental Body with respect
to any Lyte Optronics Employee Plan. Neither Lyte Optronics nor any Affiliate of
Lyte Optronics is subject to any penalty or tax with respect to any Lyte
Optronics Employee Plan under Section 402(i) of ERISA or Sections 4975 through
4980 of the Code. Each Lyte Optronics Employee Plan which is a group health plan
(within the meaning of Section 5000(b)(1) of the Code) and subject to the
Consolidated Omnibus Reconciliation Act of 1985, as amended ("COBRA"), has been
maintained in all material respects in compliance with
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its terms and conditions and has complied in all material respects with the Code
and ERISA, including the continuation coverage requirements of COBRA, and such
plan is not subject to any damages, penalties, or excise taxes arising out of or
in connection with COBRA. Neither Lyte Optronics nor any member of Lyte
Optronics's Controlled Group is or could be liable for an excise tax under
Section 4980 B of the Code in connection with any employee plan maintained by a
member of Lyte Optronics's Controlled Group.
(f) Neither Lyte Optronics nor any of its Subsidiaries does now,
nor has it ever, maintained, established, sponsored, participated in, or
contributed to, any pension plan within the meaning of Section 3(2) of ERISA
which is subject to Title IV of ERISA or Section 412 of the Code. At no time has
Lyte Optronics contributed to or been requested to contribute to any
multiemployer plan as defined in Section 3(37) of ERISA.
(g) No Lyte Optronics Employee Plan provides, or has any
liability to provide, retiree life insurance, retiree health or other retiree
employee welfare benefits to any person for any reason, except as may be
required by COBRA or other applicable statute, and neither Lyte Optronics nor
any of its Subsidiaries has never represented, promised or contracted (whether
in oral or written form) to any employee (either individually or to employees as
a group) or any other person that such employee(s) or other person would be
provided with retiree life insurance, retiree health or other retiree employee
welfare benefit, except to the extent required by statute.
(h) The execution of this Agreement and the consummation of the
transactions contemplated hereby will not (either alone or upon the occurrence
of any additional or subsequent events) constitute an event under any Lyte
Optronics Employee Plan, employee agreement, trust or loan that will or may
result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any employee.
(i) No payment or benefit which will or may be made by Lyte
Optronics or its Affiliates with respect to any employee as a result of the
transactions contemplated by this Agreement will be characterized as an "excess
parachute payment," within the meaning of Section 280G(b)(1) of the Code.
3.13 BANK ACCOUNTS AND RECEIVABLES; INVENTORIES. Section 3.13 of the
Lyte Optronics Disclosure Schedule sets forth the names and locations of all
banks, trusts, companies, savings and loan associations, and other financial
institutions at which Lyte Optronics or any of its Subsidiaries maintains
accounts of any nature and the names of all persons authorized to draw thereon
or make withdrawals therefrom. Section 3.13 of the Lyte Optronics Disclosure
Schedule sets forth an accurate and complete breakdown and aging of all accounts
receivable, notes receivable, and other receivables of Lyte Optronics and its
Subsidiaries as of March 31, 1999. All existing accounts receivable of Lyte
Optronics (including those accounts receivable reflected on the Lyte Optronics
Financial Statements that have not yet been collected and those accounts
receivable that have arisen since December 31, 1998 and have not yet been
collected) represent valid obligations of customers of Lyte Optronics and its
Subsidiaries arising from bona fide
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transactions entered into in the ordinary course of business. The amount carried
for doubtful accounts and allowances in the Lyte Optronics Balance Sheet is
sufficient to provide for any losses which may be sustained on realization of
the accounts receivable shown in the Lyte Optronics Balance Sheet. The net
inventories shown on the Lyte Optronics Balance Sheet consisted of items of a
quantity and quality usable or saleable in the ordinary course of business. All
of such inventories were acquired in the ordinary course of business and have
been replenished in the ordinary course of business, consistent with past
practices, since the date of the Lyte Optronics Balance Sheet. All such
inventories are valued in accordance with GAAP, and adequate provision has been
made or adequate reserves have been established on the books of Lyte Optronics
for all slow-moving, obsolete or unusable inventories.
3.14 CONTRACTS.
(a) Section 3.14(a) of the Lyte Optronics Disclosure Schedule
contains a list of each of the following Contracts to which Lyte Optronics or
its Subsidiaries is a party or by which any of their respective assets or
properties is bound:
(i) all Contracts or commitments relating to capital
expenditures and involving future payments in excess of $25,000;
(ii) all Contracts or commitments relating to the future
disposition or acquisition of assets or properties (other than inventory in the
ordinary course of business consistent with past practice), including
dispositions or acquisitions by merger, sale of stock or assets, or any other
business combinations, in excess of $25,000, and all Contracts relating to any
interest in any business enterprise;
(iii) all Contracts governing Indebtedness of Lyte
Optronics or its Subsidiaries, including all mortgages, indentures, loans or
credit agreements, security agreements or other Contracts or instruments
relating to the borrowing of money or extension of credit, including guaranties
referred to in clause (xv) hereof;
(iv) all purchase orders or Contracts for the purchase of
raw materials or inventory other than purchases or sales of inventory in the
ordinary course of business consistent with past practice, involving amounts in
excess of $10,000 individually or of individual amounts less than $10,000 that
collectively aggregate in excess of $25,000;
(v) all OEM, construction and manufacturing Contracts of
amounts in excess of $10,000 individually or of individual amounts less than
$10,000 that collectively aggregate in excess of $25,000;
(vi) all distribution (other than customer agreements
entered into in the ordinary course of business consistent with past practice),
joint marketing or development Contracts;
(vii) all Contracts pursuant to which Lyte Optronics or
any of its Subsidiaries has granted or may grant in the future, to any party, a
license or other interest in any
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Lyte Optronics Intellectual Property (other than implied licenses included in
the sale of inventory in the ordinary course of business consistent with past
practice) or pursuant to which Lyte Optronics is granted any interest in any
other Intellectual Property of any Third Party (other than Intellectual Property
licensed to Lyte Optronics or its Subsidiaries under a third party license
agreement that is generally available to the public at a cost less than $2,000);
(viii) all Contracts or commitments with officers,
employees, agents, consultants, advisors, salesmen, sales representatives,
distributors or dealers that are not cancelable by it on notice of not longer
than forty-five (45) days and without liability, penalty or premium;
(ix) all collective bargaining agreements;
(x) all Contracts or arrangements that contain any
severance pay or postemployment Liabilities or obligations (other than pursuant
to COBRA);
(xi) all Contracts providing bonus, deferred compensation,
pension, profit sharing or retirement with an employee or individual consultant
or salesperson (excluding "at will" employee relationships);
(xii) all Contracts or plans, including, without
limitation, all stock option plans, stock appreciation rights plans or stock
purchase plans, any of the benefits of which will be increased, or the vesting
of benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement;
(xiii) all fidelity or surety bonds or completion bonds;
(xiv) all leases of personal property having a value
individually in excess of $25,000;
(xv) all Contracts of indemnification or guaranty;
(xvi) all Contracts or commitments containing any covenant
limiting the freedom of Lyte Optronics or its Subsidiaries to engage in any line
of business or to compete with any person anywhere in the world; and
(xvii) all other Contracts or commitments not included
elsewhere that involve the payment by or to Lyte Optronics or any of its
Subsidiaries of more than $50,000 and is not cancelable without penalty within
forty-five (45) days after giving notice of termination or cancellation.
(b) All such Contracts, agreements and instruments listed or
required to be listed in the Lyte Optronics Disclosure Schedule pursuant to
Section 3.14 are valid, binding, in full force and effect, and enforceable in
accordance with their respective terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of
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debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
(c) Lyte Optronics has delivered to XXX accurate and complete
copies of all Contracts, including all amendments thereto and any correspondence
regarding any dispute with respect thereto, and including a written summary of
all oral Contracts.
(d) Neither Lyte Optronics nor any of its Subsidiaries has
violated or breached, or committed any default under, any Contract, other than
any violations, breaches or defaults that have been cured by Lyte Optronics and
for which Lyte Optronics has no continuing Liability and for which no further
remedies are due or available, and to Lyte Optronics's knowledge no other person
has violated or breached, or committed any default under, any material term of
any such Contract.
(e) No event has occurred, and no circumstance or condition
exists, that (with or without notice or lapse of time) will, or could reasonably
be expected to, (A) result in a violation or breach of any of the provisions of
any Contract required to be included on the Disclosure Schedule pursuant to this
Section 3.14, (B) give any person the right to declare default or exercise any
remedy under any Contract required to be included on the Disclosure Schedule
pursuant to this Section 3.14, (C) give any person the right to accelerate the
maturity or performance of any Contract required to be included on the
Disclosure Schedule pursuant to this Section 3.14; or (D) give any person the
right to cancel, terminate or modify any Contract required to be included on the
Disclosure Schedule pursuant to this Section 3.14.
3.15 SUBSTANTIAL DISTRIBUTORS AND CUSTOMERS. Section 3.15 of the Lyte
Optronics Disclosure Schedule lists the top 10 distributors and/or customers of
Lyte Optronics, by volume, for each of the years ended December 31, 1997 and
1998, and the three months ended March 31, 1999.
3.16 COMPLIANCE WITH LAW. Lyte Optronics and each of its Subsidiaries
has complied in all material respects with, and is not in material violation of,
and has not received any notices of violation with respect to, any foreign or
U.S. federal, state or local statute, law or regulation, including the U.S.
Foreign Corrupt Practices Act and all United States statutes, laws and
regulations governing the license and delivery of technology and products abroad
by persons subject to the jurisdiction of the United States. Lyte Optronics and
its Subsidiaries have all Permits required for the conduct of their business as
presently conducted. Each such Permit and other governmental authorizations held
by Lyte Optronics and its Subsidiaries is valid, binding and in full force and
effect, and Lyte Optronics and its Subsidiaries are not in default (or with the
giving of notice or lapse of time or both, would be in default) under any such
Permit.
3.17 LABOR DIFFICULTIES; NO DISCRIMINATION.
(a) Neither Lyte Optronics nor any of its Subsidiaries is engaged
in any unfair labor practice or in violation of any applicable laws respecting
employment and employment practices, health and safety, human rights, terms and
conditions of employment, and wages and hours. Neither Lyte Optronics nor any of
its Subsidiaries is liable for any arrears of
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wages or any taxes or any penalty for failure to comply with any of the
foregoing.
(b) There is no unfair labor practice complaint against Lyte
Optronics or any of its Subsidiaries pending or threatened before a labor
relations board or in any jurisdiction in which Lyte Optronics or its
Subsidiaries does business, and neither Lyte Optronics nor any of its
Subsidiaries has experienced any strikes, work stoppage or other significant
labor difficulties.
(c) There is and has not been any claim made against Lyte
Optronics or any of its Subsidiaries based on actual or alleged wrongful
termination or on actual or alleged race, age, sex, disability or other
harassment or discrimination, or similar tortuous conduct, nor is there any
basis for any such claim. No work stoppage or labor strike against Lyte
Optronics is pending, threatened or reasonably anticipated. Lyte Optronics does
not know of any activities or proceedings of any labor union to organize any
employees of Lyte Optronics or its Subsidiaries. Neither Lyte Optronics nor any
of its Subsidiaries is presently, nor has it been in the past, a party to, or
bound by, any collective bargaining agreement or union contract with respect to
employees and no collective bargaining agreement is being negotiated by Lyte
Optronics or any of its Subsidiaries.
(d) To Lyte Optronics's knowledge, no employee of Lyte Optronics
or its Subsidiaries (i) is in violation of any material term of any employment
contract, patent disclosure agreement, non-competition agreement, or any
restrictive covenant to a former employer relating to the right of any such
employee to be employed by Lyte Optronics or its Subsidiaries because of the
nature of the business conducted or presently proposed to be conducted by Lyte
Optronics and its Subsidiaries or to the use of trade secrets or proprietary
information of others and (ii) has given notice to Lyte Optronics or its
Subsidiaries, nor is Lyte Optronics otherwise aware, that any employee, other
than non-officer or director hourly employees, intends to terminate his or her
employment with Lyte Optronics or and of its Subsidiaries.
3.18 INSIDER TRANSACTIONS. No Affiliate of Lyte Optronics or any of its
Subsidiaries has any interest in (i) any equipment or other property, real or
personal, tangible or intangible, including, without limitation, any Lyte
Optronics Intellectual Property, used in connection with or pertaining to the
businesses of Lyte Optronics and its Subsidiaries, or (ii) any creditor,
supplier, customer, manufacturer, agent, representative, or distributor of
products of Lyte Optronics or its Subsidiaries; provided, however, that no such
Affiliate or other Person shall be deemed to have such an interest solely by
virtue of the ownership of less than one percent (1%) of the outstanding stock
or debt securities of any publicly-held company whose stock or debt securities
are traded on a recognized U.S. stock exchange or quoted on the National
Association of Securities Dealers Automated Quotation System.
