EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
DATED AS OF MARCH 14, 2002
BY AND AMONG
SECURITY BIOMETRICS, INC.,
LT ACQUISITION CORP.
LIGHTEC COMMUNICATIONS, INC.,
XXXXXXXX XXXXXXX
AND
XXXXXXX XXXXXXX
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER dated as of March 14, 2002 (this "Agreement")
is made and entered into by and among SECURITY BIOMETRICS, INC., a Nevada
corporation ("Biometrics"), LT ACQUISITION CORP., a New York corporation
("Newco"), LIGHTEC COMMUNICATIONS INC., a New York corporation ("Lightec"),
XXXXXXXX XXXXXXX ("M.A. Xxxxxxx") and XXXXXXX XXXXXXX (M.A. Xxxxxxx and Xxxxxxx
Xxxxxxx being referred to collectively as the "Xxxxxxxx").
WHEREAS, Newco is a wholly owned subsidiary of Biometrics;
WHEREAS, M.A. Xxxxxxx is the sole shareholder of Lightec;
WHEREAS, Xxxxxxx Xxxxxxx is the husband of M.A. Xxxxxxx and President and Chief
Executive Officer of Lightec;
WHEREAS, Biometric's and Newco's willingness and agreement to enter into this
Agreement are expressly conditioned upon Xxxxxxx Xxxxxxx executing and
delivering this Agreement and agreeing to be bound by the provisions hereof. The
Xxxxxxxx hereby acknowledge and agree that Biometric and Newco are entering into
this Agreement in reliance on (among other things) Xxxxxxx
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Richard's executing this Agreement and agreeing to be bound by the provisions
hereof and that, absent such agreement and execution by Xxxxxxx Xxxxxxx,
Biometrics and Newco would not enter into this agreement or consummate this
transaction;
WHEREAS, the Boards of Directors of Newco and Lightec have approved the merger
of Lightec with and into Newco on the terms set forth in this Agreement (the
"Merger").
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows.
ARTICLE 1.
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions of this Agreement,
effective as of the Effective Time (as defined below) in accordance with the
Business Corporation Law of New York (the "BCL"), Lightec shall be merged with
and into Newco. In its capacity as the surviving corporation in the Merger,
Newco is hereinafter sometimes referred to as the "Surviving Corporation."
1.2 Effective Time of the Merger. The Merger shall be effective upon filing (the
"Effective Time") of a Certificate of Merger in a form mutually acceptable to
Newco, Lightec and the Xxxxxxxx with the Secretary of State of the State of New
York in accordance with the BCL (the "Merger Filing"). The Merger Filing shall
take place simultaneously with or as soon as practicable after the closing of
the transactions contemplated by this Agreement. The parties acknowledge that it
is their mutual desire and intent to consummate the Merger as soon as
practicable after the date hereof. Accordingly, the parties shall, subject to
the provisions hereof, use commercially reasonable efforts to consummate, as
soon as practicable, the transactions contemplated by this Agreement.
1.3 Effects of the Merger. If the Closing shall occur, at and as of the
Effective Time, the separate corporate existence of Lightec shall cease, Newco
shall continue its existence under the laws of the State of New York, and the
Merger shall have the effects set forth in the applicable sections of the BCL.
Without
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limiting the generality of the foregoing or the effect or scope of any of the
representations, warranties and covenants contained herein, and subject thereto,
if the Closing shall occur, the parties acknowledge and agree that
notwithstanding the Effective Time: (i) the profits and losses of Lightec's
operations from and after March 14, 2002 shall be for the account of Newco; (ii)
except as otherwise expressly provided herein, all the property, rights,
privileges, powers, franchises and other assets of Lightec at and as of March
14, 2002 shall vest in the Surviving Corporation effective as of the Effective
Time, and all the debts, liabilities, obligations and duties of Newco and
Lightec at and as of March 14, 2002 shall become the debts, liabilities,
obligations and duties of the Surviving Corporation; and (iii) the Xxxxxxxx
shall cause Lightec to file, prior to the due dates thereof, final federal and
state income tax returns for all periods prior to March 14, 2002 and shall be
responsible for all income taxes due thereon. At or as soon as practicable after
the Effective Time, Newco shall change its name to Lightec Communications Corp.
1.4 Closing. Consummation of the transactions contemplated by this Agreement
shall take place at the offices of Xxxxx Rabbach & Xxxxxxxxx, LLP, 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, commencing at 9:00 a.m., local time, on or
about June 13, 2002, or as soon as practicable after the last to be fulfilled or
waived of the conditions set forth in Articles 6 and 7, or at such other place,
time and date as shall be fixed by mutual agreement between Biometrics, Lightec
and M.A. Xxxxxxx (but in any event shall be effective as of the Effective Time
as set forth above). The day on which the Closing shall occur shall be referred
to herein as the "Closing Date." Each party will use its reasonable best efforts
to cause to be prepared, executed and delivered the documents to be delivered
pursuant to Articles 6 and 7 and all other appropriate and customary documents
as any party or its counsel may reasonably request and to secure all consents
and approvals for the purpose of consummating the transactions contemplated by
this Agreement. All actions taken at the Closing shall be deemed to have been
taken simultaneously at the time the last of any such actions is taken or
completed.
1.5 Articles of Incorporation. The articles of incorporation of Newco as in
effect immediately before the Effective Time shall be the articles of
incorporation of the Surviving Corporation after the Effective Time until
thereafter amended in accordance with their terms and as provided in the BCL.
1.6 Bylaws. The bylaws of Newco as in effect immediately prior to the Effective
Time shall be the bylaws of the Surviving
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Corporation after the Effective Time until thereafter amended in accordance with
their terms, the articles of incorporation of the Surviving Corporation and the
BCL.
1.7 Directors. The directors of Newco immediately before the Effective Time
shall be the directors of the Surviving Corporation, and such directors shall
serve in accordance with the bylaws of the Surviving Corporation until their
respective successors are duly elected or appointed and qualified.
1.8 Officers. The officers of Newco in office immediately before the Effective
Time shall be the officers of the Surviving Corporation after the Effective
Time, and such officers shall serve in accordance with the bylaws of the
Surviving Corporation until their respective successors are duly elected or
appointed and qualified.
ARTICLE 2.
MERGER CONSIDERATION
2.1 Cancellation of Shares. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time, automatically by virtue of the Merger and
without any further action on the part of any party hereto or the holders of any
of the following securities:
(a) All of the common share of Lightec, no par value (the "Lightec Stock")
issued and outstanding immediately before the Effective Time shall be cancelled,
extinguished and converted into and become the right to receive an aggregate (a)
16,000,000 shares of common stock of Biometrics ("Biometrics Common Stock") (the
"Stock Consideration"); (b) $3,000,000 in cash payable as follows: $1,250,000 by
prepayment to M. A. Xxxxxxx xxxxx to the date hereof, receipt of which is hereby
acknowledged by M. A. Xxxxxxx, and $1,750,000 by certified, official bank or
attorney escrow account check(s), or by wire transfer of immediately available
funds, to M. A. Xxxxxxx; and (c) a promissory note for $1,000,000 in the form
and substance annexed hereto as Exhibit A (the "Note") collectively, the "Merger
Consideration").
(b) Each share of Newco's capital stock issued and outstanding immediately
before the Effective Time shall be converted into one share of common stock of
the Surviving Corporation.
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(c) As a result of the actions described in Section 2.1(a), all Lightec Stock
issued and outstanding immediately before the Effective Time shall cease to be
outstanding and shall automatically be cancelled and retired, and each
certificate ("Certificate") previously evidencing such Lightec Stock shall
thereafter solely represent the right to receive the Merger Consideration. At
the Effective Time, the holders of Certificates for Lightec Stock shall cease to
have any rights with respect to such Lightec Stock except as otherwise provided
herein or by law.
(d) At the Closing the Merger Consideration shall be delivered to M.A. Xxxxxxxx
and M.A. Xxxxxxxx shall deliver one or more Certificates evidencing all of the
outstanding Lightec Stock duly endorsed in blank.
(e) As security for repayment of the Note and all obligations thereunder, the
parties agree to cause the Surviving Corporation to grant to M.A. Xxxxxxx a
security interest in and to all of the Surviving Corporation's (i) accounts;
(ii) deposit accounts; (iii) investment property; (iv) letter-of-credit rights
and letters of credit; (v) rights to payment evidenced by chattel paper or an
instrument; (vi) rights to payment for money or funds advanced or sold; and
(vii) all proceeds of any and all of the foregoing, pursuant to a Security
Agreement in form and substance of Exhibit B hereto.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF LIGHTEC AND THE XXXXXXXX
3.1 Lightec. Lightec and each of the Xxxxxxxx, jointly and severally, hereby
represent and warrant to Biometrics and Newco that:
3.1.1 Organization and Good Standing. At the Effective Time, Lightec will be a
so called "Subchapter C" corporation duly organized, validly existing and in
good standing under the laws of the State of New York. Lightec does not own any
equity, profit sharing participation or other ownership interest in any
corporation, partnership, limited liability company, or other entity.
3.1.2 Foreign Qualification. Except as set forth on Schedule 3.1.2 hereto,
Lightec is duly qualified or licensed to do business and is in good standing in
every jurisdiction in which its business or the ownership of its assets requires
it to be so
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qualified or licensed, except where the failure to be so qualified or licenses
would not have a material adverse effect on Lightec.
3.1.3 Power and Authority. (a) Lightec has the corporate power and authority to
own, lease and operate its properties and assets and to carry on its business as
currently being conducted; and
(b) The Xxxxxxxx each have the power and authority to execute and deliver
this Agreement and to perform their respective obligations hereunder.