3.19 EMPLOYEES, INDEPENDENT CONTRACTORS AND CONSULTANTS. Section 3.19 of
the Lyte Optronics Disclosure Schedule lists and describes all currently
effective written and oral consulting, independent contractor and/or employment
agreements and other Contracts concluded with individual employees, independent
contractors or consultants to which Lyte
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Optronics or any of its Subsidiaries is a party other than such agreements that
involve less than $40,000 in total annual compensation and benefits and that are
terminable upon no more than forty-five (45) days' notice. True and correct
copies of all such written agreements have been provided to XXX or its
Representatives. All salaries and wages paid by Lyte Optronics and its
Subsidiaries are in compliance in all respects with applicable federal, state
and local laws. Section 3.19 of the Lyte Optronics Disclosure Schedule lists the
names of all persons employed by Lyte Optronics and its Subsidiaries as of May
17, 1999, as well as the salaries and other compensation arrangements (bonus,
deferred compensation, etc.) and the accrued vacation time for each such person.
3.20 INSURANCE. Lyte Optronics and its Subsidiaries maintain valid and
enforceable insurance policies and fidelity bonds as listed on Section 3.20 of
the Lyte Optronics Disclosure Schedule, covering the assets, business,
equipment, properties, operations and employees of Lyte Optronics and its
Subsidiaries, and there is no claim by Lyte Optronics or any of its Subsidiaries
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 due and payable under all such policies and bonds have been paid
and Lyte Optronics and its Subsidiaries are otherwise in material compliance
with the terms of such policies and bonds. Lyte Optronics has no knowledge of
any threatened termination of, or material premium increase with respect to, any
of such policies.
3.21 LITIGATION. There is no Legal Proceeding of any nature pending, or
to Lyte Optronics's knowledge, threatened against Lyte Optronics or any of its
Subsidiaries, their respective assets or properties or any of their respective
officers or directors, in their respective capacities as such. To Lyte
Optronics's knowledge there is no investigation pending or threatened against
Lyte Optronics, any of its Subsidiaries, or their respective assets or
properties or any of their respective officers or directors, in their capacity
as such, before any Governmental Body. Section 3.21 of the Lyte Optronics
Disclosure Schedule sets forth, with respect to any pending or threatened
action, suit, proceeding or investigation, the forum, the parties thereto, the
subject matter thereof and the amount of damages claimed or other remedy
requested. There is no Order of any court, governmental department, commission,
agency, instrumentality or arbitrator outstanding against Lyte Optronics or any
of its Subsidiaries. No Governmental Body has at any time challenged or
questioned the legal right of Lyte Optronics or any of its Subsidiaries to
manufacture, offer or sell any of its products in the present manner or style
thereof.
3.22 COMPLIANCE WITH ENVIRONMENTAL REQUIREMENTS.
(a) Lyte Optronics has obtained all Permits, licenses and other
authorizations which are required under federal, state and local laws applicable
to Lyte Optronics and its Subsidiaries and relating to pollution or protection
of the environment, including Environmental Laws. Lyte Optronics is in
compliance with all Environmental Laws, and with the terms and conditions of the
required Permits, licenses and authorizations. Lyte Optronics is not aware of,
nor has Lyte Optronics or any of its Subsidiaries received written notice of,
any conditions, circumstances, activities, practices, incidents, or actions
which may form the basis of
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any claim, action, suit, proceeding, hearing, or investigation of, by, against
or relating to Lyte Optronics or any of its Subsidiaries, based on or related to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release or threatened
release into the environment, of any Hazardous Materials.
(b) No Environmental Activity has occurred in the business of
Lyte Optronics or its Subsidiaries or on or in relation to any premises
currently or formerly used by Lyte Optronics or any of its Subsidiaries which
may require Lyte Optronics or any of its Subsidiaries to incur expenses or costs
for the elimination, neutralization or amelioration of the results of the
Environmental Activity or become liable for compensation to any third party, and
no written notification of a Release of Hazardous Material has been filed by on
or behalf of Lyte Optronics or any of its Subsidiaries, and no site, facility or
related offsite disposal site is listed or is proposed for listing on the NPL,
CERCLIS or any similar list of sites requiring investigation or clean-up under
the laws of any other country. Neither Lyte Optronics nor any of its
Subsidiaries has disposed of, emitted, discharged, handled, stored, transported,
used or released any Hazardous Material (collectively, "HAZARDOUS MATERIAL
HANDLING") arranged for any Hazardous Material Handling, or exposed any employee
or other individual to any Hazardous Material so as to give rise to any
corrective, investigative, or remedial obligation under any Environmental Law.
(c) Lyte Optronics and each of its Subsidiaries has held its
respective assets, occupied its respective premises, operated its respective
businesses and conducted all other activities in compliance with all
Environmental Laws. Neither Lyte Optronics nor any of its Subsidiaries has
received any notice of non-compliance with Environmental Laws from any person or
governmental authority and Lyte Optronics does not know of any facts which could
give rise to any such notice. Lyte Optronics and its Subsidiaries have performed
or arranged Hazardous Material Handling in compliance with all Environmental
Laws. Without limiting the generality of the preceding sentence, neither Lyte
Optronics nor any of its subsidiaries has disposed of, labeled, packaged,
transported, sold, recycled, discarded, or manufactured any product or component
of a product containing a Hazardous Material (the "HAZARDOUS MATERIAL PRODUCT
ACTIVITIES") in violation of any Environmental Laws where such violation would
reasonably be expected to have a Material Adverse Effect.
(d) Neither Lyte Optronics nor any of its Subsidiaries has
treated, stored, disposed of, handled or Released any Hazardous Material or
owned or operated any property or facility (and no such property or facility is
Contaminated by any Hazardous Material) in any manner that has given or would
give rise to any Liabilities or remedial obligations pursuant to any
Environmental Law. Neither Lyte Optronics nor any of its Subsidiaries has any
reason to believe that any Hazardous Material-related underground storage tanks,
sumps, vaults, piping or other underground Hazardous Material-related equipment
(collectively, "USTs"), are present at any property that Lyte Optronics or any
of its Subsidiaries has at any time owned, operated, occupied, or leased, where
the use, condition, or presence of such USTs would be reasonably likely to give
rise to any corrective, investigative, or remedial obligation or any exposure to
money damages under any Environmental Law. Neither Lyte Optronics nor any of its
Subsidiaries is aware of the presence at any time of any Hazardous
Material-related
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contamination at, in, on, beneath, or relating to any property that Lyte
Optronics or its Subsidiaries has at any time owned, operated, occupied, or
leased.
(e) Lyte Optronics has maintained all environmental and operating
documents and records substantially in the manner and for the time periods
required by any Environmental Laws. Section 3.22 of the Lyte Optronics
Disclosure Schedule lists each environmental Permit and each Environmental Audit
conducted with respect to Lyte Optronics or its premises while occupied by
either of them. An "Environmental Audit" shall mean any evaluation, inspection,
assessment, study or test performed at the request of or on behalf of a
governmental authority, including but not limited to, a public liaison
committee, as well as a formal written self-evaluation, whether or not required
by Environmental Law.
(f) XXX shall be entitled to conduct, and Lyte Optronics shall
cooperate in and cause its Subsidiaries to cooperate in an environmental review
to be conducted at XXX'x request and expense (the "ENVIRONMENTAL REVIEW").
Should such Environmental Review include any invasive sampling, XXX and Lyte
Optronics shall mutually agree the terms and conditions upon which such invasive
sampling shall take place.
3.23 CORPORATE DOCUMENTS. Lyte Optronics has furnished to XXX for its
examination: (i) copies of its charter documents; (ii) its minute book
containing all records required to be set forth of all proceedings, consents,
actions, and meetings of the shareholders, the board of directors and any
committees thereof and the minute books of each of its Subsidiaries; (iii) all
Permits, Orders, and consents issued by any regulatory agency with respect to
Lyte Optronics and its Subsidiaries, or any securities of Lyte Optronics and its
Subsidiaries, and all applications for such Permits, Orders, and consents; and
(iv) the stock transfer books of Lyte Optronics and its Subsidiaries setting
forth all transfers of any capital stock. The corporate minute books, stock
certificate books, stock registers and other corporate records of Lyte Optronics
and its Subsidiaries are complete in all material respects, and the signatures
appearing on all documents contained therein are the true signatures of the
persons purporting to have signed the same. All actions reflected in such books
and records were duly and validly taken in compliance in all material respects
with the laws of the applicable jurisdiction.
3.24 YEAR 2000 COMPLIANCE. For purposes hereof, the term "YEAR 2000
COMPLIANT" refers to a product that, both individually and in conjunction with
all other systems or products with which such product is required or designed to
interface, is (i) able to receive, record, store, process, calculate, manipulate
and output dates from and after January 1, 2000, time periods that include
January 1, 2000 and information that is dependent on or relates to such dates or
time periods, in the same manner and with the same accuracy, functionality, data
integrity and performance as when dates or time periods prior to January 1, 2000
are involved, (ii) able to store and output date information in a manner that is
unambiguous as to century and (iii) able to respond to two-digit year input so
as to accurately resolve any ambiguity as to century in a disclosed, defined,
pre-determined manner that is practicable and efficient. The products designed
and sold by Lyte Optronics do not contain or provide functionality that records,
stores, processes, calculates, manipulates or outputs dates, or is dependent on
or relates to dates or time periods. All internal computer systems that are
material to the business, finances
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or operations of Lyte Optronics and its Subsidiaries are, both individually and
in conjunction with all other internal systems or products with which they are
required or designed to interface, Year 2000 Compliant. To its knowledge,
neither Lyte Optronics nor any of its Subsidiaries is using the services of any
third party whose systems are not Year 2000 Compliant where such circumstance
might reasonably be expected to have a material adverse effect on Lyte
Optronics's business, financial condition or results of operation.
3.25 STOCKHOLDER VOTING. Holders of such number of shares of the issued
and outstanding shares of Lyte Optronics Class A Common Stock and Lyte Optronics
Series A Convertible Preferred Stock, voting together as a class, and of the
Lyte Optronics Class B Common Stock voting separately as a class, have agreed in
writing to vote for approval of the Merger and the actions contemplated thereby
such that less than 5% of the outstanding shares of each such Class or Series
shall have exercised, or shall have a continuing right to exercise, appraisal,
dissenters' or similar rights under applicable law with respect to their shares
by virtue of the Merger.
3.26 NO BROKERS. Neither Lyte Optronics, any of its Subsidiaries, nor
any shareholder, officer or director of Lyte Optronics or any of its
Subsidiaries is obligated for the payment of fees or expenses of any broker or
finder in connection with the origin, negotiation or execution of this Agreement
or in connection with any transaction contemplated hereby other than X. Xxxx &
Company. Section 3.26 of the Lyte Optronics Disclosure Schedule sets forth Lyte
Optronics's current reasonable estimate of all Payable Third Party Expenses
expected to be incurred by Lyte Optronics in connection with the negotiation and
effectuation of the terms and conditions of this Agreement and the transactions
contemplated hereby.
3.27 PRODUCT WARRANTY. No products heretofore sold by Lyte Optronics or
its Subsidiaries are now subject to any guarantee or warranty other than Lyte
Optronics's standard terms and conditions of sale, a copy of which has
previously been made available to XXX. The amount of the warranty reserve
carried in the Lyte Optronics Balance Sheet is sufficient to provide for
replacement of any product designed, manufactured, merchandised, serviced,
distributed or sold by Lyte Optronics or any of its Subsidiaries, or other
damages in connection with such sales or deliveries, at any time prior to the
Effective Time.
3.28 NO INTERFERENCE OR CONFLICT. To Lyte Optronics's knowledge, no
shareholder, officer, employee or consultant of Lyte Optronics or its
Subsidiaries is obligated under any contract or agreement, or subject to any
Order of any court or administrative agency that would interfere with such
person's efforts to promote the interests of Lyte Optronics or that would
interfere with Lyte Optronics's or its Subsidiaries' business. Neither the
execution nor delivery of this Agreement, nor the carrying on of Lyte
Optronics's or its Subsidiaries' business as presently conducted or proposed to
be conducted nor any activity of such officers, directors, employees or
consultants in connection with the carrying on of Lyte Optronics's business as
presently conducted or currently proposed to be conducted, will, to the
knowledge of Lyte Optronics, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract or
agreement under which any of such officers, directors, employees or consultants
is now bound.
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3.29 POOLING OF INTERESTS. Lyte Optronics is poolable, and based
on consultation with its independent accountants, neither Lyte Optronics nor any
of its directors, officers or shareholders has taken any action which would
interfere with XXX'x ability to account for the Merger as a pooling of
interests.
3.30 CHINA APPROVALS. No approvals of any local, municipal or
central governmental agency or other Governmental Body of the People's Republic
of China is required in order to execute and deliver this Agreement and the
other Transaction Documents and to consummate the Merger and the transactions
contemplated hereunder.
3.31 ACCURACY OF INFORMATION IN INFORMATION STATEMENT OR PROXY
STATEMENT. The information (excluding any information about XXX or the Merger
therein furnished by XXX) furnished by Lyte Optronics to the Lyte Optronics
Stockholders in connection with the solicitation of shareholder consent or
proxies for the approval and adoption of this Agreement and the approval and
adoption of the Merger shall not, on the date the Information or Proxy Statement
is first mailed to the Lyte Optronics Stockholders, on any date subsequent
thereto and prior to the Effective Time or at the Effective Time, contain any
untrue statement of a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they are made, not false or misleading, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of consent or proxies which has become false or misleading.