3.1.4. Binding Effect. This Agreement has been duly executed and delivered by
the Xxxxxxxx and is the legal, valid and binding obligation of the Xxxxxxxx, as
their respective obligations are set forth herein, enforceable in accordance
with its terms, except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights generally;
(b) the availability of equitable remedies may be limited by
equitable principles of general applicability; and
(c) rights to indemnification may be limited by considerations of
public policy.
3.1.5 Absence of Restrictions and Conflicts. A. The execution, delivery and
performance of this Agreement and the fulfillment of and compliance with the
terms and conditions of this Agreement do not and will not, with the passing of
time or the giving of notice, or both, violate or conflict with, constitute a
breach of or default under, result in the loss of any material benefit under, or
give rise to any right of termination or permit the acceleration or modification
of any obligation under, (i) any term or provision of the Articles of
Incorporation of Lightec, (ii) except as set forth in Schedule 3.1.5, any
Contract (as defined in Section 3.1.12), (iii) any judgment, decree or order of
any court or governmental authority or agency to which the Xxxxxxxx, Lightec, or
any of their respective properties is bound, or (iv) any statute, law,
regulation or rule applicable to the Xxxxxxxx or Lightec.
B. No consent, approval, order or authorization of, or registration,
declaration or filing with, (i) any governmental
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agency or public or regulatory unit, agency, body or authority, or (ii) any
other person or entity, is required in connection with the execution, delivery
or performance of this Agreement by the Xxxxxxxx or Lightec, or as a condition
to the continuing realization of material benefits under, and the enforceability
of, any Contract (as defined in Section 3.1.12).
3.1.6 Capitalization of Lightec
(a) As of the date hereof, and at all times since the incorporation
of Lightec, M.A. Xxxxxxx owns and has owned the number of shares
of Lightec Stock set forth opposite her name on Schedule 3.1.6,
which is all of the Lightec Stock issued and outstanding.
(b) All of the outstanding Lightec Stock has been duly authorized and
validly issued and is fully paid.
(c) There are no voting trusts, member agreements or other voting
arrangements, charges, liens or encumbrances on Lightec owned by
M.A. Xxxxxxx.
(d) There is no outstanding subscription, contract or other rights
obligating Lightec to issue, sell, exchange, or otherwise dispose
of, or to purchase, redeem or otherwise acquire, Lightec Stock.
3.1.7 Financial Statements and No Material Changes. The Xxxxxxxx have heretofore
furnished Biometrics with the balance sheets of Lightec as at March 14, 2002 and
May 31, 2002 (the "Balance Sheets") and as at the end of each of the two
preceding fiscal years, inclusive, and the related statements of income,
shareholders' equity and changes in cash flow for the years then ended, all
certified by Serroukas & Badat (collectively with the Balance Sheets, the
"Financial Statements"). Such Financial Statements are listed on Schedule 3.1.7
hereto. True and complete copies of the Financial Statements have been delivered
to Biometrics and are deemed a part of Schedule 3.1.7. Such Financial
Statements, including the footnotes thereto, except as indicated therein, have,
to the best knowledge of the Xxxxxxxx, been prepared in accordance with
generally accepted accounting principles consistently followed throughout the
periods indicated. The Balance Sheets fairly present, in all material respects,
the financial position of Lightec as of the dates thereof and, except as
indicated therein, reflect all claims against and all debts and liabilities of
Lightec, fixed or contingent, and to the best knowledge of the Xxxxxxxx, as
required by generally accepted accounting principles as of the
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date thereof, and the related statements of income, shareholders' equity and
changes in its cash flow fairly present, in all material respects, the results
of the operations of Lightec and the changes in its cash flow for the periods
indicated to the extent required to be included in the Financial Statements
under generally accepted accounting principles. Such other balance sheets fairly
present, in all material respects, the financial position of Lightec at the
respective dates thereof and, except as indicated therein, reflect all claims
against and all debts and liabilities of Lightec, fixed or contingent, as
required, to the best knowledge of the Xxxxxxxx, by generally accepted
accounting principles, as at the respective dates thereof and the related
statements of income, shareholders' equity and changes in cash flow fairly
present, in all material respects, the results of the operations of Lightec and
the changes in its cash flow for the periods indicated to the extent required to
be included in the Financial Statements under, to the best knowledge of the
Xxxxxxxx, generally accepted accounting principles. Since March 14, 2002 (the
"Beginning Balance Sheet Date") there has been no material adverse change in the
assets or liabilities, or in the business or financial condition, or in the
results of operations, of Lightec.
3.1.8 Books and Records. The minute books of Lightec, as previously made
available to Biometrics and its representatives, contain accurate records of all
meetings of, and corporate action (including action taken by written consent)
taken by the stockholders and Board of Directors of Lightec. Except as set forth
on Schedule 3.1.8 hereto, Lightec has not had any of its material records,
systems, controls, data or information recorded, stored, maintained, operated or
otherwise wholly or partly dependent upon or held by any means (including any
electronic, mechanical or photographic process, whether computerized or not)
which (including all means of access thereto and therefrom) are not under its
exclusive ownership and direct control.
3.1.9 Title to Properties; Encumbrances. Except as set forth on Schedule 3.1.9
hereto, and except for property and assets reflected in the Balance Sheets or
acquired since May 31, 2002 which have been sold or otherwise disposed of in the
ordinary course of business, Lightec has good, valid and marketable title to (a)
all of its material properties and assets (personal, tangible and intangible),
including, without limitation, all of the properties and assets reflected in the
Balance Sheets, except as indicated in the notes thereto, and (b) all of the
properties and assets purchased or acquired by Lightec since March 14, 2002; in
each case subject to no
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encumbrance, lien, charge or other restriction of any kind or character, except
for (i) liens reflected on the Balance Sheets, (ii) liens for taxes, assessments
or governmental charges or levies on property not yet due and payable or the
validity of which are being contested in good faith by appropriate proceedings,
(iii) statutory liens incurred in the ordinary course of business that are not
yet due and payable or the validity of which are being contested in good faith
by appropriate proceedings, (iv) landlord liens contained in leases entered in
the ordinary course of business; and (v) liens described on Schedule 3.1.9
(liens of the type described in clauses (i) through (v) above are hereinafter
sometimes referred to as "Permitted Liens".
3.1.10 (a) Real Property. Lightec does not now own, and has never owned, any
real property.
(b) Personal Property. Schedule 3.1.10(b) hereto contains an accurate
and complete list of all material tangible personal property (other
than inventory) owned or leased by Lightec or used in Lightec's
business. With respect to any property included on Schedule 3.1.10(b)
which is not owned by Lightec and for which annual lease payments are
$5,000 or more, Schedule 3.1.10(b) names the owner thereof and
describes or refers to any agreement relating to the use thereof; all
such property not owned by Lightec is in such condition that upon the
return thereof to its owner, Lightec will have discharged all of its
obligations to such owner, except as indicated on such Schedule
3.1.10(b).
(c) Inventory. Schedule 3.1.10(c) hereto contains a listing of the
inventory of Lightec as of March 14, 2002 and May 31, 2002. Except as
disclosed on Schedule 3.1.10(c), the inventory classified as such in
the Balance Sheet consists of items of a quantity and quality usable
or saleable in the ordinary course of business at prevailing market
prices without discount other than in the ordinary course of business,
net of applicable reserves.
(d) Condition and Sufficiency of Assets. All machinery, equipment,
vehicles, furniture, fixtures, plants, buildings, facilities and other
tangible assets owned by or used by Lightec are, without material
exception in any individual case, in good operating condition and
repair, ordinary wear and tear
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excepted, and are adequate for the uses to which they are being put.
Neither Lightec nor either of the Xxxxxxxx has received any notice
that any of such assets or facilities is in need of significant
maintenance or repair, except in the ordinary course of business. The
assets owned by Lightec are sufficient and adequate to conduct its
business as now being conducted.
3.1.11 Leases. Schedule 3.1.11 hereto contains an accurate and complete list and
description of the terms of all leases to which Lightec is a party (as lessee or
lessor) providing for annual lease payments of $5,000 or more. Each lease set
forth on Schedule 3.1.11 (each, a "Lease") is in full force and effect. All
rents and additional rents due to date on each Lease have been paid. With
respect to each Lease, Lightec has been in peaceful possession since the
commencement of the original term of such Lease and is not in default thereunder
and no waiver, indulgence or postponement of Lightec's obligations thereunder
has been granted by the lessor; and there exists no event of default or event,
occurrence, condition or act (including the exchange of the Lightec Stock
hereunder) which, with the giving of notice, the lapse of time or the happening
of any further event or condition, would become a default under such Lease.
Lightec has not violated any of the terms or conditions under any such Lease in
any material respect, and all of the covenants to be performed by any other
party under any such Lease have been fully performed. The property leased by
Lightec is in a state of good operating condition, not in need of significant
maintenance or repair, except in the ordinary course of business and is adequate
and suitable for the purposes for which it is presently being used.