3.32 ACCURACY OF DOCUMENTS AND INFORMATION. The written
information set forth in, and the copies delivered to XXX of all instruments,
Contracts and other documents required to be delivered pursuant to the terms of,
this Agreement or the schedules or exhibits to this Agreement, are complete and
correct. No representations or warranties made by Lyte Optronics in this
Agreement, the Lyte Optronics Disclosure Schedule, nor any financial statement,
certificate, schedule or exhibit furnished directly to XXX pursuant to this
Agreement contains any untrue statement of a material fact, or omits to state a
material fact necessary to make the statements or facts contained herein not
misleading. There is no fact which materially and adversely affects Lyte
Optronics known to Lyte Optronics which has not been expressly and fully set
forth in this Agreement or the schedules and exhibits hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF LYTE OPTRONICS
PRINCIPAL STOCKHOLDERS
Except as otherwise disclosed in the Lyte Optronics Disclosure Schedule
referring specifically (referencing the appropriate schedule or section number)
to representations, warranties or covenants in this Agreement, each Lyte
Optronics Principal Stockholder, as to itself, himself or herself, represents
and warrants to XXX as follows:
4.1 BENEFICIAL OWNER. Such Lyte Optronics Principal Stockholder
is the beneficial owner of that number and class and series of shares of Lyte
Optronics Capital Stock
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set forth on the signature page hereto and, except as otherwise set forth on the
signature page hereto (i) has held such Lyte Optronics Capital Stock at all
times since the date set forth on such signature page and (ii) did not acquire
any Lyte Optronics Capital Stock in contemplation of the Merger. The Lyte
Optronics Capital Stock constitutes the Lyte Optronics Principal Stockholder's
entire interest in the outstanding capital stock of Lyte Optronics. No other
person or entity not a signatory of this Agreement has a beneficial interest in
or a right to acquire such Lyte Optronics Capital Stock or any portion thereof
(except for any rights of any person under applicable community property laws,
and except with respect to shareholders which are partnerships or partners of
such shareholders). All of such shares of Lyte Optronics Capital Stock are and
will be, at all times until the Closing, free and clear of any liens, claims,
options, charges or other encumbrances. The Lyte Optronics Principal
Stockholder's principal place of residence or place of business is set forth on
the signature page hereto.
4.2 NO TRANSFER. The Lyte Optronics Principal Stockholder will
not transfer (except as may be specifically required by court order or by
operation of law), sell, exchange, pledge or otherwise dispose of or encumber
the Lyte Optronics Capital Stock or any New Securities (as defined below), or
make any offer or agreement relating thereto, at any time prior to the Closing.
4.3 NEW SECURITIES. The Lyte Optronics Principal Stockholder
agrees that any shares in the capital of Lyte Optronics that the Lyte Optronics
Principal Stockholder purchases or with respect to which the Lyte Optronics
Principal Stockholder otherwise acquired beneficial ownership after the date of
this Agreement and prior to the Closing (the "New Securities") shall be subject
to the terms and conditions of this Agreement to the same extent as if they
constituted Lyte Optronics Capital Stock.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF XXX AND SUB
XXX represents and warrants to Lyte Optronics as set forth below:
5.1 ORGANIZATION. XXX is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each of XXX and Sub and has the corporate power and
authority to own its properties and to carry on its business as it is now being
conducted and as it is proposed to be conducted and is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or properties makes such qualification or licensing
necessary.
5.2 POWER, AUTHORITY AND VALIDITY. XXX and Sub have all requisite
corporate power and authority to enter into this Agreement and other Transaction
Documents to which they are a party and to carry out their obligations hereunder
and thereunder. The execution and delivery of this Agreement and the Transaction
Documents to which it is a party and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of XXX and Sub. This Agreement has
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been duly executed and delivered by XXX and Sub and constitutes the valid and
binding obligation of XXX and Sub, enforceable in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies. The execution and delivery of this Agreement by XXX and Sub does not,
and, as of the Effective Time, the consummation of the transactions contemplated
hereby will not constitute a Conflict with (i) any provision of the Certificate
of Incorporation or Bylaws of XXX or Sub or (ii) any mortgage, indenture, lease,
contract or other agreement or instrument, Permit, concession, franchise,
license, judgment, Order, decree, statute, law, ordinance, rule or regulation
applicable to XXX or Sub or their respective properties or assets, except for
any Conflict which could not reasonably be expected to have a material adverse
effect on the business, financial condition, results of operations, assets
(including intangible assets), Liabilities or prospects of XXX. No consent,
waiver, approval, Order or authorization of, or registration, declaration or
filing with, any Governmental Body or any Third Party (so as not to trigger any
Conflict) is required by or with respect to XXX or Sub 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 Nevada Merger Agreement
with the Nevada Secretary of State, and the Delaware Certificate of Merger with
the Delaware Secretary of State, and (ii) such consents, waivers, approvals,
Orders, authorizations, registrations, declarations and filings as may be
required under applicable federal and state securities laws, (iii) such other
consents, waivers, authorizations, filings, approvals and registrations which
are set forth on Schedule 5.2 to this Agreement, and (iv) where the failure to
obtain or make any such consent, waiver, approval, Order, authorization,
registration, declaration or filing could not reasonably be expected to have a
Material Adverse Effect.
5.3 CAPITAL STRUCTURE. The authorized stock of XXX consists of
40,000,000 shares of Common Stock, of which 16,257,027 shares were issued and
outstanding as of April 12, 1999, and 2,000,000 shares of Preferred Stock none
of which were issued and outstanding. At the close of business on April 12,
1999, 1,530,604 shares of XXX Common Stock were subject to issuance upon the
exercise of outstanding stock options. All of the outstanding shares of XXX
Common Stock are validly issued, fully paid, nonassessable and free of
preemptive rights. The authorized capital stock of Sub consists of 1,000 shares
of Common Stock, all of which, as of the date hereof, are issued and outstanding
and are held by XXX. All such shares have been duly authorized, and all such
issued and outstanding shares have been validly issued, are fully paid and
nonassessable and are free of any liens or Encumbrances other than any liens or
Encumbrances created by or imposed upon the holders thereof. The shares of XXX
Common Stock and XXX Preferred Stock to be issued pursuant to the Merger, when
issued, will be duly authorized, validly issued, fully paid and nonassessable,
and free of preemptive rights.
5.4 SEC DOCUMENTS; FINANCIAL STATEMENTS. XXX has made available to Lyte
Optronics a true and complete copy of each statement, report, registration
statement, definitive proxy statement and other filings filed with the SEC under
the Exchange Act by XXX since May 20, 1998 (collectively, the "XXX SEC
DOCUMENTS"). As of their respective filing dates, the XXX SEC Documents complied
in all material respects with the requirements of the
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Exchange Act and the Securities Act, as the case may be, and none of the XXX 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 subsequently filed XXX SEC
Document prior to the date hereof. XXX has filed all XXX SEC Documents required
to be filed under the Securities Act or the Exchange Act, as the case may be.
The financial statements of XXX, including the notes thereto, included in the
XXX SEC Documents (the "XXX FINANCIAL STATEMENTS") complied as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto as of their respective
dates, and have been prepared in accordance with GAAP applied on a basis
consistent throughout the periods indicated and consistent with each other
(except as may be indicated in the notes thereto or, in the case of unaudited
statements included in Quarterly Reports on Form 10-Qs, as permitted by Form
10-Q of the SEC). The XXX Financial Statements fairly present the consolidated
financial condition and operating results of XXX and its Subsidiaries at the
dates and during the periods indicated therein (subject, in the case of
unaudited statements, to normal, recurring year-end adjustments). There has been
no change in XXX accounting policies except as described in the notes to the XXX
Financial Statements.
5.5 LITIGATION. There is no Legal Proceeding pending, or as to which XXX
has received any notice of assertion against XXX, which in any manner challenges
or seeks to prevent, enjoin, alter or materially delay any of the transactions
contemplated by this Agreement.
5.6 ACCURACY OF DOCUMENTS AND INFORMATION. No representations or
warranties made by XXX or Sub in this Agreement, nor any document, written
information, statement, financial statement, certificate, schedule or exhibit
furnished directly to Lyte Optronics pursuant to this Agreement, taken as a
whole, contains any untrue statement of a material fact, or omits to state a
material fact necessary to make the statements or facts contained herein not
misleading.
ARTICLE VI
COVENANTS OF LYTE OPTRONICS
6.1 ADVICE OF CHANGES. Lyte Optronics will promptly advise XXX in
writing (i) of any event occurring subsequent to the date of this Agreement
which would render any representation or warranty of Lyte Optronics or the Lyte
Optronics Principal Stockholders contained in this Agreement, if made on or as
of the date of such event or the Closing Date, untrue or inaccurate in any
material respect and (ii) of any Material Adverse Affect on Lyte Optronics's
assets, properties, business, or financial condition, taken as a whole.
6.2 CONDUCT OF BUSINESS. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, except as expressly contemplated by this Agreement, Lyte
Optronics agrees as to itself and its Subsidiaries, to carry on its business in
the usual, regular and ordinary course in substantially the same manner as
previously conducted, to pay its debts and Taxes when due subject to
availability
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of funds and to good faith disputes over such debts or Taxes, to pay or perform
its other obligations when due, and, to the extent consistent with such
business, to use all reasonable efforts consistent with past practices and
policies to (i) preserve intact its present business organization, (ii) keep
available the services of its present officers and key employees, and (iii)
preserve its relationships with customers, suppliers, distributors, licensors,
licensees and others having business dealings with it. Lyte Optronics shall
promptly after becoming aware thereof notify XXX of any events or occurrences
not in the ordinary course of business of Lyte Optronics that would,
individually or in the aggregate, result in a breach of any representation,
warranty, covenant or agreement of Lyte Optronics set forth in this Agreement
which would cause any of the conditions to XXX'x obligations to effect the
Merger to not be satisfied. Except as expressly contemplated by this Agreement
or as set forth in the Lyte Optronics Disclosure Schedule, Lyte Optronics shall
not (and shall not permit any of its Subsidiaries to) without the prior written
consent of XXX, such consent not to be unreasonably withheld:
(a) incur or prepay any Indebtedness for borrowed money or
guarantee any such Indebtedness or issue or sell any debt securities of Lyte
Optronics or any of its Subsidiaries or purchase or guarantee any debt
securities of others or amend the terms of any outstanding loan agreement;
(b) incur or prepay any Liability in excess of $50,000 other than
in connection with the performance or consummation of this Agreement and other
than purchases and sales of inventory in the ordinary course of business
consistent with past practice;
(c) place or create any Encumbrances, other than Permitted
Encumbrances, on any of its assets or properties in excess of $10,000;
(d) sell, lease, license or otherwise dispose of any of its
properties or assets, except inventory in the regular and ordinary course of
business in an amount in excess of $10,000 individually or of amounts that are
individually less than $10,000 but collectively are in excess of $25,000;
(e) acquire or agree to acquire, by merging or consolidating
with, by purchasing a substantial equity interest in or substantial portion of
the assets of, or by any other means, any business or any corporation,
partnership, or other business organization or division, or otherwise enter into
any lease or Contract for the purchase or sale of any property, real or
personal, or acquire or agree to acquire any amount of assets in excess of
$10,000 individually or that are less than $10,000 individually but collectively
in excess of $25,000 (other than purchases or sales of inventory in the ordinary
course of business consistent with past practice);
(f) fail to use reasonable efforts to maintain its equipment and
other assets in good working condition and repair according to the standards it
has maintained up to the date of this Agreement, subject only to ordinary wear
and tear;
(g) cancel, materially amend or renew any insurance policy;
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(h) pay or authorize any bonus, increased salary (other than
increases to employees other than officers or directors in an aggregate amount
that is less than 2% of the total payroll of all such employees, excluding
officers and directors), or special remuneration to any officer or employee,
including any amounts for accrued but unpaid salary or bonuses outside of normal
pay periods and amounts, adopt or amend any employee benefit plan, program,
policy or arrangement (including without limitation any amendment which
accelerates vesting under any such employee benefit plan, program, policy or
arrangement), or enter into any employment contract, extend any employment offer
(other than employment of hourly employees at a salary and benefits of not more
than $40,000 per year), pay or agree to pay any special bonus or special
remuneration to any director, officer or consultant;
(i) grant any severance or termination pay to any director,
officer, employee or consultant, except payments made pursuant to written
agreements outstanding on the date hereof (which such agreements are disclosed
on Section 6.2(i) of the Lyte Optronics Disclosure Schedule);
(j) adopt or change any accounting methods;
(k) revalue any of its assets, including without limitation
writing down the value of inventory or writing off notes or accounts receivable
other than in the ordinary course of business and consistent with past practice;
(l) declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of Lyte Optronics
Capital Stock, or split, combine or reclassify any of Lyte Optronics Capital
Stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of Lyte Optronics Capital Stock, or
repurchase, redeem or otherwise acquire, directly or indirectly any of its
capital stock (or options, warrants, or other rights exercisable therefor),
other than the repurchase of 137,116 shares of Class A Common Stock from Pacific
Mezzanine;
(m) take any action, including acceleration of vesting of any
options, warrants, restricted stock or other rights to acquire shares of Lyte
Optronics Capital Stock, which would be reasonably likely to interfere with
XXX'x ability to account for the Merger as a pooling of interests or any other
action that could jeopardize the treatment of the Merger as a tax-free
reorganization hereunder;
(n) amend or otherwise modify (or agree to do so), or violate the
terms of, any of the Contracts set forth or described in the Lyte Optronics
Disclosure Schedule other than immaterial amendments or modifications in the
ordinary course of business consistent with past practice;
(o) enter into or amend, modify or terminate any strategic
alliance, joint development or joint marketing arrangement or agreement, other
than customer agreements in the ordinary course of business consistent with past
practice;
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(p) enter into or amend, modify or terminate any supply,
customer, OEM, distribution, marketing, manufacturing or similar Contract other
than purchases or sales of inventory or supplies in the ordinary course of
business consistent with past practice;
(q) (i) sell, license or transfer to any person or entity or
otherwise extend, amend or modify any rights to any Lyte Optronics Intellectual
Property or enter into any agreement with respect to the Lyte Optronics
Intellectual Property with any person or entity or with respect to the
Intellectual Property of any person or entity, (ii) other than Intellectual
Property rights acquired under "shrink-wrap" and similar widely available
commercial end-user licenses (in each case which is not included in Lyte
Optronics's products or technology including products and technology currently
available or under development), buy or license any Intellectual Property or
enter into any agreement with respect to the Intellectual Property of any person
or entity, (iii) enter into any agreement with respect to the development of any
Intellectual Property with a third party, or (iv) change pricing or royalties
charged by or to Lyte Optronics for its Intellectual Property (other than sales
of inventory in the ordinary course of business consistent with past practice),
or the pricing or royalties set or charged by persons who have licensed
Intellectual Property to Lyte Optronics;
(r) waive or commit to waive any rights with a value in excess of
$25,000, in any one case, or $50,000 in the aggregate;
(s) issue, grant, deliver or sell or authorize or propose the
issuance, grant, delivery or sale of, any shares of Lyte Optronics Capital Stock
or securities convertible into, or subscriptions, rights, warrants or options to
acquire, or other agreements or commitments of any character obligating it to
issue any such shares or other convertible securities, other than pursuant to
the exercise or conversion of Lyte Optronics Options or Lyte Optronics Warrants
outstanding on the date of this Agreement;
(t) amend its Articles of Incorporation or Bylaws;
(u) initiate or settle any litigation or arbitration proceeding
that involves amounts in excess of $25,000;
(v) make or change any election, change any annual accounting
period, file any Tax Return or amended Tax Return (other than any immaterial Tax
Returns filed in the ordinary course), enter into any closing agreement, settle
any tax claim or assessment relating to Lyte Optronics, surrender any right to
claim refund of taxes, consent to any extension or waiver of the limitation
period applicable to any tax claim or assessment relating to Lyte Optronics, or
take any other action or omit to take any action, if any such election,
adoption, change, amendment, agreement, settlement, surrender, consent or other
action or omission would have the effect of increasing the tax liability of Lyte
Optronics or any of its Subsidiaries or XXX; or
(w) agree to do any of the things described in the preceding
clauses of this Section 6.2 or any other action that would prevent Lyte
Optronics from performing or cause Lyte Optronics not to perform its covenants
hereunder.