3.1.12 Material Contracts. Schedule 3.1.12 hereto sets forth a true and complete
list of each partially or totally executory contract, agreement, commitment,
option or understanding, of the following types, to which Lightec is a party by
which it or any of its material properties, assets or employees is bound
(collectively the "Contracts"):
(a) warrants, stock options, "put" or "call" agreements and other
agreements or commitments to sell, purchase, issue, convert or exchange shares
of the capital stock of Lightec, as the case may be;
(b) voting agreements or arrangements, restrictive share transfer
agreements, stockholder agreements, preferred
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stock agreements, stock escrow agreements, and any agreement, indenture or other
instrument which contains restrictions with respect to payment of dividends or
any other distribution in respect of its capital stock;
(c) collective bargaining agreements;
(d) employment, consulting, advisory and other similar agreements or
arrangements, management agreements, management information services agreements,
or arrangements or agreements with current or former stockholders, directors,
officers, and employees other than employment agreements;
(e) any bonus, deferred compensation, pension, profit sharing, stock
option, employee stock purchase, retirement or other employee benefit plan;
(f) production, supply or purchase contracts or contracts for capital
expenditures involving payments in excess of $10,000 each, and sales orders in
excess of $10,000 each, or with terms in excess of one year as of March 14,
2002;
(g) franchise agreements or material arrangements, agreements or
arrangements with distributors, brokers, manufacturer's representatives, sales
representatives, sales agents, service or warranty representatives or similar
individuals or entities;
(h) advertising contracts providing for annual payments of $5,000 or
more;
(i) installment sales agreements providing for annual payments of
$7,500 or more;
(j) confidentiality or secrecy agreements or arrangements;
(k) joint venture or partnership agreements or arrangements;
(l) gas and electric power supply contracts or arrangements;
(m) government contracts or arrangements, other than those for the
purchase of goods in the ordinary course of business;
(n) license or royalty agreements or arrangements;
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(o) powers of attorney for any purpose whatsoever;
(p) agreements which in any manner limit or restrict Lightec from
competing in any line of business or carrying on or expanding the nature or
geographical scope of its business anywhere in the world;
(q) options, contracts or understandings relating to the purchase of
any of the assets, properties or rights of Lightec other than for the sale of
goods in the ordinary course of business;
(r) loan or financing agreements, trust agreements, promissory notes,
bonds, indentures, mortgages, security agreements, guarantees and other
agreements, commitments or instruments of Lightec (or binding upon or relating
to Lightec) evidencing, creating or relating to the borrowing or lending of
money, or any other indebtedness (other than trade payables incurred in the
ordinary course of business);
(s) any guarantee or other contingent liability in respect of any
indebtedness or obligation of any individual, partnership, joint venture,
corporation, trust, limited liability company, unincorporated organization,
government or other entity (each, a "Person") other than the endorsement of
negotiable instruments for collection in the ordinary course of business; or
(t) any other agreement, contract or commitment not entered into in
the ordinary course of business which involves $25,000 or more and is not
cancelable without penalty within 90 days.
Except as indicated on Schedule 3.1.12, each Contract is in full force and
effect and there exists no default or event of default or event, occurrence,
condition or act (including the consummation of this Agreement) which, with the
giving of notice, the lapse of time or the happening of any other event or
condition, would become a default or event of default, or give rise to any right
of termination, or permit the acceleration or modification of any obligation
thereunder, the consequences of which would be materially adverse to Lightec,
taken as a whole. Lightec has not violated any of the terms or conditions of any
Contract which would or could have a material adverse effect on Lightec, and all
of the covenants to be performed by any other party thereto have been fully
performed.
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3.1.13 No Restrictions. Except as set forth on Schedule 3.1.13 hereto, neither
Lightec nor either of the Xxxxxxxx is subject to, or a party to, (i) any
charter, by-law, mortgage, lien, lease, license, permit, agreement, contract,
instrument, or (ii) law, rule, ordinance, regulation, order, judgment or decree,
other than those of general application, which materially and adversely affects
the business practices, operations or condition of Lightec, or any of their
respective assets or properties, or which would prevent, restrict, affect or be
affected by, consummation of the transactions contemplated by this Agreement, or
which would restrict the ability of Lightec, to continue its business or to
acquire any property or conduct business in any area.
3.1.14 Litigation. Except as set forth on Schedule 3.1.14 hereto, there is no
action, suit, claim, investigation or other proceeding at law or in equity,
(including any arbitration or administrative or other proceeding by or before
any governmental or other instrumentality or agency), pending, or, to the best
knowledge of the Xxxxxxxx, threatened, against or affecting Lightec, or any of
its properties or rights, and there is no valid basis for any such action,
proceeding or investigation. Lightec is not subject to any judgment, order or
decree entered in any lawsuit or other proceeding.
3.1.15 Taxes. Except as described on Schedule 3.1.15, Lightec has filed or
caused to be filed, within the times and within the manner prescribed by law,
all federal, state, local and foreign tax returns and tax reports which are
required to be filed by, or with respect to, Lightec. Such returns and reports
are correct and complete in all material respects and reflect accurately all
liability for taxes of Lightec for the periods covered thereby. All federal,
state, local and foreign income, profits, franchise, sales, use, occupancy,
excise and other taxes and assessments (including interest and penalties)
payable by, or due from, Lightec as of the Beginning Balance Sheet Date have
been fully paid or adequately disclosed and fully provided for in the Balance
Sheets, to the extent required by generally accepted accounting principles. The
federal income tax liability of Lightec and M.A. Xxxxxxx in her capacity as sole
shareholder of Lightec has been finally determined for all fiscal years to and
including the fiscal year ended December 31, 2001. Except as set forth on
Schedule 3.1.15, no examination of any federal, state, local or foreign tax
return of Lightec is currently in progress or, to the best knowledge of the
Xxxxxxxx, is threatened. Except as set forth on Schedule 3.1.15, there are no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any tax return of Lightec.
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3.1.16 Liabilities. Lightec has no outstanding claims, liabilities or
indebtedness, contingent or otherwise, of the type required to be reflected on a
balance sheet prepared in accordance with generally accepted accounting
principles except as set forth in the Balance Sheets or referred to in the
footnotes thereto, other than liabilities incurred subsequent to May 31, 2002 in
the ordinary course of business by Lightec not exceeding $10,000 in the
aggregate. Lightec is not in default in respect of the terms or conditions of
any material indebtedness or other material obligation including, limitation
defaults under provisions relating to change of management or control of Lightec
arising as a result of the transactions contemplated by this Agreement.
3.1.17 Insurance. Set forth on Schedule 3.1.17 hereto is a complete list of
insurance policies which Lightec maintains with respect to its businesses,
properties or employees. Such policies are in full force and effect and there is
no reason to believe that any of them will be terminated as a result of the
Merger. Such policies, with respect to their amounts and types of coverage, are
in accordance with standard industry practice for companies engaged in
businesses similar to the business of Lightec, to insure against risks to which
Lightec and its properties and assets are normally exposed in the operation of
its businesses. Since March 14, 2002, there has not been any material adverse
change in the relationship of Lightec with its insurers or in the premiums
payable pursuant to such policies.
3.1.18 Intellectual Properties. Except as disclosed on Schedule 3.1.18 the
operation of the business of Lightec as it is currently conducted requires no
rights under Intellectual Property (as hereinafter defined) which is material to
the condition or conduct of Lightec's business, other than rights under
Intellectual Property listed on Schedule 3.1.18 hereto and rights granted to
Lightec pursuant to agreements listed on Schedule 3.1.18. To the best knowledge
of the Xxxxxxxx, within the four (4) year period immediately prior to the date
of this Agreement, the business of Lightec made use of no Intellectual Property
rights other than rights under Intellectual Property listed on Schedule 3.1.18
and rights granted to Lightec pursuant to agreements listed on Schedule 3.18.1.
Except as otherwise set forth on Schedule 3.1.18, Lightec owns all right, title
and interest in the Intellectual Property listed on Schedule 3.1.18 and has
granted no rights or licenses to others with respect to the same. Each item of
Intellectual Property listed on Schedule 3.1.18 has been duly registered with,
filed in, or issued by the appropriate United States of America governmental
agency, to the
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extent required, and each such registration, filing and issuance remains in full
force and effect. No claim adverse to the interests of Lightec in the
Intellectual Property or agreements listed on Schedule 3.1.18 has been made in
litigation, no such claim has been threatened or asserted in writing, and no
Person has infringed or otherwise violated the rights of Lightec in any of the
Intellectual Property or agreements listed on Schedule 3.1.18. Except as set
forth on Schedule 3.1.18, no litigation is pending wherein Lightec is accused of
infringing or otherwise violating the Intellectual Property right of another, or
of breaching a contract conveying rights under Intellectual Property, and, to
the best knowledge of the Xxxxxxxx, no such claim has been asserted or
threatened against Lightec. For purposes of this Section 3.1.18, "Intellectual
Property" means domestic and foreign patents, patent applications, registered
trademarks and service marks and registered copyrights.
3.1.19 Compliance with Laws. Lightec is in compliance with all applicable
federal, state, local and foreign laws, regulations, orders, judgments and
decrees, the breach of which would have a material adverse effect on Lightec.
3.1.20 Accounts Receivable. The amount of all accounts receivable, unbilled
invoices and other debts due or recorded in the records and books of account of
Lightec as being due to Lightec, as the case may be, as at the Closing Date
(less the amount of any provision or reserve therefor made in the respective
records and books of account of Lightec): (a) arose from bona-fide sales to
third parties in the ordinary course of business; (b) consists only of
obligations of third parties in connection with the sale of goods and/or
services; (c) represent the full invoice value of all accounts included therein;
(d) are not subject to any defenses, counterclaims or set-offs (except as
reflected in any reserves shown on the Financial Statements); (e) except as set
forth in the Financial Statements, have not been encumbered or sold; and (f) are
collectible in full. There has been no material adverse change since the
Beginning Balance Sheet Date in the amount of accounts receivable or other debts
due Lightec or the allowances with respect thereto, from that reflected in the
Balance Sheets, other than in the ordinary course of business.