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6.3 NO SOLICITATION. Until the earlier of the Effective Time and the
date of termination of this Agreement pursuant to the provisions of Section 9.1
hereof, Lyte Optronics will not, directly or indirectly, through any officer,
director, employee, Subsidiary, Affiliate or agent of Lyte Optronics, or
otherwise, take any action to solicit, initiate, seek, entertain, encourage or
support any inquiry, proposal or offer from, furnish any information to, or
participate in any negotiations with, any third party regarding or possibly
leading to, any acquisition of Lyte Optronics or any of its Subsidiaries, any
merger or consolidation with or involving Lyte Optronics or any of its
Subsidiaries, any tender or exchange offer, or other business combination or
change in control or similar transaction, or any acquisition of any material
portion of the stock (including all vested and unvested capital stock, and all
stock outstanding on the date hereof or issued at any time hereafter),
properties or assets of Lyte Optronics or any of its Subsidiaries and Lyte
Optronics shall engage in no such negotiations or discussions and shall furnish
no non-public or Confidential Information concerning, or enter into no such
agreement with any person other than XXX providing for the acquisition of Lyte
Optronics or any of its Subsidiaries (whether by way of merger, purchase of
capital stock, purchase of assets or otherwise), or make or authorize any
statement, recommendation or solicitation in support of any possible acquisition
of Lyte Optronics or any of its Subsidiaries (whether by way of merger, purchase
of capital stock, purchase of assets, recapitalization, combination or
otherwise), any material portion of its capital stock (including all vested and
unvested capital stock, and all stock outstanding on the date hereof or issued
at any time hereafter), properties or assets or any equity interest in Lyte
Optronics by any person other than by XXX. Lyte Optronics shall immediately
cease and cause to be terminated any such contacts or negotiations with third
parties relating to any such transaction or proposed transaction. Lyte Optronics
will notify XXX immediately after receipt by Lyte Optronics at any time through
the Expiration Date (or any of its officers, directors, employees, affiliates or
agents) of any unsolicited proposal for, or inquiry respecting, any third party
acquisition transaction involving Lyte Optronics or any request for nonpublic
information in connection with such proposal or inquiry, or for access to the
properties, books or records of Lyte Optronics by any person, or entity that
informs Lyte Optronics that it is considering making, or has made, such a
proposal or inquiry. Except as contemplated by this Agreement, the disclosure by
Lyte Optronics of the terms of this Agreement (other than the prohibition of
this section) to persons, other than its Stockholders, lawyers, accountants and
financial advisors, and any third party from whom consent is required to
consummate the Merger, shall be deemed to be a violation of this Section 6.3.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 ACCESS TO INFORMATION. Until the Closing and subject to the
confidentiality and nonuse provisions hereof, Lyte Optronics shall allow XXX and
its Representatives free access upon reasonable notice and during normal working
hours to its files, books, records, and offices, including, without limitation,
any and all information relating to taxes, commitments, contracts, leases,
licenses, and personal property and financial condition. Until the Closing, Lyte
Optronics
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shall cause its accountants to cooperate with XXX and its Representatives in
making available all financial information requested, including without
limitation the right to examine all working papers pertaining to all financial
statements prepared or audited by such accountants. No information or knowledge
obtained in any investigation pursuant to this Section 7.1 shall affect or be
deemed to modify any representation or warranty made by Lyte Optronics herein or
the conditions to the parties to consummate the Merger herein.
7.2 REGULATORY APPROVALS. Prior to the Closing, Lyte Optronics shall
execute and file, or join in the execution and filing, of any application or
other document which may be necessary in order to obtain the authorization,
approval or consent of any Governmental Body, federal, state or local, which may
be reasonably required, or which XXX may reasonably request, in connection with
the consummation of the transactions contemplated by this Agreement Lyte
Optronics shall use its best efforts to obtain all such authorizations,
approvals and consents.
7.3 REGISTRATION OF SHARES.
(a) The parties hereto acknowledge and agree that the shares of
XXX Common Stock and XXX Preferred Stock issuable to the shareholders of Lyte
Optronics pursuant to Section 2.7 hereof, shall constitute "restricted
securities" within the meaning of the Securities Act. The certificates for
shares of XXX Common Stock and XXX Preferred Stock (and any Common Stock
issuable upon conversion of the XXX Preferred Stock) to be issued in the Merger
shall bear legends identifying such shares as privately placed and subject to
restrictions under the Securities Act, complying with applicable state
securities laws and, if applicable, noticing the restrictions on transfer
pursuant to the Affiliate Agreement (as defined in Section 7.13). It is
acknowledged and understood that XXX is relying upon certain written
representations made by each shareholder of Lyte Optronics.
(b) Lyte Optronics shall use all reasonable efforts to arrange
for each shareholder of Lyte Optronics resident in the United States to execute
and deliver to XXX a Stockholder's Questionnaire in the form attached hereto as
Exhibit E (the "STOCKHOLDER'S QUESTIONNAIRE").
(c) XXX shall xxxxx to the Lyte Optronics Stockholders
registration rights relating to the shares of XXX Common Stock received in the
Merger pursuant to Section 2.7 hereof as set forth in the Registration Rights
Agreement in the form attached hereto as Exhibit F.
(d) At the request of XXX, Lyte Optronics shall use its best
efforts to cause the Lyte Optronics Stockholders to execute and deliver to XXX
such instruments and do and perform such acts and things as may be necessary or
desirable to comply with all applicable securities laws and state corporate law.
7.4 STOCKHOLDER CONSENT. As promptly as practical after the execution of
this Agreement, Lyte Optronics shall submit this Agreement and the transactions
contemplated hereby to its shareholders for approval and adoption as provided by
Nevada Law and the Articles
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of Incorporation and Bylaws of Lyte Optronics. Lyte Optronics shall use its best
efforts to obtain the consent of its shareholders to approve the Merger and this
Agreement. In connection with such shareholder approval and as soon as
practicable after the execution of this Agreement, Lyte Optronics shall prepare,
with the cooperation of XXX, a Proxy or Information Statement for purposes of
soliciting such approval of the shareholders. The Proxy or Information Statement
shall also constitute a disclosure document for the offer and sale of the shares
of XXX Common Stock and XXX Preferred Stock to be received by the holders of
Lyte Optronics Capital Stock in the Merger. Each of XXX and Lyte Optronics
agrees to provide promptly to the other such information concerning its business
and financial statements and affairs as, in the reasonable judgment of the
providing party or its counsel, may be required or appropriate for inclusion in
the Proxy or Information Statement or in any amendments or supplements thereto,
and to cause its counsel and auditors to cooperate with the other's counsel and
auditors in the preparation of the Proxy or Information Statement. Each of the
parties hereto will promptly advise the other parties in writing if at any time
prior to the Effective Time either Lyte Optronics or XXX shall obtain knowledge
of any facts that might make it necessary or appropriate to amend or supplement
the Proxy or Information Statement in order to make the statements contained or
incorporated by reference therein not misleading or to comply with applicable
law. The Proxy or Information Statement shall contain the recommendation of the
Board of Directors of Lyte Optronics that the Lyte Optronics Stockholders
approve the Merger and this Agreement and the transactions contemplated hereby
and the conclusion of the Board of Directors that the terms and conditions of
the Merger are fair and reasonable to the shareholders of Lyte Optronics.
Anything to the contrary herein notwithstanding, Lyte Optronics shall not
include in the Proxy or Information Statement any information with respect to
XXX or its Affiliates that has not been approved by XXX prior to such inclusion.
7.5 CONSENTS. Lyte Optronics and XXX shall each use its commercially
reasonable efforts to obtain all consents, waivers and approvals of parties to
any Contracts as may be required in connection with the Merger, or for any such
Contract to remain in full force and effect without limitation, modification or
alteration after the Effective Time so as to preserve all rights of and benefits
to Lyte Optronics and XXX thereunder.
7.6 EXPENSES. If the Merger is not consummated, so long as Lyte
Optronics has negotiated in good faith, all Third Party fees and expenses,
including, without limitation, all legal and accounting fees and expenses, up to
the amount of seventy-five thousand dollars ($75,000) incurred by Lyte Optronics
in connection with the negotiation and effectuation of the terms and conditions
of this Agreement and the transactions contemplated hereby shall be paid by XXX
and any expenses in excess of such amount shall be deemed to be expenses of Lyte
Optronics, and shall be borne by the Lyte Optronics Stockholders. If the Merger
is consummated, XXX shall pay the following expenses: (a) up to the sum of one
hundred ninety-five thousand dollars ($195,000) incurred by Lyte Optronics and
payable to Xxxx Xxxxxxx & Xxxxxxxxxxx, LLP ("GRC"), and X. Xxxx & Co. ("XXXX")
for services not related to the transactions contemplated by this Agreement (the
"GRC and Xxxx Payables"), and (b) up to the sum of three hundred thousand
dollars (300,000) in expenses incurred by Lyte Optronics and payable to (i) GRC
and for services rendered in connection with the transactions contemplated by
this Agreement (the "GRC DEAL EXPENSES") and (ii) Xxxxxx Xxxxxxxx, whether or
not incurred in
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connection with this Agreement (collectively with the GRC Deal Expenses the
"DEAL EXPENSES") ( and collectively at such limit, such GRC and Xxxx Payables
and Deal Expenses are "PAYABLE THIRD PARTY EXPENSES"); provided, however, that
the Deal Expenses shall include, and be reduced for, any amounts previously paid
by Lyte Optronics to Xxxxxx Xxxxxxxx between March 1, 1999 and the Closing Date
and any amounts previously paid by Lyte Optronics to GRC and Xxxx between May
18, 1999 and the Closing Date. Any amounts payable to GRC, Xxxx (other than the
Xxxx Fees and Expenses) or Xxxxxx Xxxxxxxx in excess of the Payable Third Party
Expenses (the "EXCESS FEES") shall be be the responsibility of the Lyte
Optronics Stockholders and not the obligations of Lyte Optronics, XXX, or the
Surviving Corporation. XXX shall pay the amount of such Excess Fees at Closing,
and reduce the number of shares representing the Aggregate Common Share Number
and Aggregate Preferred Number by increasing the Common Portion of the Deducted
Shares and the Preferred Portion of the Deducted Shares as follows: (a) 93.6% of
such Excess Fees shall be divided by $24.30, and the quotient obtained shall
equal the number of shares constituting the Common Portion of the Deducted
Excess Fee Shares ("COMMON PORTION OF THE DEDUCTED EXCESS FEE SHARES"), and (b)
6.4% of such Excess Fees shall be divided by $4.00, and the quotient obtained
shall equal the number of shares constituting the Preferred Portion of the
Deducted Excess Fee Shares ("PREFERRED PORTION OF THE DEDUCTED EXCESS FEE
SHARES"). The Xxxx Expenses shall be paid by XXX at the Closing, and shall
reduce the Aggregate XXX Preferred Number and the Aggregate XXX Common Share
Number by the Xxxx Portion of the Deducted Preferred Shares and the Xxxx Portion
of the Deducted Common Shares, respectively. All third party expenses incurred
by XXX or Sub in connection with the negotiation and consummation of the terms
and conditions of this Agreement and the transactions contemplated hereby shall
be paid by XXX. Whether or not the Merger is consummated, XXX agrees to pay the
reasonable costs, fees and expenses of the Purchaser Representative described in
Section 8.3(f).