3.1.21 Employment Relations. (a) Lightec is in substantial compliance with all
federal, state or other applicable laws, domestic or foreign, respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and has not and is not engaged in any unfair labor practice;
(b) no unfair labor practice complaint against Lightec
19
is pending before the National Labor Relations Board; (c) there is no labor
strike, dispute, slowdown or stoppage actually pending or threatened against or
involving Lightec; (d) no representation question exists respecting the
employees of Lightec; (e) no grievance which might have a material adverse
effect upon Lightec or the conduct of its respective businesses exists, no
arbitration proceeding arising out of or under any collective bargaining
agreement is pending and no claim therefor has been asserted; (f) no collective
bargaining agreement is currently being negotiated by Lightec; and (g) Lightec
has not experienced any material labor difficulty during the last three years.
3.1.22 Employee Benefit Plans. Lightec does not have, nor has it ever had, in
effect any employee pension or profit sharing plan.
3.1.23 Environmental Laws and Regulations. Lightec has heretofore made available
to Biometrics in writing information relating to the following items: (a) the
nature and quantities of any Hazardous Materials (as defined below) generated,
transported or disposed of by Lightec on or after January 1, 1995 (other than
raw material awaiting manufacturing work-in-process or finished goods and
through the sale of products in the ordinary course of business), together with
a description of the location of each such activity, and (b) a summary of the
nature and quantities of any Hazardous Materials that have been disposed of or
found at any site or facility owned or operated presently or at any previous
time by Lightec (other than raw material awaiting manufacturing, work-in-process
or finished goods and through the sale of products in the ordinary course of
business). Except as described on Schedule 3.1.23:
(a) Lightec is in compliance in all material respects with all
applicable federal, state and local laws and regulations relating to the
registration of Hazardous Material, pollution control and environmental
contamination including, but not limited to, all laws and regulations governing
the generation, use, collection, discharge, or disposal of Hazardous Materials
and all laws and regulations with regard to record keeping, notification and
reporting requirements respecting Hazardous Materials;
(b) Lightec has not received any written notice of a violation of, or
been subject to any administrative or judicial proceeding pursuant to, such laws
or regulations either now or any time during the past three years; and
20
(c) there are no facts or circumstances which could reasonably form
the basis for the assertion of any Environmental Claim (as defined below)
against Lightec, under current law and practice, relating to environmental
matters including, but not limited to, any Environmental Claim arising from past
or present environmental practices asserted under CERCLA (as defined below) and
RCRA (as defined below), or any other federal, state or local environmental
statute.
For purposes of this Section 3.1.23 and Section 4.21, the following terms
shall have the following meanings: (A) "Hazardous Materials" shall mean
materials defined as "hazardous substances", "hazardous wastes" or "solid
wastes" in (i) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. xx.xx. 9601-9657, and any amendments thereto
("CERCLA"), (ii) the Resource Conservation and Recovery Act, 42 U.S.C.
ss.ss.6901-6987 and any amendments thereto ("RCRA"), and (iii) any similar
federal, state or local environmental statute; and (B) "Environmental Claim"
shall mean any and all claims, demands, causes of actions, suits, proceedings,
administrative proceedings, losses, judgments, decrees, debts, damages,
liabilities, court costs, attorneys' fees and any other expenses incurred,
assessed or sustained by or against Lightec, Biometrics or Newco, as the case
may be.
3.1.24 Interests in Clients, Suppliers, Etc. Except as set forth in Schedule
3.1.24, neither of the Xxxxxxxx nor any officer or director of Lightec
possesses, directly or indirectly, any financial interest in, or is a director,
officer or employee of, or consultant for, any Person which is a client,
supplier, customer, lessor, lessee, or competitor or potential competitor of
Lightec. Ownership of securities of a company whose securities are registered
under the Securities Merger Act of 1934 not in excess of 1% of any class of such
securities shall not be deemed to be a financial interest for purposes of this
Section 3.1.24.
3.1.25 Bank Accounts, Powers of Attorney and Employees. Set forth on Schedule
3.1.25 hereto is an accurate and complete list showing (a) the name and address
of each bank in which Lightec has an account or safe deposit box, the number of
any such account or any such box, and the names of all persons authorized to
draw thereon or have access thereto; (b) the names of all persons, if any,
holding powers of attorney from Lightec and a summary statement of the terms
thereof; and (c) the names of all persons receiving compensation on a regular
basis as officers, directors, employees, consultants or otherwise from Lightec
as
21
of January 31, 2002, together with a statement of the rate of compensation
payable to each such person.
3.1.26 No Changes Since Beginning Balance Sheet Date. Since the Beginning
Balance Sheet Date, except as expressly contemplated hereby or disclosed in
Schedule 3.1.26, Lightec has not (i) incurred any liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise), except in the
ordinary course of business, (ii) permitted any of its assets to be subjected to
any mortgage, pledge, lien, security interest, encumbrance, restriction or
charge of any kind (other than Permitted Liens), (iii) sold, transferred or
otherwise disposed of any assets except in the ordinary course of business, (iv)
made any capital expenditure or commitment therefor, except in the ordinary
course of business, (v) made any acquisition of assets or properties except in
the ordinary course of business, (vi) declared or paid any dividend or made any
distribution on any shares of its capital stock, or redeemed, purchased, issued,
sold or otherwise acquired or disposed of any shares of its capital stock or
granted any option, warrant or other right to purchase or acquire any such
shares, (vii) made any bonus or profit sharing distribution or payment of any
kind, (viii) increased its indebtedness for borrowed money, except current
borrowings from banks in the ordinary course of business, or made any loan to
any Person or guaranteed any indebtedness for borrowed money, (ix) written off
as uncollectible any notes or accounts receivable, except write-offs in the
ordinary course of business charged to applicable reserves, none of which
individually or in the aggregate is material to Lightec, (x) granted any
increase in the rate of wages, salaries, bonuses or other remuneration of any
director, officer, employee or consultant, (xi) canceled or waived any claims or
rights of substantial value, (xii) made any change in any method of accounting
or auditing practice, (xiii) suffered any damage, destruction or loss, whether
covered by insurance or not, having a material adverse effect, (xiv) introduced
any material change with respect to the operation of its business, (xv) entered
into any material commitment or transaction (including, without limitation, any
borrowing or capital expenditure) not in the ordinary course of its business,
(xvi) paid, discharged or satisfied any liability or other expense other than in
the ordinary course of its business, (xvii) disposed of or permitted to lapse
any rights to the use of any Intellectual Property right which would have a
material adverse effect on Lightec, (xviii) paid, loaned or advanced any amount
to, or transferred or leased any properties or assets (real, personal or mixed,
tangible or intangible) to, or entered into any agreement or arrangement with,
any of its officers,
22
directors, consultants, employees or stockholders, (xx) otherwise conducted its
business or entered into any transaction, except in the usual and ordinary
manner and in the ordinary course of business, (xxi) suffered revocation of any
license or right to do business, fire, explosion, accident, casualty, labor
trouble, flood, drought, riot, storm, condemnation or act of God or other public
force which had a material adverse effect on the business or financial condition
of Lightec or (xxii) agreed, whether or not in writing, to do any of the
foregoing.
3.1.27 Broker's or Finder's Fees. Except as disclosed in Schedule 3.1.27,
hereto, no agent, broker, person or firm acting on behalf of the Xxxxxxxx or
Lightec is, or will be, entitled to any commission or broker's or finder's fees
from the parties hereto, or from any Person controlling, controlled by or under
common control with any of the parties hereto, in connection with any of the
transactions contemplated by this Agreement.
3.1.28 Property of Others. No material shortage exists in (a) any property,
including, without limitation, any inventories of raw materials, work in process
or finished goods, owned by customers or suppliers of Lightec and stored by
Lightec upon Lightec's premises or elsewhere, or (b) any other item of personal
property owned by any other Person for which either Lightec is accountable or
responsible.
3.1.29 Customers and Suppliers. Schedule 3.1.29 hereto sets forth a true and
complete list of the names and addresses of the 15 suppliers from which Lightec
purchased the largest amount of supplies or services during the fiscal year
ended December 31, 2001 and a true and complete list of the names and addresses
of the 25 customers to which Lightec sold the largest amount of products, goods
or services during the fiscal year ended December 31, 2001. No supplier or
customer listed on Schedule 3.1.29 has notified Lightec that it expects to (and
neither Lightec nor the Xxxxxxxx has any reason to believe that any such
supplier or customer may) reduce its business with Lightec by reason of the
transactions contemplated by this Agreement.
3.1.30 Warranties. Except as described in detail on Schedule 3.1.30 hereto, no
warranties of any kind or nature whatsoever by Lightec to any third party are,
or on the Closing Date will be, in effect or binding on Lightec or any of its
respective assets or properties, except for warranties imposed by law.
23
3.1.31 Government Contracts. Lightec has never been suspended or disbarred from
bidding on contracts or subcontracts for any agency or instrumentality of the
United States government or any other state, country, municipal or other,
governmental authority foreign or domestic, nor, has any such suspension or
disbarment been threatened in writing. Lightec has not been, and is not now
being, audited or investigated by the United States Government Accounting Office
(the "GAO"), the Defense Contract Audit Agency (the "DCAA"), the inspector
general of any agency of the United States government. There are no facts or
circumstances which could reasonably form the basis for the suspension or
disbarment of Lightec, under current law and practice, from bidding on contracts
or subcontracts for any agency or instrumentality of any government or for a
claim pursuant to an audit or investigation by the GAO, the DCAA or the
inspector general of any agency of the government.
3.1.32 Absence of Questionable Payments. Since December 31, 2001, neither
Lightec nor any of its respective directors, officers, agents or employees, or
any other person acting on behalf of either Lightec, has (a) used any of the
funds of Lightec or, with the explicit or implicit approval of Lightec, any of
the director's, officer's, agent's, employee's or other person's, funds for
contributions, payments, gifts or expenditures (any relating to political
activity made to government officials or others) that are unlawful under the
laws of the United States, any state or local jurisdiction thereof, or, under
the laws of any foreign jurisdiction ("Unlawful Payments"), or (b) accepted or
received any Unlawful Payments on behalf of or with the explicit or implicit
approval of Lightec.
3.1.33 Disclosure. None of this Agreement, the Financial Statements referred to
in Section 3.1.7 hereof (including the footnotes thereto), or any Schedule,
Exhibit or certificate attached hereto or delivered in accordance with the terms
hereof, when taken as a whole, contains any untrue statement of a material fact,
or omits any statement of a material fact necessary in order to make the
statements contained herein or therein not materially misleading.
3.1.34 Copies of Documents. The Xxxxxxxx and Lightec have caused to be made
available for inspection and copying by Biometrics and its advisers, true,
complete and correct copies of all documents specifically described in any
Schedule attached hereto.
3.1.35 Purchase for Investment. M.A. Xxxxxxx is an " accredited investor" as
that term is defined in Regulation D
24
promulgated by the United States Securities and Exchange Commission (the "SEC");
she has made such investigation of Lightec as she deems necessary for the
purposes of entering into and consummating this Agreement and will acquire the
Biometrics Common Stock in the Merger for her own account for investment and not
with a view toward any resale or distribution thereof within the meaning of
Section 2(11) of the Securities Act of 1933, as amended.
ARTICLE 4
REPRESENTATIONS OF BIOMETRICS
Biometrics and Newco hereby jointly and severally represent and warrant to
the Xxxxxxxx as follows:
4.1 Existence and Good Standing of Biometrics and Newco; Power and Authority;
Foreign Qualification. Biometrics is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada. Newco is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New York. . Each of Biometrics and Newco is duly qualified or
licensed to do business and is in good standing in every jurisdiction in which
its business or the ownership of its Assets requires it to be so qualified or
licensed, except where the failure to be so qualified or licensed would not have
a material adverse effect on Biometrics or Newco. Each of Biometrics and Newco
has the corporate power and authority to own, lease and operate its properties
and assets and to carry on its business as currently being conducted and to
make, execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby, and this Agreement and the transactions
contemplated hereby have been duly authorized and approved by all required
corporate action of Biometrics and Newco.
4.2 Restrictions. Neither Biometrics nor Newco is subject to any charter,
by-law, mortgage, lien, lease, agreement, instrument, order, law, rule,
ordinance, regulation, judgment or decree, or any other restriction of any kind
or character, which would prevent consummation of the transactions contemplated
by this Agreement.
4.3 Purchase for Investment. (a) Biometrics is an "accredited investor" as that
term is defined in Regulation D promulgated by the SEC; it has made such
investigation of Lightec as it deems necessary for the purposes of entering into
and consummating
25
this Agreement and will acquire the Lightec Stock for its own account for
investment and not with a view toward any resale or distribution thereof within
the meaning of Section 2(11) of the Securities Act of 1933, as amended.
(b) Biometrics and Newco acknowledge that (i) they have had the opportunity
to visit with the Xxxxxxxx and Lightec and meet with the respective officers and
of he representatives of Lightec to discuss the business and the assets,
liabilities, financial condition, cash flow and operations of Company, and (ii)
all materials and information requested by Biometrics and Newco have been
provided to Biometrics and Newco to their satisfaction. Biometrics and Newco
acknowledge that they have made their own independent examination,
investigation, analysis and evaluation of Lightec, including their own estimate
of the value of Lightec. Nothing in this Section nor any investigation,
examination, analysis or evaluation of Lightec made by or on behalf of
Biometrics and Newco shall in any way modify any representation or warranty made
by the Xxxxxxxx and Lightec in Article 3 hereof, or elsewhere in this Agreement
or the any Schedule, or release or discharge the Xxxxxxxx or Lightec from their
representations under the terms of this Agreement.
4.4 Broker's or Finder's Fees. No agent, broker, person or firm acting on behalf
of Biometrics or Newco is, or will be, entitled to any commission or broker's or
finder's fees from any of the parties hereto, or from any person controlling,
controlled by or under common control with any of the parties hereto, in
connection with any of the transactions contemplated herein.
4.5 Binding Effect. This Agreement has been duly executed and delivered by
Biometrics and Newco and is the legal, valid and binding obligation of
Biometrics and Newco, enforceable against each of them in accordance with its
terms, as their respective obligations are set forth herein, except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights generally;
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability; and
(c) rights to indemnification may be limited by considerations of public
policy.
26
4.6 Absence of Restrictions and Conflicts. The execution, delivery and
performance of this Agreement by Biometrics and Newco, the consummation of the
Merger and the fulfillment of and compliance with the terms and conditions of
this Agreement do not and will not, with the passing of time or the giving of
notice or both, violate or conflict with, constitute a breach of or default
under, result in the loss of any material benefit under, or permit the
acceleration of any obligation under, (i) any term or provision of the
Certificate of Incorporation or By-Laws of Biometrics or Newco, (ii) any
judgment, decree or order of any court or governmental authority or agency to
which Biometrics or Newco is a party or by which Biometrics or Newco or any
their respective properties is bound, (iii) any statute, law, regulation or rule
applicable to Biometrics or Newco, or (iv) or any provisions of any note, bond,
mortgage, indenture, license, franchise, permit, agreement, lease, franchise
agreement or other instrument or obligation to which Biometrics or Newco or any
of their subsidiaries is a party, or by which it or any of their respective
properties or assets may be bound. Except for compliance with the applicable
requirements of the Securities Act of 1933, the Securities Exchange Act of 1934
and applicable state securities laws, no consent, approval, order or
authorization of, or registration, declaration or filing with, any governmental
agency or public or regulatory unit, agency, body or authority with respect to
Biometrics is required in connection with the execution, delivery or performance
of this Agreement by Biometrics or the consummation of the transactions
contemplated hereby.
4.7 Capitalization of Biometrics and Newco.
(a) On the date hereof and at the Effective Time, the authorized capital
stock of Biometrics consists of 100,000,000 shares of Common Stock,
par value $0.001 per share As of the date hereof, there are 70,843,325
shares of Biometrics Common Stock outstanding. All of the capital
stock of Biometrics Stock have the same voting and other rights. The
authorized capital stock of Newco consists of 100 shares of common
stock, par value $.01 per share, all of which shares are validly
issued and outstanding and owned by Biometrics on the date hereof, and
all of which shares have the same voting and other rights.
(b) All of the issued and outstanding shares of Biometrics capital stock
and Newco capital stock have been duly authorized and validly issued
and are fully paid,
27
non-assessable and are not subject to, nor were they issued in
violation of, any preemptive rights.
(c) To Biometrics' and Newco's knowledge, there are no voting trusts,
stockholder agreements or other voting arrangements that have been
entered into among the stockholders of Biometrics or Newco.
(d) There are no outstanding subscription, contract, convertible or
exchange able security, option, warrant, call or other rights
obligating Biometrics or Newco to issue, sell, exchange, or otherwise
dispose of, or to purchase, redeem or otherwise acquire, shares of, or
securities convertible into or exchangeable for, capital stock of
Biometrics or Newco, except as contemplated by this Agreement or set
forth in Schedule 4.7.
(e) At the Effective Time, Newco will be a wholly owned subsidiary of
Biometrics and M.A. Xxxxxxx will own 16,000,000 shares of the issued
and outstanding common stock of Biometrics.
4.8 SEC Documents; Biometric Financial Statements.
Biometrics has filed with the SEC all forms, statements, reports and
documents (including all exhibits, amendments and supplements thereto) required
to be filed by it under the Securities Exchange Act, and the respective rules
and regulations thereunder, all of which complied in all material respects with
all applicable requirements of the appropriate act and rules and regulations
thereunder. Biometrics has furnished or made available or will make available to
Lightec and the Xxxxxxxx true and correct copies of Biometric's registration
statement on Form 10-SB/A-6 its Annual Report on Form-10-K SB for the year ended
June 30, 2001 and Quarterly Reports on Form 10-QSB for the quarters ended
September 30, 2001 and December 31, 2001 collectively, the "Biometrics SEC
Documents"). As of their respective filing dates, the Biometrics SEC Documents
complied in all material respects with the requirements of the Securities Act
and the Merger Act, and the applicable rules and regulations of the SEC
thereunder, as the case may be, and none of the Biometrics 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, under the circumstances in which they were made, not misleading. The
financial statements of Biometrics, including the notes thereto, included in the
Biometrics SEC Documents (the
28
"Biometrics Financial Statements") comply as to form in all material respects
with applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
generally accepted accounting principles 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 unedited statements, as
permitted by SEC rules for such form) and present fairly the consolidated
financial position of Biometrics at the dates thereof and of its operations and
cash flows for the periods then ended (subject, in the case of unedited
statements, to normal, recurring audit adjustments which will not be material in
amount or significance) and do not include or omit to state any fact which
renders Biometrics Financial Statements hereunder misleading. There has been no
change in Biometrics accounting policies, except as described in the notes to
Biometrics Financial Statements.