7.7 REGULATORY APPROVALS. Prior to the Closing, XXX and Sub shall
execute and file, or join in the execution and filing, of any application or
other document which may be necessary in order to obtain the authorization,
approval or consent of any Governmental Body, which may be reasonably required,
or which Lyte Optronics may reasonably request, in connection with the
consummation of the transactions contemplated by this Agreement. Such Persons
and entities shall use their best efforts to obtain all such authorizations,
approvals and consents
7.8 LISTING OF ADDITIONAL SHARES. XXX shall file with the NASDAQ
National Market a Notification Form for Listing of Additional Shares with
respect to the shares of XXX Common Stock issuable, and those required to be
reserved for issuance, in connection with the Merger.
7.9 CONFIDENTIALITY.
(a) Each party acknowledges that in the course of the performance
of this Agreement, it may obtain confidential or proprietary information of the
other party. Such confidential or proprietary information may include, but not
be limited to, trade secrets, know-how, inventions, techniques, processes,
algorithms, software programs, schematics,
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designs, contracts, customer lists, financial information, sales and marketing
plans and business and product information ("CONFIDENTIAL INFORMATION"). The
party receiving such Confidential Information ("RECEIVING PARTY") shall, at all
times, both during the term of this Agreement and thereafter, hold, and cause
its Affiliates and Representatives to hold, in strict confidence all such
Confidential Information furnished by or on behalf of each other party in
connection with this Agreement or the transactions contemplated hereby, except
to the extent that such Confidential Information can be shown by the Receiving
Party to have been:
(i) previously known to the Receiving Party at the time of
disclosure, which knowledge the Receiving Party shall have the burden of
proving;
(ii) in the public domain (either prior to or after the
furnishing of such Confidential Information hereunder);
(iii) later acquired by the Receiving Party from another
source if the Receiving Party is not aware that such source is under an
obligation to keep such Confidential Information confidential; or
(iv) compelled to be disclosed by judicial or
administrative process (including, without limitation, in connection with
obtaining the necessary approvals of this Agreement and the transactions
contemplated hereby), or by other requirements of law, or in an Action or
Proceeding brought by a party hereto in pursuit of its rights or in the exercise
of its remedies hereunder, provided, however that the Receiving Party will use
its best efforts to minimize such disclosure and will consult with and assist
the other party in obtaining a protective order prior to such disclosure.
(b) The Receiving Party shall take all reasonable steps to
prevent unauthorized disclosure or use of the Confidential Information furnished
by or on behalf of any other party, and to prevent it from falling into the
public domain or into the possession of unauthorized persons. The Receiving
Party shall not disclose Confidential Information to any person or entity other
than its officers, employees, and Representatives who need access to such
Confidential Information in order to effect the intent of this Agreement and who
have entered into confidentiality agreements which protects such Confidential
Information. The Receiving Party shall promptly give notice to the party on
whose behalf such Confidential Information was disclosed or delivered of any
unauthorized use or disclosure. The Receiving Party agrees to assist the party
on whose behalf such Confidential Information was disclosed or delivered to
remedy any such unauthorized use or disclosure of its Confidential Information,
which remedies shall include injunctive relief without the necessity of posting
a bond or proving damages.
(c) Following the closing, the restrictions in this Section 7.9
shall not apply to use by XXX or Sub or their Affiliates of Confidential
Information concerning Lyte Optronics or its Subsidiaries. In the event the
transactions contemplated hereby are not consummated, upon the request of a
furnishing party, each Receiving Party shall, and shall cause its
Representatives and Affiliates, to promptly redeliver or cause to be redelivered
all copies of Confidential Information furnished by or on behalf of such
furnishing party in connection with this Agreement or any of the transactions
contemplated hereby, and to destroy or cause to be
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destroyed all notes, memoranda, summaries, analyses, compilations and other
writings related thereto or based thereon prepared by the Receiving Party.
7.10 PUBLIC DISCLOSURE. Unless otherwise required by law (including,
without limitation, federal and state securities laws) or, as to XXX, by the
rules and regulations of The NASDAQ Stock Market, Inc. prior to the Effective
Time, no disclosure (whether or not in response to an inquiry) of the subject
matter of this Agreement shall be made by any party hereto unless approved by
XXX and Lyte Optronics prior to release, provided that such approval shall not
be unreasonably withheld or delayed.
7.11 VOTING AGREEMENTS AND IRREVOCABLE PROXIES. Lyte Optronics shall use
its best efforts, on behalf of XXX and pursuant to the request of XXX, to cause
holders of the shares of Lyte Optronics Capital Stock listed on Schedule 7.11
hereof to execute and deliver to XXX a Voting Agreement and Irrevocable Proxy
substantially in the form of Exhibit C attached hereto concurrently with the
execution of this Agreement, agreeing, among other things, to vote in favor of
the Merger.
7.12 AFFILIATE AGREEMENTS. Schedule 7.12 sets forth those persons who,
in Lyte Optronics's reasonable judgment, are or may be "Affiliates" of Lyte
Optronics within the meaning of Rule 145 promulgated under the Securities Act
("RULE 145"). Lyte Optronics shall provide XXX such information and documents as
XXX shall reasonably request for purposes of reviewing such list. Each of XXX
and Lyte Optronics has delivered or shall cause to be delivered to XXX,
concurrently with the execution of this Agreement, from each of their respective
Affiliates, an executed Affiliate Agreement in the form attached hereto as
Exhibit G (for Affiliates of Lyte Optronics) or Exhibit H (for Affiliates of
XXX). XXX shall be entitled to place appropriate legends on the certificates
evidencing any XXX Common Stock to be received by such Affiliates pursuant to
the terms of this Agreement, and to issue appropriate stop transfer instructions
to the transfer agent for XXX Common Stock, consistent with the terms of such
Affiliate Agreements.
7.13 NON-COMPETITION AGREEMENTS. Lyte Optronics shall use reasonable
efforts to cause to be delivered to XXX an executed Non-Competition Agreement in
substantially the form attached hereto as Exhibit D concurrently with the
execution of this Agreement from each of the persons listed on Schedule 7.13.
7.14 REPRESENTATIONS AND WARRANTIES. Subject to the terms and conditions
of this Agreement, each of the parties hereto shall use its commercially
reasonable efforts to ensure that its representations and warranties remain true
and correct in all material respects, and to take promptly, or cause to be
taken, all actions, and to do promptly, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated hereby. Lyte Optronics shall give
prompt notice to XXX, and XXX shall give prompt notice to Lyte Optronics, of (i)
the occurrence or non-occurrence of any event, the occurrence or non-occurrence
of which is likely to cause any representation or warranty of Lyte Optronics or
XXX, respectively, contained in this Agreement to be untrue or inaccurate at or
prior to the Effective Time, and (ii) any failure of Lyte Optronics or XXX, as
the case may be, to
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comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 7.14 shall not limit or otherwise affect any remedies
available to the party receiving such notice.
7.15 BENEFIT PLANS. Subject to compliance with pooling-of-interest
accounting treatment of the Merger, as soon as practicable after the Effective
Time, XXX shall take such reasonable actions as are necessary to allow eligible
employees of Lyte Optronics and its Subsidiaries to participate in the benefit
programs of XXX available to employees of XXX having similar positions and
levels of responsibility on the terms and conditions provided in such plans and
giving credit to such employees for their term of service with Lyte Optronics
and its Subsidiaries.
7.16 POOLING ACCOUNTING. Each of the parties hereto shall each use its
best efforts to cause the business combination to be effected by the Merger to
be accounted for as a pooling of interests. Each of the parties hereto shall use
its best efforts to cause its respective employees, directors, shareholders and
Affiliates not to take any action that would adversely affect the ability of XXX
to account for the business combination to be effected by the Merger as a
pooling of interests.
7.17 LYTE OPTRONICS FINANCIAL STATEMENTS. Lyte Optronics shall cause its
management and its independent auditors to facilitate on a timely basis (i) the
preparation of financial statements (including pro forma financial statements if
required) as required by XXX to comply with applicable SEC regulations, (ii) the
review of Lyte Optronics's audit work papers for up to the past three years,
including interim periods and access for review or examination of selected
interim financial statements and data, and (iii) the delivery of such
representations from Lyte Optronics's independent accountants as may be
reasonably requested by XXX or its accountants in order for XXX'x accountants to
assess their concurrence with XXX management's conclusions called for by Section
8.3(j) hereof.
7.18 ADDITIONAL DOCUMENTS AND FURTHER ASSURANCES. 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 better evidence and reflect the
transactions described herein and contemplated hereby and to carry into effect
the intents and purposes of this Agreement.
7.19 TAX-FREE REORGANIZATION. Each party shall each use its best efforts
to cause the Merger to be treated as a reorganization within the meaning of
Section 368(a) of the Code.
7.20 FIRPTA AND OTHER COMPLIANCE. On or prior to the Closing Date, Lyte
Optronics shall deliver to XXX a properly executed statement in a form
reasonably acceptable to XXX for purposes of satisfying XXX'x obligations under
Treasury Regulation Section 1.1445-2(c)(3), and a statement meeting the
requirements of Treasury Regulation Section 1.897-2(h)(2) stating that interests
in Lyte Optronics are not United States real property interests.
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ARTICLE VIII
CONDITIONS TO THE MERGER
8.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO THE MERGER. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing of the following
conditions:
(a) STOCKHOLDER APPROVAL. The Agreement and the Merger shall have
been approved and adopted by the stockholders of Lyte Optronics by the requisite
vote under applicable law and Lyte Optronics's Articles of Incorporation.
(b) GOVERNMENT CONSENTS. There shall have been obtained at or
prior to the date of Closing such Permits, consents or authorizations, and there
shall have been taken such other action, as may be required by any regulatory
authority having jurisdiction over the parties and the subject matter and the
actions herein proposed to be taken, including, but not limited to, compliance
with applicable state and federal securities laws.
(c) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary injunction or other Order issued by any court of
competent jurisdiction or other legal or regulatory restraint or prohibition
preventing the consummation of the Merger shall be in effect.
(d) NASDAQ LISTING. The shares of XXX Common Stock issuable to
Lyte Optronics Stockholders pursuant to this Agreement and such other shares
required to be reserved for issuance in connection with the Merger shall have
been authorized for listing on The NASDAQ National Market upon official notice
of issuance.
8.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF LYTE OPTRONICS. The
obligations of Lyte Optronics to consummate the Merger and the transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing of each of the following conditions, any of which may be waived,
in writing, exclusively by Lyte Optronics:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of XXX and Sub contained in this Agreement shall
be true and correct in all material respects (except for those representations
and warranties which are by their terms qualified by a statement of materiality,
which representations and warranties shall be true and correct in all respects),
except for those representations and warranties which address matters only as of
a particular date (which shall remain true and correct as of such date), on and
as of the Closing Date with the same force and effect as if they had been made
at the Closing and Lyte Optronics shall receive a certificate to such effect
signed by a duly authorized officer of XXX.
(b) AGREEMENTS AND COVENANTS. XXX and Sub shall have performed
and complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by them on or prior to the
Effective Time, and Lyte Optronics shall have received a certificate to such
effect signed by a duly authorized officer of
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XXX.
(c) LEGAL OPINION. Lyte Optronics shall have received a legal
opinion from Xxxx Xxxx Xxxx & Freidenrich, counsel to XXX, in substantially the
form attached hereto as Exhibit I.
(d) AUTHORIZATIONS. Lyte Optronics shall have received from XXX
and Sub written evidence that the execution, delivery and performance of XXX'x
and Sub's obligations under this Agreement and the Agreement of Merger have been
duly and validly approved and authorized by the Board of Directors of XXX and
Sub, respectively, and the shareholder of Sub.
(e) REGISTRATION RIGHTS AGREEMENT. XXX and the Stockholder
Representative (as defined in Section 10.6) on behalf of the Lyte Optronics
Stockholders shall have entered into a Registration Rights Agreement in the form
attached hereto as Exhibit F.