4.9 Absence of Certain Changes. (a) Biometrics has not, except as otherwise set
forth in Schedule 4.9:
(i) conducted its business other than in the ordinary course or suffered
any adverse change in its business, operations, assets, or financial
condition, except as reflected on the Biometrics Financial Statements;
(ii) suffered any material damage or destruction to or loss of the assets
of Biometrics or Newco, whether or not covered by insurance, which
property or assets are material to the operations or business of
Biometrics or Newco taken as a whole;
(iii)settled, forgiven, compromised, canceled, released, waived or
permitted to lapse any material rights or claims other than in the
ordinary course of business;
(iv) entered into or terminated any material agreement, commitment or
transaction, or agreed to or made any changes in material leases or
agreements, other than renewals or extensions thereof and leases,
agreements, transactions and commitments entered into or terminated in
the ordinary course of business;
(v) written up, written down or written off the book value of any material
amount of assets other than in the ordinary course of business;
29
(vi) declared, paid or set aside for payment any dividend or distribution
with respect to Biometrics' capital stock;
(vii) redeemed, purchased or otherwise acquired, or sold, granted or
otherwise disposed of, directly or indirectly, any of Biometrics'
capital stock or securities or any rights to acquire such capital
stock or securities, or agreed to changes in the terms and
conditions of any such rights outstanding as of the date of this
Agreement;
(viii) increased the compensation of or paid any bonuses to any employees
or contributed to any employee benefit plan, other than in the
ordinary course of business and consistent with established
policies, practices or requirements;
(ix) entered into any employment, consulting or compensation agreement
with any person or group;
(x) entered into any collective bargaining agreement or trade union
recognition agreement with any person or group;
(xi) entered into, adopted or amended any employee benefit plan or share
option scheme or agreement; or
(xii) entered into any agreement to do any of the foregoing.
(b) Newco is a New York corporation formed on February 20, 2002, has no
liabilities and has not conducted any business whatsoever.
4.10 No Material Undisclosed Liabilities. There are no liabilities or
obligations of Biometrics or Newco of any nature, whether absolute, accrued,
contingent, or otherwise, other than:
(a) in the aggregate adequately provided for in the balance sheet of
Biometrics (including any related notes thereto) as of December 31,
2001, as set forth in Biometrics' Quarterly Report on Form 10-QSB for
the quarter Ended December 31, 2001 (the "December 31, 2001 Biometrics
Balance Sheet");
(b) incurred in the ordinary course of business and not required under
generally accepted accounting
30
principles to be reflected on the December 31, 2001 Biometrics Balance
Sheet;
(c) incurred since December 31, 2001, in the ordinary course of business;
or
(d) incurred in connection with this Agreement.
4.11 Tax Returns; Taxes. Biometrics (a) has duly filed all U.S. federal and
material state, county, local and foreign tax returns and reports required to be
filed by it, including those with respect to income, payroll, property,
withholding, social security, unemployment, franchise, excise and sales taxes
and all such returns and reports are correct and complete in all material
respects; (b) has either paid in full all taxes that have become due as
reflected on any return or report and any interest and penalties with respect
thereto or has fully accrued on its books or has established adequate reserves
for all taxes payable but not yet due; and (c) has made the required cash
deposits with appropriate governmental authorities representing estimated
payments of taxes, including income taxes, payroll and other employment related
tax obligations. No extension or waiver of any statute of limitations or time
within which to file any return has been granted to or requested by Biometrics
with respect to any tax. No unsatisfied deficiency, delinquency or default for
any tax, assessment or governmental charge has been claimed, proposed or
assessed against Biometrics, nor has Biometrics received notice of any such
deficiency, delinquency or default. Biometrics has no material tax liabilities
other than those arising in the ordinary course of business since the date
hereof. There are no outstanding agreements or waivers extending the statutory
period of limitations applicable to any tax return of Biometrics.
4.12 Litigation and Government Claims. There is no pending suit, claim, action,
investigation or litigation, or administrative, arbitration or other proceeding
or governmental investigation or inquiry against Biometrics to which its
businesses or assets are subject, and to the knowledge of Biometrics, there are
no such proceedings threatened or contemplated. Biometrics is not subject to any
judgment, decree, injunction, rule or order of any court, or, to the knowledge
of Biometrics, any governmental restriction applicable to Biometrics.
4.13 Compliance with Laws. Biometrics has all material authorizations approvals,
licenses and orders to carry on its businesses as it is now being conducted, to
own or hold under
31
lease the properties or assets it owns or holds under lease and to perform all
of its obligations under the agreements to which it is a party. Biometrics has
been and is, to the knowledge of Biometrics, in compliance with all applicable
laws, regulations and administrative orders of any country, state or
municipality (or any subdivision thereof) to which its businesses, ownership of
assets and its employment of labor or its use or occupancy of properties, or any
part thereof, are subject.
4.14 Employee Benefits Plans. Biometrics does not have, nor has it ever had, in
effect any employee pension or profit sharing plans.
4.15 Title to Properties and Related Matters. Biometrics has good and marketable
title to or valid leasehold interests in its properties (other than personal
properties sold or otherwise disposed of in the ordinary course of business),
and all of such properties and all assets purchased by Biometrics are free and
clear of any lien, claim or encumbrance and except for:
(a) liens for taxes, assessments or other governmental charges not yet due
and payable or the validity of which are being contested in good faith
by appropriate proceedings;
(b) statutory liens incurred in the ordinary course of business that are
not yet due and payable or the validity of which are being contested
in good faith by appropriate proceedings;
(c) landlord liens contained in leases entered in the ordinary course of
business; and
(d) other liens, claims or encumbrances that, in the aggregate, do not
materially subtract from the value of, or materially interfere with,
the present use of, any real property owned or used by Biometrics.
4.16 Authorization For Biometrics Common Stock. Biometrics has taken all
necessary director action to approve the Merger and the transactions
contemplated herein, and to permit it to issue the number of shares of
Biometrics Common Stock required to be issued pursuant to the terms of this
Agreement. The shares of Biometrics Common Stock issued pursuant to the terms of
this Agreement will, when issued, be validly issued, fully paid and
nonassessable and not be subject to preemptive rights.
4.17 Matters Related To Newco. Pursuant to the Merger, 100% of the net assets of
Newco held immediately prior to the Merger
32
will be held by the Surviving Corporation immediately subsequent to the Merger.
4.18 Material Contracts. All of the material contracts of Biometrics or Newco,
or any of their subsidiaries are valid, enforceable in accordance with their
terms and in full force and effect and neither Biometrics, Newco nor any of
their subsidiaries is in default thereunder in any material respect.
4.19 No Need for Shareholder Consent. Neither the Merger nor any other
transaction contemplated herein or thereby will require the consent or approval
of the shareholders of Biometrics.
4.20 Proxy Contests; Derivative Claims. There has never been a proxy contest or
derivative claim with respect to Biometrics or its capital stock.
4.21 Environmental Laws and Regulations.
(a) Biometrics and Newco are in compliance in all material respects
with all applicable federal, state and local laws and regulations relating to
the registration of Hazardous Material, pollution control and environmental
contamination including, but not limited to, all laws and regulations governing
the generation, use, collection, discharge, or disposal of Hazardous Materials
and all laws and regulations with regard to record keeping, notification and
reporting requirements respecting Hazardous Materials;
(b) Neither Biometrics nor Newco has received any written notice of a
violation of, or been subject to any administrative or judicial proceeding
pursuant to, such laws or regulations either now or any time during the past
three years; and
(c) There are no facts or circumstances which could reasonably form
the basis for the assertion of any Environmental Claim against Biometrics or
Newco, under current law and practice, relating to environmental matters
including, but not limited to, any Environmental Claim arising from past or
present environmental practices asserted under CERCLA and RCRA, or any other
federal, state or local environmental statute.
4.22 Employment Relations. (a) Biometrics is in substantial compliance with all
federal, state or other applicable laws, domestic or foreign, respecting
employment and employment practices, terms and conditions of employment and
wages and
33
hours, and has not and is not engaged in any unfair labor practice; (b) no
unfair labor practice complaint against Biometrics is pending before the
National Labor Relations Board; (c) there is no labor strike, dispute, slowdown
or stoppage actually pending or threatened against or involving Biometrics; (d)
no representation question exists respecting the employees of Biometrics; (e) no
grievance which might have a material adverse effect upon Biometrics or the
conduct of its respective businesses exists, no arbitration proceeding arising
out of or under any collective bargaining agreement is pending and no claim
therefor has been asserted; (f) no collective bargaining agreement is currently
being negotiated by Biometrics; and (g) Biometrics has not experienced any
material labor difficulty during the last three years.
ARTICLE 5.
CERTAIN COVENANTS AND AGREEMENTS
5.1. Conduct of Business by Lightec From the date hereof to the Closing Date,
Lightec will, except as required in connection with the Merger and the other
transactions contemplated by this Agreement or consented to in writing by
Biometrics:
(a) carry on its business in the ordinary and regular course in
substantially the same manner as heretofore conducted and not engage
in any new line of business or enter into any material agreement,
transaction or activity or make any material commitment except those
in the ordinary and regular course of business and not otherwise
prohibited under this Section 5.1;
(b) neither change nor amend its Articles of Incorporation;
(c) not issue or sell or register the transfer of Lightec Stock or issue,
sell or grant rights to purchase or subscribe to, or enter into any
arrangement or contract with respect to the issuance or sale of any
Lightec Stock;
(d) not declare, pay or set aside for payment any distribution in respect
of the Lightec Stock and not redeem, purchase or otherwise acquire any
Lightec Stock;
(e) not acquire or enter into any agreement to acquire, directly or
indirectly, by merger, consolidation or purchase of securities or
assets, any business or entity or any material part of the same;
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(f) use its reasonable efforts to preserve intact the corporate existence,
goodwill and business organization of Lightec, to keep the officers
and employees of Lightec available to Lightec and to preserve the
relationships of Lightec with suppliers, customers and others having
business relations with any of them;
(g) not (i) create, incur or assume any debt or create, incur or assume
any short-term debt for borrowed money, other than in the ordinary
course of business and in amounts consistent with past practice (ii)
assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of
any other person, (iii) make any loans or advances to any other
person, or (iv) make any capital contributions to, or investments in,
any person;
(h) not (i) enter into, modify or extend in any manner the terms of any
employment, severance or similar agreements with officers and
directors, (ii) grant any increase in the compensation of officers or
directors, whether now or hereafter payable; or (iii) grant any
increase in the compensation of any other employees except for
compensation increases in the ordinary course of business and
consistent with past practice (it being understood by the parties
hereto that for the purposes of (ii) and (iii) above increases in
compensation shall include any increase pursuant to any option, bonus,
stock purchase, pension, profit-sharing, deferred compensation,
retirement or other plan, arrangement, contract or commitment);
(i) not make or incur (other than in the ordinary course of business) any
individual capital expenditure in excess of $5,000 or capital
expenditures in the aggregate in excess of $20,000 without the prior
approval of Biometrics (as used herein, "capital expenditure" shall
mean all payments in respect of the cost of any fixed asset or
improvement or replacement, substitution or addition thereto that has
a useful life of more than one year, including those costs arising in
connection with the acquisition of such assets by way of increased
product or service charges or offset items or in connection with
capital leases);
(j) perform when due all of its obligations under all Lightec Contracts
(except those being contested in good faith) and not enter into,
assume or amend any contract or commitment that would be a Lightec
Contract other than contracts to
35
provide services entered into in the ordinary course of business; and
(k) prepare and file all returns for taxes and other tax reports, filings
and amendments thereto required to be filed by it, and allow
Biometrics, at its request, to review all such returns, reports,
filings and amendments at Lightec's offices prior to the filing
thereof, which review shall not interfere with the timely filing of
such returns.