8.3 ADDITIONAL CONDITIONS TO XXX AND SUB'S OBLIGATIONS. The obligations
of XXX and Sub to consummate the Merger and the transactions contemplated by
this Agreement shall be subject to the satisfaction at or prior to the Closing
of each of the following conditions, any of which may be waived, in writing,
exclusively by XXX:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES AT CLOSING. The
representations and warranties of Lyte Optronics contained in this Agreement
shall be true and correct in all material respects (except for those
representations and warranties which are by their terms qualified by a statement
of materiality, which representations and warranties shall be true and correct
in all respects) on and as of the Closing Date (without regard to any updates to
the Lyte Optronics Disclosure Schedules, unless otherwise agreed by XXX), except
for those representations and warranties which address matters only as of a
particular date (which shall remain true and correct as of such date), with the
same force and effect as if they had been made on the Closing Date and XXX shall
receive a certificate to such effect signed by the chief executive officer and
chief financial officer of Lyte Optronics.
(b) AGREEMENTS AND COVENANTS. Lyte Optronics shall have performed
and complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it on or prior to the
Effective Time, and XXX shall have received a certificate to such effect signed
by a duly authorized officer of Lyte Optronics.
(c) LEGAL OPINION. XXX shall have received a legal opinion from
Xxxx, Xxxxxxx & Xxxxxxxxxxx, LLP, counsel to Lyte Optronics, in substantially
the form attached hereto as Exhibit J-1 and from Nevada counsel to Lyte
Optronics in substantially the form attached hereto as Exhibit J-2.
(d) AFFILIATE AGREEMENTS. Lyte Optronics shall have delivered to
XXX an executed Affiliate Agreement in substantially the form attached hereto as
Exhibit G, executed by each of the Affiliates of Lyte Optronics, which such
Affiliate Agreement shall be in
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full force and effect.
(e) PURCHASER REPRESENTATIVE. A Purchaser Representative, as
defined in Regulation D under the Securities Act, reasonably satisfactory to
XXX, shall be made available to represent each of the shareholders of Lyte
Optronics who are not "accredited" as defined in Regulation D, and such
Purchaser Representative shall have executed documentation reasonably
satisfactory to XXX to reflect such appointment.
(f) NON-COMPETITION AGREEMENTS. Each of the persons listed on
Schedule 7.13 shall have executed and delivered to XXX a Non-Competition
Agreement in the form attached hereto as Exhibit D, and such Non-Competition
Agreements shall not have been terminated or repudiated.
(g) NO DISSENTERS' RIGHTS. XXX shall have received from Lyte
Optronics written evidence that (i) the execution, delivery and performance of
this Agreement and the Agreement of Merger have been duly and validly approved
and authorized by its Board of Directors and (ii) holders of (a) the Lyte
Optronics Class A Common Stock and Lyte Optronics Series A Preferred Stock
voting together as a separate class, (b) the Lyte Optronics Class B Common Stock
voting as a separate class, and (c) the Lyte Optronics Series B 5% Preferred
Stock voting together as a separate series, have approved this Agreement, the
Merger and the transactions contemplated hereby and thereby such that holders of
not more than 5% of the outstanding shares of Lyte Optronics Capital Stock shall
have exercised, or shall have a continuing right to exercise, appraisal,
dissenters' or similar rights under applicable law with respect to their shares
by virtue of the Merger.
(h) NO ADVERSE CHANGE. There shall not have occurred any adverse
change in the business, assets (including intangible assets), liabilities,
financial condition, results of operations or prospects of Lyte Optronics since
the date of this Agreement having a Material Adverse Effect.
(i) EMPLOYMENT WITH XXX. XXX shall be reasonably satisfied that
sufficient employees of Lyte Optronics offered employment by XXX have accepted
or will accept employment with the Surviving Corporation to avoid a Material
Adverse Effect on the business, financial condition or operations of Lyte
Optronics.
(j) POOLING LETTERS. XXX shall have receive a letter from
PricewaterhouseCoopers LLP regarding such firm's concurrence with XXX
management's conclusions as to the appropriateness of pooling of interests
accounting for the Merger under Accounting Principles Board Opinion No. 16
("APB16"), if consummated in accordance with this Agreement. In addition,
immediately prior to the execution and delivery of this Agreement, Lyte
Optronics's accountants shall have provided and immediately prior to the Closing
Lyte Optronics's accountants shall provide, a letter, reasonably satisfactory in
form and substance to XXX, regarding such firm's concurrence with Lyte
Optronics's management's conclusions as to the appropriateness of pooling of
interests accounting for the Merger under APB16 if consummated in accordance
with this Agreement.
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(k) AUDITED FINANCIAL STATEMENTS. Lyte Optronics shall have
delivered to XXX its audited consolidated balance sheet and consolidated
statements of income, shareholder's equity and changes in financial condition
for the fiscal year ended December 31, 1998 (which, together with all Lyte
Optronics Financial Statements delivered pursuant to Section 3.4 above, shall be
deemed to be the "LYTE OPTRONICS FINANCIAL STATEMENTS". The audited Lyte
Optronics Financial Statements at and for the fiscal year ended December 31,
1998 shall be consistent with, and show no adverse changes to, the unaudited
consolidated balance sheet and consolidated statements of income, shareholders'
equity and changes in financial position for the period ended December 31, 1998
delivered by Lyte Optronics pursuant to Section 3.4(a) above.
(l) RESIGNATION OF DIRECTORS. The directors of Lyte Optronics in
office immediately prior to the Effective Time shall have resigned as directors
of the Surviving Corporation effective immediately following the Effective Time.
(m) THIRD PARTY CONSENTS. XXX shall have been furnished with
evidence satisfactory to it that Lyte Optronics has obtained the consents,
approvals and waivers, including but not limited to such consents, approvals and
waivers set forth on Schedule 8.3(m) hereto, required to consummate the Merger
and the transactions contemplated herein (including without limitation any
consents, waivers or approvals required under any Contract to which Lyte
Optronics or any of its Subsidiaries is a party or by which Lyte Optronics or
any of its Subsidiaries or any of their respective assets or properties is bound
and which are necessary in connection with the Merger to transfer to the
Surviving Corporation all rights of Lyte Optronics and its Subsidiaries
thereunder).
(n) CHINA APPROVALS. All approvals required from local, municipal
or central government of China have been obtained in order to consummate the
Merger and the transactions contemplated hereunder.
(o) DUE DILIGENCE AND ENVIRONMENTAL REVIEW. There shall have been
prior to the Closing Date satisfactory completion of the Environmental Review
and a review by XXX and its Representatives of Lyte Optronics's business,
financial, technical and legal affairs.
ARTICLE IX
TERMINATION
9.1 MUTUAL AGREEMENT. Subject to the provisions of Sections 9.2 and 9.3
below, this Agreement may be terminated at any time prior to the Effective Time:
(a) by the mutual written consent of each of the parties hereto;
(b) by XXX or Lyte Optronics if (i) the Effective Time has not
occurred before 5:00 p.m. (Pacific Time) on June 30, 1999 (provided that the
right to terminate this Agreement under this Section 9.1 shall not be available
to any party whose failure to fulfill
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any obligation under this Agreement has been the cause of or resulted in the
failure of the Merger to occur on or before such date); (ii) there shall be a
final nonappealable Order of a federal or state court in effect preventing
consummation of the Merger; or (iii) there shall be any statute, rule,
regulation or order enacted, promulgated or issued or deemed applicable to the
Merger by any governmental entity that would make consummation of the Merger
illegal;
(c) by XXX or Lyte Optronics, if there shall be any action taken,
or any statute, rule, regulation or Order enacted, promulgated or issued or
deemed applicable to the Merger, by any Governmental Body, which would: (i)
prohibit XXX'x or Lyte Optronics's ownership or operation of all or any portion
of the business of Lyte Optronics or (ii) compel XXX or Lyte Optronics to
dispose of or hold separate all or a material portion of the business or assets
of Lyte Optronics or XXX as a result of the Merger;
(d) by XXX, if it is not in material breach of its obligations
under this Agreement and there has been a breach of any representation,
warranty, covenant or agreement contained in this Agreement on the part of Lyte
Optronics and (i) such breach has not been cured within ten (10) business days
after written notice to Lyte Optronics (provided that no cure period shall be
required for a breach which by its nature cannot be cured), and (ii) as a result
of such breach the conditions set forth in Sections 8.3(a), 8.3(b) or 8.3(c), as
the case may be, would not then be satisfied;
(e) by Lyte Optronics, if it is not in material breach of its
obligations under this Agreement and there has been a breach of any
representation, warranty, covenant or agreement contained in this Agreement on
the part of XXX or Sub and (i) such breach has not been cured within ten (10)
business days after written notice to XXX (provided that, no cure period shall
be required for a breach which by its nature cannot be cured), and (ii) as a
result of such breach the conditions set forth in Section 8.2(a) or 8.2(b), as
the case may be, would not then be satisfied, or
(f) by XXX or Lyte Optronics, at any time prior to June 30, 1999,
if it becomes clear that one or more of the conditions to Closing set forth in
Article VIII of the non-terminating party will not be satisfied and is incapable
of being cured by such date, and the terminating party is not in breach of or
default under this Agreement.
It is sufficient for any action taken to terminate this Agreement
pursuant to this Section 9.1 to be authorized by the Board of Directors (as
applicable) of the party taking such action.
9.2 NO LIABILITY. Any termination of this Agreement pursuant to Section
9.1 shall be without further obligation or liability upon any party in favor of
any other party hereto.
9.3 EFFECT OF TERMINATION. The termination of the Agreement pursuant to
Section 9.1 shall cause the Agreement to forthwith become void and there shall
be no liability or obligation on the part of XXX, Sub or Lyte Optronics, or
their respective officers, directors, or stockholders, provided that each party
shall remain liable for any breaches of this Agreement prior to its termination;
and provided further that, the provisions of Sections 7.6 and 7.9 and
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Articles IX and X of this Agreement shall remain in full force and effect and
survive any termination of this Agreement.
9.4 AMENDMENT. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any time
before or after approval of the matters presented in connection with the Merger
by the Lyte Optronics Stockholders, but, after any such approval, no amendment
shall be made which by law requires further approval by such Stockholders
without such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
9.5 EXTENSION; WAIVER. At any time prior to the Effective Time, any
party hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (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 or (iii) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on behalf
of such party.
ARTICLE X
INDEMNIFICATION AND ESCROW
10.1 SURVIVAL OF REPRESENTATIONS. The representations and warranties
made by Lyte Optronics and the Lyte Optronics Principal Stockholders in this
Agreement and the representations and warranties set forth in any certificate
delivered by Lyte Optronics in connection with this Agreement shall survive the
Closing and shall remain in full force and effect and shall survive until the
close of business on the close of the Indemnification Period as provided in
Section 10.5(d) below, and shall survive thereafter only with respect to any
claims made by XXX against the Escrow Fund prior to the end of the
Indemnification Period. The representations, warranties, covenants and
obligations of Lyte Optronics and the Lyte Optronics Principal Stockholders, and
the rights and remedies that may be exercised by the Indemnitees (as defined
herein), shall not be limited or otherwise affected by or as a result of any
information furnished to, or any investigation made by or knowledge of, any of
the Indemnitees or any of their Representatives unless, prior to the Closing,
Lyte Optronics provides written notification to the Chief Financial Officer or
Chief Executive Officer of XXX specifying the fact or facts which caused the
breach of the representation, warranty or covenant, and such Chief Financial
Officer or Chief Executive Officer of XXX acknowledges in writing to Lyte
Optronics that such written notification has been received and accepted and such
breach or default waived. For purposes of this Agreement, each statement or
other item of information set forth in the Lyte Optronics Disclosure Schedule
shall be deemed to be a representation and warranty made by Lyte Optronics and
the Lyte Optronics Principal Stockholders in this Agreement.
10.2 INDEMNIFICATION FROM THE ESCROW FUND.
(a) From and after the Closing Date, XXX, its officers,
directors,
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representatives, agents and Affiliates, including the Surviving Corporation
(each an "INDEMNITEE"), shall be indemnified and held harmless from and against,
and shall be compensated and reimbursed from and up to the Escrow Amount held in
the Escrow Fund as provided below, for any and all claims, losses, Liabilities,
damages, deficiencies, costs and expenses, including reasonable attorneys' fees
and expenses, and expenses of investigation and defense (hereinafter
individually a "LOSS" and collectively "LOSSES") incurred by such Indemnitee
directly or indirectly as a result of any inaccuracy or breach of any
representation, warranty, covenant or agreement of Lyte Optronics or the Lyte
Optronics Principal Stockholders contained herein, or by reason of any
misrepresentation by Lyte Optronics or the Lyte Optronics Principal Stockholders
made in or pursuant to this Agreement or in any certificate delivered by Lyte
Optronics or the Lyte Optronics Principal Stockholders pursuant to this
Agreement, or any Legal Proceeding relating to any inaccuracy, breach or expense
of the type referred to above (including any Legal Proceeding commenced by any
Indemnitee for the purpose of enforcing any of its rights under this Section if
such Indemnitee is the prevailing party in any such Legal Proceeding).
Notwithstanding anything else in this Agreement, from and after the Effective
Time, the liability of Lyte Optronics and the Lyte Optronics Principal
Stockholders hereunder shall be limited exclusively to the Escrow Amount
deposited in the Escrow Fund, provided, however, that nothing herein shall limit
the liability of Lyte Optronics or the Lyte Optronics Stockholders for any
breach of any representation, warranty or covenant if the Merger does not close.
(b) No claim shall be made by any Indemnitee against the Escrow
Fund unless and until the aggregate Losses incurred by all Indemnitees
collectively exceeds the sum of One Hundred Fifty Thousand Dollars ($150,000),
and then to the full extent of all Losses from the first One Hundred Thousand
Dollars ($100,000). XXX and Lyte Optronics each acknowledge that such Losses, if
any, would relate to unresolved contingencies existing at the Effective Time,
which if resolved at the Effective Time would have led to a reduction in the
aggregate merger consideration received by the Lyte Optronics Stockholders
hereunder.
(c) If the Surviving Corporation suffers, incurs or otherwise
becomes subject to any Losses as a result of or in connection with any
inaccuracy in or breach of any representation, warranty, covenant or obligation,
then (without limiting any of the rights of the Surviving Corporation as an
Indemnitee) XXX shall also be deemed, by virtue of its ownership of the stock of
the Surviving Corporation, to have incurred Losses as a result of and in
connection with such inaccuracy or breach.
10.3 NO CONTRIBUTION. No right of contribution, right of indemnity or
other right or remedy shall be exercised or asserted, or attempted to be
exercised or asserted, against the Surviving Corporation by the Lyte Optronics
Stockholders in connection with any indemnification obligation or any other
liability which may be paid or satisfied from the Escrow Fund.
10.4 DEFENSE OF THIRD PARTY CLAIMS. In the event of the assertion or
commencement by any Person of any claim or Legal Proceeding (whether against the
Surviving Corporation, against XXX or against any other Person) with respect to
which any Indemnitee
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may be entitled to indemnification hereunder, the procedure set forth below
shall be followed.
(a) NOTICE. XXX shall give prompt written notice to the
Stockholder Representative (as defined in Section 10.6 below) and to Xxxx,
Xxxxxxx & Xxxxxxxxxxx, LLP of the commencement of any such Legal Proceeding
against XXX or the Surviving Corporation for which indemnity may be sought under
this Article X; provided, however, that any failure on the part of XXX to so
notify the Stockholder Representative or Xxxx, Xxxxxxx & Xxxxxxxxxxx, LLP shall
not limit any of the obligations of the Lyte Optronics Stockholders under this
Article X unless the ability to defend such claim is materially prejudiced by
such failure or delay. The Indemnification Period shall be tolled solely with
respect to a particular claim for the period beginning on the date the
Stockholder Representative receives written notice of that claim until the final
resolution of such claim so long as such claim is made within the
Indemnification Period.
(b) DEFENSE OF CLAIM. The Indemnitee shall have the right to be
represented by counsel of its choice and to defend or otherwise control the
handling of any claim, or Legal Proceeding for which indemnity is sought. If the
Indemnitee so proceeds with the defense of any such claim or Legal Proceeding:
(i) all expenses relating to the defense of such claim or
Legal Proceeding (whether or not incurred by the Indemnitee) shall be borne and
paid exclusively from and out of the Escrow Fund;
(ii) the Stockholder Representative shall make available
to the Indemnitee any non-privileged documents and materials in the possession
or control of the Lyte Optronics Stockholders that may be necessary to the
defense of such claim or Legal Proceeding except for documents or materials
which are sealed by a court Order or are subject to a nondisclosure agreement
prohibiting disclosure by the Lyte Optronics Stockholders;
(iii) the Indemnitee shall keep the Stockholder
Representative informed of all material developments and events relating to such
claim or Legal Proceeding;
(iv) the Stockholder Representative shall have the right
to participate in the defense of such claim or legal proceeding at his or her
sole cost and expense; and
(v) the Indemnitee shall have the right to settle, adjust
or compromise such claim or Legal Proceeding with the written consent of the
Stockholder Representative; provided, however, that the Stockholder
Representative shall not unreasonably withhold such consent.
10.5 ESCROW FUND.
(a) CREATION OF ESCROW FUND. As soon as practicable after the
Effective Time, XXX shall deposit the Escrow Amount with an institution
acceptable to XXX and the Stockholder Representative as escrow agent (the
"ESCROW AGENT"), such deposit to
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constitute an escrow fund (the "ESCROW FUND") to be governed by the terms set
forth herein and in an escrow agreement (the "INDEMNITY ESCROW AGREEMENT") in
substantially the form attached hereto as Exhibit K. The Escrow Amount shall be
withheld on a pro rata basis from the Lyte Optronics Stockholders who otherwise
are entitled to such amounts at the Effective Time and shall be comprised of
shares of XXX Common Stock and XXX Preferred Stock which have vested in such
shareholder to the maximum extent possible. The Escrow Fund shall be available
as the sole source to compensate the Indemnitees for any Losses incurred by any
Indemnitee directly or indirectly as a result of any inaccuracy of or breach by
Lyte Optronics or the Lyte Optronics Principal Stockholders of any
representation, warranty, covenant or agreement contained herein, or by reason
of any misrepresentation by Lyte Optronics or the Lyte Optronics Principal
Stockholders made in or pursuant to this Agreement (including the Lyte Optronics
Disclosure Schedule) or in any certificate delivered by Lyte Optronics or the
Lyte Optronics Principal Stockholders pursuant to this Agreement.
(b) PROTECTION OF AND ADDITIONS TO THE ESCROW FUND; VOTING
RIGHTS.
(i) The Escrow Agent shall hold and safeguard the Escrow
Fund during the Indemnification Period, shall treat such fund as a trust fund in
accordance with the terms of this Agreement and not as the property of XXX or
Lyte Optronics's shareholders and shall hold and dispose of the Escrow Fund only
in accordance with the terms hereof.
(ii) Any shares of XXX Common Stock or other equity
securities issued or distributed by XXX (including shares issued upon a stock
split) ("NEW SHARES") in respect of XXX Common Stock in the Escrow Fund which
have not been released from the Escrow Fund shall be added to the Escrow Fund
and become a part thereof. New Shares issued in respect of shares of XXX Common
Stock which have been released from the Escrow Fund shall not be added to the
Escrow Fund but shall be distributed to the holders of record thereof. Cash
dividends on XXX Common Stock shall not be added to the Escrow Fund but shall be
distributed to the holders of record thereof.
(iii) Each Lyte Optronics Stockholder shall have voting
rights with respect to the shares of XXX Common Stock contributed to the Escrow
Fund by such stockholder (and on any New Shares added to the Escrow Fund in
respect of such shares of XXX Common Stock).
(c) VALUE OF THE ESCROW AMOUNT. All payments made to XXX from the
Escrow Fund shall be made of XXX Common Stock and XXX Preferred Stock, pro rata,
pursuant to the total aggregate value of all such securities deposited into the
Escrow Fund determined as set forth below. For the purposes of determining the
number of shares of XXX Common Stock and XXX Preferred Stock to be delivered to
XXX out of the Escrow Fund pursuant to this Article X, each share of XXX Common
Stock shall be valued at the average price of a share of XXX Common Stock, as
reported on the NASDAQ National Market for the fifteen consecutive trading days
ending on the second trading day immediately prior to the release of such Escrow
Amount from the Escrow Fund, and each share of XXX Preferred Stock shall be
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valued at its liquidation value plus any accrued but unpaid dividends thereon.
At the time of any release of any portion of the Escrow Amount to satisfy a
claim of an Indemnitee, XXX and the Stockholder Representative shall certify
such fair market value in a certificate signed by both XXX and the Stockholder
Representative, and shall deliver such certificate to the Escrow Agent.
(d) DISTRIBUTIONS FROM THE ESCROW FUND. The Escrow Fund shall be
in existence immediately following the Effective Time and shall terminate at
5:00 p.m. California time, on the date which is one year following the Closing
Date as to all representations, warranties and covenants of Lyte Optronics and
the Lyte Optronics Principal Stockholders except for those representations
related to matters expected to be encountered in the audit process, as to which
the Escrow Fund shall terminate on the earlier of (i) one year following the
Closing Date or (ii) the date of the auditor's report for the audit of XXX'x
financial statements for the year ending December 31, 1999, which includes the
results of Lyte Optronics (the "INDEMNIFICATION PERIOD"); provided, that the
Indemnification Period shall not terminate with respect to such amount that is
equal to the good faith estimate of the value of any claims made and pending as
of the Indemnification Period by XXX pursuant to this Article X until the
resolution of all such claims; and provided, further, that the Escrow Fund will
terminate in full upon final and complete resolution of all claims. Deliveries
of Escrow Amounts consisting of XXX Common Stock to the Lyte Optronics
Stockholders pursuant to this Section 10.5(d) shall be made to the former
holders of the Lyte Optronics Class A Common Stock, Lyte Optronics Class B
Common Stock and Lyte Optronics Series A Convertible Preferred Stock in
proportion to their respective original contributions of XXX Common Stock to the
Escrow Fund. Deliveries of Escrow Amounts consisting of XXX Preferred Stock to
the Lyte Optronics Stockholders pursuant to this Section 10.5(d) shall be made
to the former holders of the Lyte Optronics Series B 5% Preferred Stock in
proportion to their respective original contributions of XXX Preferred Stock to
the Escrow Fund. Provided, however, that if any of the shares in escrow are
subject to a repurchase right in favor of Lyte Optronics upon termination of
services to Lyte Optronics, then such shares shall not be distributed to the
applicable shareholder but in lieu thereof shall (to the extent not already
repurchased in the event of prior termination of services) be delivered to the
appropriate Escrow Agent who is authorized to hold such shares for the benefit
of Lyte Optronics in the event of a future termination of services to Lyte
Optronics.
(e) CLAIMS UPON THE ESCROW FUND.
(i) Upon receipt by the Escrow Agent at any time on or
before the last day of the Indemnification Period of a certificate signed by any
officer of XXX (the "OFFICER'S Certificate"): (A) stating that XXX has paid or
properly accrued or reasonably anticipates that it will have to pay or accrue
Losses, and (B) specifying in reasonable detail the individual items of Losses
included in the amount so stated, the date each such item was paid or properly
accrued, or the basis for such anticipated liability, and the nature of the
misrepresentation, breach of warranty or covenant to which such item is related,
the Escrow Agent shall, subject to the provisions of Section 10.5(d) hereof,
deliver to XXX out of the Escrow Fund, as promptly as practicable, shares of XXX
Common Stock and XXX Preferred Stock held in the Escrow Fund in an amount equal
to any Losses incurred or accrued by XXX, valued as provided in Section 10(c).
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(ii) At the time of delivery of any Officer's Certificate
to the Escrow Agent, a duplicate copy of such certificate shall be delivered to
the Stockholder Representative and Xxxx Xxxxxxx and Xxxxxxxxxxx, and for a
period of thirty (30) days after such delivery, the Escrow Agent shall make no
delivery to XXX of any Escrow Amounts pursuant to Section 10.5(d) hereof unless
the Escrow Agent shall have received written authorization from the Stockholder
Representative to make such delivery. After the expiration of such thirty (30)
day period, the Escrow Agent shall make delivery of shares of XXX Common Stock
and XXX Preferred Stock from the Escrow Fund in accordance with this Section
10.5, provided that no such payment or delivery may be made if the Stockholder
Representative shall object in a written statement to the claim made in the
Officer's Certificate, and such statement shall have been delivered to the
Escrow Agent prior to the expiration of such thirty (30) day period. Any
objection made to a claim made by or on behalf of XXX shall be resolved as
provided in the Indemnity Escrow Agreement.
(f) FEES. All fees of the Escrow Agent for performance of its
duties hereunder shall be paid by XXX. It is understood that the fees and usual
charges agreed upon for services of the Escrow Agent shall be considered
compensation for ordinary services as contemplated by this Agreement. In the
event that the conditions of this Agreement are not promptly fulfilled, or if
the Escrow Agent renders any service not provided for in this Agreement, or if
the parties request a substantial modification of its terms, or if any
controversy arises, or if the Escrow Agent is made a party to, or intervenes in,
any litigation pertaining to this escrow or its subject matter, the Escrow Agent
shall be reasonably compensated for such extraordinary services and reimbursed
for all costs, attorneys' fees, and expenses occasioned by such default, delay,
controversy or litigation.
(g) EXCLUSIVE REMEDY. Except for acts constituting fraud,
intentional misrepresentation or other willful misconduct, the Escrow Fund
provided for in this Article X shall represent the exclusive remedy in respect
of any claim for indemnity or breach of this Agreement by Lyte Optronics or its
shareholders following the Closing.
10.6 STOCKHOLDER REPRESENTATIVE.
(a) APPOINTMENT OF STOCKHOLDER REPRESENTATIVE. By virtue of their
approval of this Agreement, the Lyte Optronics Stockholders will be deemed to
have irrevocably constituted and appointed, effective as of the Effective Time,
Xxxxx Xxxxxx and Xxxxxx Xxxx (together with their permitted successors,
collectively the "STOCKHOLDER REPRESENTATIVE"), as their true and lawful agent
and attorney-in-fact for each shareholder of Lyte Optronics to enter into any
agreement in connection with the transactions contemplated by this Agreement or
the Indemnity Escrow Agreement, to exercise all or any of the powers, authority
and discretion conferred on him under any such agreement, to waive any terms and
conditions of any such agreement (other than the payment of the Escrow Amount),
to give and receive notices and communications, to authorize delivery to XXX of
the Escrow Amount or other property from the Escrow Fund in satisfaction of
claims by XXX, to object to such deliveries, to agree to, negotiate, enter into
settlements and compromises of, and demand arbitration and comply with Orders of
courts and awards of arbitrators with respect to such claims, and to take all
actions necessary or
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appropriate in the judgment of the Stockholder Representative for the
accomplishment of the foregoing. Such agency may be changed by the holders of a
majority in interest of the Escrow Fund from time to time upon not less than
thirty (30) days' prior written notice to XXX; provided that the Stockholder
Representative may not be removed unless holders of a two-thirds interest of the
Escrow Fund agree to such removal and to the identity of the substituted agent.