5.2. Conduct of Business by Biometrics From the date hereof to the Closing Date,
Biometrics will, except as required in connection with the Merger and the other
transactions contemplated by this Agreement or as consented to in writing by the
Xxxxxxxx:
(a) carry on its businesses in the ordinary and regular course in
substantially the same manner as heretofore conducted and not engage
in any new line of business or enter into any agreement, transaction
or activity or make any commitment except in the ordinary and regular
course of business and not otherwise prohibited under this Section
5.2;
(b) neither change nor amend its Articles of Incorporation or By-Laws;
(c) not issue or sell any securities of Biometrics or issue, sell or grant
options, warrants or rights to purchase or subscribe to, or enter into
any arrangement or contract with respect to the issuance or sale of
any of the securities of Biometrics, rights or obligations convertible
into or exchangeable for any securities of Biometrics, or alter the
terms of any warrants or options, or make any changes (by split-up,
combination, reorganization or otherwise) in the capital structure of
Biometrics (except that Biometrics is contemplating a reverse 5:1
split);
(d) not declare, pay or set aside for payment any dividend or other
distribution in respect of the capital stock or other equity
securities of Biometrics and not redeem, purchase or otherwise acquire
any shares of the capital stock or other securities, or rights or
obligations convertible into or Merger able for any shares of the
capital stock or other securities of Biometrics or obligations
convertible into such, or any options, warrants or other rights to
purchase or subscribe to any of the foregoing;
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(e) not acquire or enter into any agreement, directly or indirectly, to
acquire, by merger, consolidation or purchase of securities or assets,
any business or entity or any material part thereof;
(f) use its reasonable efforts to preserve intact the corporate existence,
goodwill and business organization of Biometrics, to keep the officers
and employees of Biometrics available to Biometrics and to preserve
the relationships of Biometrics with suppliers, customers and others
having business relations with any of them;
(g) not (i) create, incur or assume any debt or create, incur or assume
any short-term debt for borrowed money, (ii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person, or
(iii) make any loans or advances to any other person;
(h) not (i) enter into, modify or extend in any manner the terms of any
employment, severance or similar agreements with officers and
directors, (ii) grant any increase in the compensation of officers or
directors, whether now or hereafter payable, or (iii) grant any
increase in the compensation of any other employees except for
compensation increases in the ordinary course of business and
consistent with past practice (it being understood by the parties
hereto that for the purposes of (ii) and (iii) above increases in
compensation shall include any increase pursuant to any option, bonus,
stock purchase, pension, profit-sharing, deferred compensation,
retirement or other plan, arrangement, contract or commitment).
(i) timely make any filings and applications required to be filed in order
to obtain all approvals, consents and waivers of governmental
authorities necessary or appropriate for the consummation of the
transactions contemplated hereby, including but not limited to all
forms, statements, reports and documents (including all exhibits,
amendments and supplements thereto) required to be filed by it under
each of the Securities Act and the Exchange Act.
(j) promptly notify the Xxxxxxxx of any dispute among directors or between
Biometrics or Newco and their regular accountants.
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(k) change the number of members of the Board of Directors of either
Biometrics or Newco.
(l) cause, permit or suffer to exist the conduct of any business by Newco.
5.3. M.A. Xxxxxxx Covenants. From the date hereof to the Closing Date, M.A.
Xxxxxxx covenants and agrees that, except as required in connection with the
Merger and the other transactions contemplated by this Agreement or consented to
in writing by Biometrics, she will not sell, assign, pledge, encumber, or
otherwise transfer, or grant any other rights to acquire, any of her Lightec
Stock or agree to do any of the foregoing.
5.4. Notice of any Material Change. Each party shall, promptly after the first
notice or occurrence thereof but not later than the Closing Date, advise the
other parties in writing of any event or the existence of any state of facts
that (i) would make any of his, her or its representations and warranties in
this Agreement untrue in any material respect, or (ii) would constitute a breach
of any provisions of this (Agreement).
5.5. Reasonable Efforts; Further Assurances; Cooperation. Subject to the other
provisions of this Agreement, the parties hereto shall use all reasonable
efforts to perform their obligations herein and to take, or cause to be taken,
or do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable law to obtain all regulatory approvals and satisfy all
conditions to the obligations of the parties under this Agreement and to cause
the Merger and the other transactions contemplated herein to be carried out
promptly in accordance with the terms hereof and shall cooperate fully with each
other and their respective officers, directors, employees, the Newco
shareholder, agents, counsel, accountants and other designees in connection with
any steps required to be taken as a part of their respective obligations under
this Agreement, including without limitation:
(a) Each of the Xxxxxxxx and Biometrics shall promptly take, or cause to
be taken, all actions and do, or cause to be done, all things
reasonably necessary, proper or advisable to obtain (i) any required
approval of any federal, state or local governmental agency or
regulatory body with jurisdiction over the transactions contemplated
by this Agreement, and (ii) any other necessary or advisable consent
from any other party.
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(b) In the event any claim, action, suit, investigation or other
proceeding by any governmental body or other person is commenced or
threatened that questions the validity or legality of the Merger or
any of the other transactions contemplated hereby, or seeks damages in
connection therewith, the parties agree to cooperate and use all
reasonable efforts to defend against such claim, action, suit,
investigation or other proceeding and, if an injunction or other order
is issued in any such action, suit or other proceeding, to use all
reasonable efforts to have such injunction or other order lifted, and
to cooperate reasonably regarding any other impediment to the
consummation of the transactions contemplated by this Agreement.
(c) Each party shall give prompt written notice to the other of (i) the
occurrence, or failure to occur, of any event the occurrence or
failure of which would be likely to cause any representation or
warranty of such party contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to
the Closing Date or that will or may result in the failure to satisfy
the conditions specified in Article 6 or 7, and (ii) any failure of
such party to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder.
5.6. Board of Directors. As long as M.A. Xxxxxxx continues to own in the
aggregate not less than 8,000,000 shares of Biometric Common Stock (adjusted for
any stock dividend, splits and reverse splits), and so long as he is willing and
able to so serve, the Boards of Directors of Newco and Biometrics shall nominate
and elect Xxxxxxx Xxxxxxxx as a member of the Board of Directors of both
Biometrics and Newco.
5.7. Access to Information.
(a) Lightec and the Xxxxxxxx shall afford to Biometrics, Newco and their
accountants, counsel, financial advisors, actual and prospective funding
sources, investors and other representatives (collectively, the "Biometric
Representatives"), full access during normal business hours throughout the
period preceding the Effective Time to all of their properties, books,
contracts, commitments and records and, during such period, shall furnish
promptly such other information concerning their businesses, properties and
personnel as Biometrics, Newco and any Biometric Representative shall reasonably
request.
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(b) Biometrics and Newco shall afford to Lightec and the Xxxxxxxx and their
accountants, counsel, financial advisors, and other representatives
(collectively, the "Xxxxxxxx Representatives"), full access during normal
business hours throughout the period preceding the Effective Time to all of
their properties, books, contracts, commitments and records and, during such
period, shall furnish promptly such other information concerning their
businesses, properties and personnel as Lightec or the Xxxxxxxx and any Xxxxxxxx
Representative shall reasonably request.
(c) If this Agreement is terminated, Biometrics, Newco and any
Representatives shall promptly redeliver to Lightec all nonpublic written
material provided pursuant to this Section 5.7 and shall not retain any copies,
extracts or other reproductions in whole or in part of such written material.
5.8. Registration Rights.
(a) Right to Piggyback. If at any time Biometrics proposes to file a
registration statement under the Securities Act with respect to a public
offering by Biometrics or any selling shareholder of Biometrics' Common Stock,
then Biometrics shall register the Stock Consideration ("Piggyback
Registration") and cause it to be duly qualified under appropriate state
securities laws unless the managing underwriter or underwriters of any such
offering determine the inclusion of all or any portion of the Stock
Consideration in such public offering would adversely affect Biometrics or such
public offering, in which event the amount of the Stock Consideration to be
included in such public offering shall not be reduced unless and until all other
Biometrics common stock held by any other selling stockholder and requested to
be included in the registration has been reduced pro rata and not included in
the registration statement.
(b) The obligations of Biometrics with respect to Piggyback Registration
provided for in this Section shall terminate at the earlier of (i) the time when
one or more registration statement registering the full number of shares of
Stock Consideration is declared effective by the SEC or (ii) M.A. Xxxxxxxx owns
less than fifty percent (50%) of the Stock Consideration.