Any vacancy in the position of Stockholder Representative may be filled by
approval of the holders of a majority in interest of the Escrow Fund. No bond
shall be required of the Stockholder Representative, and the Stockholder
Representative shall receive no compensation for his or her services. Notices or
communications to or from the Stockholder Representative shall constitute notice
to or from each of the Lyte Optronics Stockholders. This power of attorney is
coupled with an interest and is irrevocable.
(b) NO LIABILITY OF STOCKHOLDER REPRESENTATIVE. The Stockholder
Representative shall not be liable for any act done or omitted hereunder as
Stockholder Representative while acting in good faith and not in a manner
constituting gross negligence, and any act done or omitted pursuant to the
advice of counsel shall be conclusive evidence of such good faith. The Lyte
Optronics Stockholders shall severally indemnify the Stockholder Representative
and hold the Stockholder Representative harmless against any loss, liability or
expense incurred without gross negligence or bad faith on the part of such
Stockholder Representative and arising out of or in connection with the
acceptance or administration of the Stockholder Representative's duties
hereunder. Subject to the prior right of XXX to make claims for Losses, the
Stockholder Representative shall have the right to recover from the Escrow Fund
prior to any distribution to the shareholders of Lyte Optronics for any third
party expenses incurred by the Stockholder Representative in performing his or
her duties hereunder.
(c) ACTIONS OF THE STOCKHOLDER REPRESENTATIVE. A decision, act,
consent, or instruction of the Stockholder Representative shall constitute a
decision of all the shareholders for whom a portion of the Escrow Amount
otherwise issuable to them are deposited in the Escrow Fund and shall be final,
binding and conclusive upon each of such shareholders, and the Escrow Agent and
XXX may rely upon any such decision, act, consent or instruction of the
Stockholder Representative as being the decision, act, consent or instruction of
each and every such shareholder of Lyte Optronics. The Escrow Agent and XXX are
hereby relieved from any liability to any person for any acts done by them in
accordance with such decision, act, consent or instruction of the Stockholder
Representative.
(d) THIRD-PARTY CLAIMS. In the event XXX becomes aware of a
third-party claim which XXX intends to assert for a demand against the Escrow
Fund, XXX shall notify the Stockholder Representative of such claim and the
Stockholder Representative shall have the right to appoint counsel to
participate in such matter at the cost of the shareholders of Lyte Optronics.
XXX shall have the right in its sole discretion to settle any such claim;
provided, however, that except with the consent of the Stockholder
Representative, no settlement of any such claim with third-party claimants shall
alone be determinative of the amount of any claim against the Escrow Fund.
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ARTICLE XI
GENERAL PROVISIONS
11.1 NOTICES. Any notice provided for or permitted under this Agreement
will be treated as having been received (a) when delivered personally, (b) when
sent by confirmed telex or telecopy, (c) one (1) day following when sent by
commercial overnight courier with written verification of receipt, or (d) three
(3) days following when mailed postage prepaid by certified or registered mail,
return receipt requested, to the party to be notified, at the address set forth
below, or at such other place of which the other party has been notified in
accordance with the provisions of this Section 11.1.
Lyte Optronics: Lyte Optronics, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxx
With copy to: Xxxx, Xxxxxxx & Xxxxxxxxxxx, LLP
000000 Xxxxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx X. Xxxx, Esq.
Xxxxxxx X. Xxxxxxx, Esq.
AXT or Sub: American Xtal Technology, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxxx
With copy to: Xxxx Xxxx Xxxx & Freidenrich LLP
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
Stockholder Xxxxx Xxxxxx
Representative: Xxxxxx Xxxx
0000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
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With copy to: Xxxx, Xxxxxxx & Xxxxxxxxxxx, LLP
000000 Xxxxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx X. Xxxx, Esq.
Xxxxxxx X. Xxxxxxx, Esq.
11.2 GOVERNING LAWS. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof. Each of the parties hereto hereby agrees that process may be served
upon them in any manner authorized by the laws of the State of California for
such persons and waives and covenants not to assert or plead any objection which
they might otherwise have to such jurisdiction and such process. Each party
hereby agrees that such courts, as applicable, shall have in personam
jurisdiction with respect to such party, and such party hereby submits to the
personal jurisdiction of such courts.
11.3 NO ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any
right, interest, or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other parties hereto and any attempt to
do so shall be void. Subject to the preceding sentence, this Agreement is
binding upon, inures to the benefit of and is enforceable by the parties hereto
and their respective successors and assigns.
11.4 SEVERABILITY. If any provision of this Agreement, or the
application thereof, shall 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 shall be interpreted so as best to reasonably
effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision which will achieve, to the extent possible, the economic,
business and other purposes of the void or unenforceable provision.
11.5 ENTIRE AGREEMENT. This Agreement, the exhibits and schedules
hereto, the documents referenced herein, and the exhibits and schedules thereto,
constitute the entire understanding and agreement of the parties hereto with
respect to the subject matter hereof and thereof and supersede all prior and
contemporaneous agreements or understandings, inducements or conditions, express
or implied, written or oral, between the parties with respect hereto and
thereto. The express terms hereof control and supersede any course of
performance or usage of the trade inconsistent with any of the terms hereof.
11.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original as against any party whose
signature appears thereon and all of which together shall constitute one and the
same instrument. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as signatories.
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11.7 OTHER REMEDIES. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party shall be deemed cumulative with
and not exclusive of any other remedy conferred hereby or by law on such party,
and the exercise of any one remedy shall not preclude the exercise of any other.
11.8 SURVIVAL OF AGREEMENTS. Subject to Section 10.1 and 10.5, all
covenants, agreements, representations and warranties made herein shall survive
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby notwithstanding any investigation of the
parties hereto.
11.9 NO WAIVER. The failure of any party to enforce any of the
provisions hereof shall not be construed to be a waiver of the right of such
party thereafter to enforce such provisions.
11.10 ATTORNEYS' FEES. Should suit be brought to enforce or interpret
any part of this Agreement, the prevailing party shall be entitled to recover,
as an element of the costs of suit and not as damages, reasonable attorneys'
fees to be fixed by the court (including without limitation, costs, expenses and
fees on any appeal). The prevailing party shall be the party entitled to recover
its costs of suit, regardless of whether such suit proceeds to final judgment. A
party not entitled to recover its costs shall not be entitled to recover
attorneys' fees. No sum for attorneys' fees shall be counted in calculating the
amount of a judgment for purposes of determining if a party is entitled to
recover costs or attorneys' fees.
11.11 TIME. Time is of the essence of this Agreement.
11.12 CONSTRUCTION OF AGREEMENT; INTERPRETATION. This Agreement has been
negotiated by the respective parties hereto and their attorneys and the language
hereof shall not be construed for or against any party.
11.13 NO JOINT VENTURE. Nothing contained in this Agreement shall be
deemed or construed as creating a joint venture or partnership between any of
the parties hereto. No party is by virtue of this Agreement authorized as an
agent, employee or legal representative of any other party. No party shall have
the power to control the activities and operations of any other and their status
is, and at all times, will continue to be, that of independent contractors with
respect to each other. No party shall have any power or authority to bind or
commit any other. No party shall hold itself out as having any authority or
relationship in contravention of this Section 11.13.
11.14 FURTHER ASSURANCES. 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 better evidence and reflect the transactions described herein
and contemplated hereby and to carry into effect the intents and purposes of
this Agreement.
11.15 ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. No provisions of this
Agreement are intended, nor shall be interpreted, to provide or create any third
party beneficiary
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rights or any other rights of any kind in any client, customer, affiliate,
shareholder, partner of any party hereto or any other person or entity unless
specifically provided otherwise herein, and, except as so provided, all
provisions hereof shall be personal solely between the parties to this
Agreement.
11.16 ARBITRATION. Each party agrees that any dispute arising out of or
relating to this Agreement not otherwise covered by Article X hereof shall be
settled by (i) agreement of the Stockholder Representative and XXX or (ii)
arbitration in Fremont, California and, except as herein specifically stated, in
accordance with the commercial arbitration rules of the American Arbitration
Association ("AAA RULES") then in effect. However, in all events, these
arbitration provisions shall govern over any conflicting rules which may now or
hereafter be contained in the AAA Rules. Any judgment upon the award rendered by
the arbitrator may be entered in any court having jurisdiction over the subject
matter thereof. The arbitrator shall have the authority to grant any equitable
and legal remedies that would be available in any judicial proceeding instituted
to resolve such dispute.
(a) COMPENSATION OF ARBITRATOR. Any such arbitration shall be
conducted before a single arbitrator who shall be compensated for his or her
services at a rate to be determined by the parties or by the American
Arbitration Association, but based upon reasonable hourly or daily consulting
rates for the arbitrator in the event the parties are not able to agree upon his
or her rate of compensation.
(b) SELECTION OF ARBITRATOR. The AAA Rules for the selection of
the arbitrator shall be followed by XXX and the Stockholder Representative.
(c) PAYMENT OF COSTS. XXX shall pay fifty percent (50%) of the
initial compensation to be paid to the arbitrator in any such arbitration and
fifty percent (50%) of the costs of transcripts and other normal and regular
expenses of the arbitration proceedings, and the remaining fifty percent (50%)
shall be paid from the Escrow Fund; provided, however, that the prevailing party
in any arbitration shall be entitled to an award of attorneys' fees and costs,
and all costs of arbitration, other than those provided for above, will be paid
by XXX if it is the losing party and otherwise from the Escrow Fund.
(d) DISCOVERY. The parties shall be entitled to conduct discovery
proceedings in accordance with the provisions of the Federal Rules of Civil
Procedure, only to the extent the arbitrator considers necessary to a full and
fair exploration of the issues in dispute.
(e) BURDEN OF PROOF. For any claim submitted to arbitration, the
burden of proof shall be as it would be if the claim were litigated in a
judicial proceeding.
(f) JUDGMENT. Upon the conclusion of any arbitration proceedings
hereunder, the arbitrator shall render findings of fact and conclusions of law
and a written opinion setting forth the basis and reasons for any decision
reached by him and shall deliver such documents to each party to this Agreement
along with a signed copy of the award.
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(g) TERMS OF ARBITRATION. The arbitrator chosen in accordance
with these provisions shall not have the power to alter, amend or otherwise
affect the terms of these arbitration provisions or the provisions of this
Agreement.
11.17 SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, in addition to any other remedy to which they
are entitled at law or in equity.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized respective officers, all as of the date first
set forth above.
AMERICAN XTAL TECHNOLOGY, INC. LYTE OPTRONICS , INC.
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxx Xxxxxx
------------------------------------- -------------------------------------
Xxxxxx X. Xxxxx Xxxxx Xxxxxx
President and Chief Executive Officer Chief Executive Officer
MONTEREY ACQUISITION CORP. STOCKHOLDER REPRESENTATIVE:
By: /s/ Xxxxxx X. Xxxxx /s/ Xxxxx Xxxxxx
------------------------------------- -------------------------------------
Xxxxxx X. Xxxxx Xxxxx Xxxxxx
President
/s/ Xxxxxx Xxxx
-------------------------------------
Xxxxxx Xxxx
[SIGNATURE PAGE FOR AGREEMENT AND PLAN OF REORGANIZATION]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized respective officers, all as of the date first
set forth above.
By: /s/ Xxxxx Xxxxxx
-------------------------------------
Xxxxx Xxxxxx
Shares beneficially owned:
______ shares of Lyte Optronics Class A
Common Stock
______ shares of Lyte Optronics Class B
Common Stock
______ shares of Lyte Optronics Series A
Preferred Stock
______ shares of Lyte Optronics Series B 5%
Preferred Stock
By: /s/ Xxxxxx Xxxx
-------------------------------------
Xxxxxx Xxxx
Shares beneficially owned:
______ shares of Lyte Optronics Class A
Common Stock
______ shares of Lyte Optronics Class B
Common Stock
______ shares of Lyte Optronics Series A
Preferred Stock
______ shares of Lyte Optronics Series B 5%
Preferred Stock
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INDEX TO EXHIBITS
EXHIBIT A DELAWARE CERTIFICATE OF MERGER
EXHIBIT B NEVADA MERGER AGREEMENT
EXHIBIT C STOCKHOLDER VOTING AGREEMENT AND IRREVOCABLE PROXY
EXHIBIT D NON-COMPETITION AGREEMENT
EXHIBIT E STOCKHOLDER QUESTIONNAIRE
EXHIBIT F REGISTRATION RIGHTS AGREEMENT
EXHIBIT G LYTE OPTRONICS AFFILIATE AGREEMENT
EXHIBIT H XXX AFFILIATE AGREEMENT
EXHIBIT I XXXX XXXX LEGAL OPINION
EXHIBIT J-1 XXXX XXXXXXX LEGAL OPINION
EXHIBIT J-2 NEVADA COUNSEL LEGAL OPINION
EXHIBIT K INDEMNITY ESCROW AGREEMENT
EXHIBIT L CERTIFICATE OF DETERMINATION