(c) Listing. Biometrics shall cause all Stock Consideration covered by such
the registration statement to be (i) listed on each securities exchange or
market, if any, on which similar securities issued by Biometrics are then
listed, or, if they are not listed or quoted on any Merger or market,
40
to cause them to be quoted on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"), or the National Market System of NASDAQ
if the securities so qualify;
(d) Registration Expenses. The fees and expenses incident to the
preparation and filing of the Registration Statement ("Registration Expenses")
shall be borne by Biometrics, including but not limited to: (i) all registration
and filing fees, including fees and expenses relating to Biometrics' securities
and the Stock Consideration (A) with respect to filings required to be made with
the National Association of Securities Dealers, Inc. and (B) compliance with
securities or Blue Sky laws, (ii) printing expenses of the Registration
Statement requested by the managing underwriter, (iii) fees and disbursements of
counsel for Biometrics, (iv) fees and disbursements of Biometrics' independent
certified public accountants, (v) underwriter's fees and including the fees and
expenses of any "qualified independent underwriter" or other independent
appraiser participating in an offering pursuant to Section 3 of Schedule E to
the By-laws of the National Association of Securities Dealers, Inc., (vi)
Securities Act liability insurance if Biometrics so desires such insurance, and
(vii) fees and expenses of all other persons retained by Biometrics and not
specifically required as a result of the registration of any Biometrics Common
Stock. All Registration Expenses shall be borne by Biometrics whether or not any
registration statement is declared effective. Biometrics shall, in any event,
pay its internal expenses (including, without limitation, all salaries and
expenses of their respective officers and employees performing legal or
accounting duties), the expense of any annual audit, the fees and expenses
incurred in connection with the listing of the securities to be registered on
any securities exchange or market on which similar securities issued by
Biometrics are then listed or quoted and rating agency fees and the fees and
expenses of any person, including special experts, retained by Biometrics which
is not related to the registration of Biometrics Common Stock.
ARTICLE 6.
CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE XXXXXXXX
Except as may be waived by them in writing, the obligation of the Xxxxxxxx
to consummate the transactions contemplated by this Agreement shall be subject
to the satisfaction on or before the Closing Date of each of the following
conditions:
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6.1. Compliance. Biometrics and Newco shall have, or shall have caused to be,
satisfied or complied with and performed in all material respects all terms,
covenants and conditions of this Agreement to be complied with or performed by
Biometrics or Newco on or before the Closing Date.
6.2. Representations and Warranties. All of the representations and warranties
made by Biometrics or Newco, or either of them, in this Agreement shall be true
and correct in all material respects at and as of the Closing Date with the same
force and effect as if such representations and warranties had been made at and
as of the Closing Date, except for changes permitted or contemplated by this
Agreement; provided, however, that notwithstanding anything herein to the
contrary, this Section 6.2 shall be deemed to have been satisfied even if such
representations or warranties are not true and correct, unless the failure of
any of the representations or warranties to be so true and correct would have or
would be reasonably likely to have a material adverse effect on the business,
financial condition or prospects of Biometrics ("Biometrics Material Adverse
Change").
6.3. Material Adverse Changes. There shall not have occurred a Biometrics
Material Adverse Change.
6.4. Officer's Certificate. Each of Biometrics and Newco shall have delivered to
Lightec, a Certificate of its Chairman or President, dated the Closing Date,
certifying that the conditions specified in Sections 6.1, 6.2 and 6.3 have been
satisfied.
6.5. Secretary's Certificate. Each of Biometrics and Newco shall have delivered
to M.A. Xxxxxxx a certificate of its Secretary certifying as to its Articles of
Incorporation, By-Laws, incumbency of officers, and the resolutions attached
thereto and any other corporate proceedings relating to the authorization,
execution and delivery of this Agreement and the transactions contemplated
hereby.
6.6. Biometrics Share Certificates. Biometrics shall have delivered to M.A.
Xxxxxxx one or more certificates representing 16,000,000 shares of Biometrics
Common Stock. The certificate or certificates evidencing the Biometrics Common
Stock to be issued to M.A. Xxxxxxx hereunder will bear an appropriate and
customary restrictive legend.
6.7. Appointment of Designee of M.A. Xxxxxxx as Director of Biometrics. Xxxxxxx
Xxxxxxx shall have become a member of the
42
Board of Directors of Biometrics, effective at the Closing, provided he is
willing and able to serve in such capacity.
6.8. Security Agreement. The Surviving Company shall have executed and delivered
a Security Agreement in the form and substance of Exhibit B hereto.
6.9. Employment Agreement. Biometrics shall have entered into an employment
agreement with Xxxxxxx Xxxxxxx in the form and substance of Exhibit C hereto.
6.10. Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory to the Xxxxxxxx and their counsel.
6.11. Approvals. All governmental and other consents and approvals including
without limitation, those from landlords and lenders, if any, necessary to
permit the consummation of the transactions contemplated by this Agreement shall
have been received.
ARTICLE 7.
CONDITIONS PRECEDENT TO OBLIGATIONS OF NEWCO AND BIOMETRICS
Except as may be waived by Biometrics in writing, the obligations of Biometrics
and Newco to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction, on or before the Closing Date, of each of the
following conditions:
7.1. Compliance. The Xxxxxxxx and Lightec shall have, or shall have caused to
be, satisfied or complied with and performed in all material respects all terms,
covenants, and conditions of this Agreement to be complied with or performed by
them or either of them on or before the Closing Date.
7.2. Representations and Warranties. All of the representations and warranties
made by the Xxxxxxxx or Lightec, or either of them, in this Agreement shall be
true and correct in all material respects at and as of the Closing Date with the
same force and effect as if such representations and warranties had been made at
and as of the Closing Date, except for changes permitted or contemplated by this
Agreement; provided, however, that notwithstanding anything herein to the
contrary, this Section 7.2 shall be deemed to have been satisfied even if such
43
representations or warranties are not true and correct, unless the failure of
any of the representations or warranties to be so true and correct would have or
would be reasonably likely to have a material adverse effect on the business,
financial condition or prospects of Lightec ("Lightec Material Adverse Change").
7.3. Material Adverse Changes. There shall not have occurred a Lightec Material
Adverse Change.
7.4. Certificate. The Xxxxxxxx shall have delivered to Biometrics a Certificate
of the Manager of Lightec, dated the Closing Date and in form and substance
reasonably satisfactory to Biometric's counsel, certifying that the conditions
specified in Sections 7.1, 7.2, 7.3, and 7.6 have been satisfied; and certifying
as to its Articles of Incorporation, incumbency, and any other proceedings
relating to the authorization, execution and delivery of this Agreement and the
transactions contemplated hereby.
7.5. Assignment and Transfer of Lightec Stock. M.A. Xxxxxxx shall have assigned
and transferred the Lightec Stock to Newco in exchange for the Merger
Consideration.
7.6. Approvals. All governmental and other consents and approvals including,
without limitation, those from landlords, lenders, and counter parties to the
Contracts (as defined in Section 3.1.12), if any, necessary to permit the
consummation of the transactions contemplated by this Agreement shall have been
received.
7.7. Employment Agreement. Biometrics shall have entered into an employment
agreement with Xxxxxxx Xxxxxxx in the form and substance of Exhibit C hereto.
7.8. Proceedings and Documents. All proceedings in connection with the
transactions contemplated by this Agreement and all documents and instruments
incident to such transactions shall be satisfactory to Biometrics and its
counsel, and Biometrics and its counsel shall have received all such counterpart
originals or certified or other copies of such documents as they may reasonably
request.
7.9. Approvals. All governmental and other consents and approvals including,
without limitation, those from landlords and lenders, if any, necessary to
permit the consummation of the transactions contemplated by this Agreement shall
have been received.
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ARTICLE 8.
COVENANTS OF THE XXXXXXXX
8.1 Non-Competition; Non-Interference. In consideration of the transactions
contemplated hereby, M.A. Xxxxxxxx agrees that from the date of this Agreement
until the earlier of December 31, 2005, he or she will not:
(a) within any jurisdiction or marketing area in which Biometrics or any of
its affiliates is doing business or is qualified to do business, directly or
indirectly own, manage, operate, control, be employed by or participate in the
ownership, management, operation or control of, or be connected in any manner
with, any business competitive with Biometrics or Newco. For these purposes,
ownership of securities not in excess of 1% of any class of securities of a
public company shall not be considered to be competition with Biometrics or
Newco; or
(b) persuade or attempt to persuade any potential customer or client to
which Biometrics or Newco has made a presentation, or with which, Biometrics or
Newco has been having discussions, not to hire Biometrics or Newco, or to hire
another company with respect to the business of Biometrics or Newco; or
(c) solicit for herself or any person other than Biometrics or Newco or any
of their subsidiaries or affiliates, the business of any company which is a
customer or client of Biometrics or Newco, or any of their subsidiaries or
affiliates, or was its customer or client within two years prior to the date of
this Agreement in any area which is competitive with the business of Biometrics
or Newco; or
(d) persuade or attempt to persuade any employee of Biometrics or Newco or
any of their subsidiaries or affiliates to leave the employ of Biometrics or
Newco or any such subsidiaries or affiliates, or to become employed by any
person other than Biometrics or Newco; or
(e) disclose or use any confidential or secret information relating to
Biometrics or Newco, any of their subsidiaries or affiliates or their clients
and customers.
It is the desire and intent of the parties to this Agreement that the
provisions of this Section 8.1 shall be enforced to the fullest extent
permissible under the laws and
45
public policies applied in each jurisdiction in which enforcement is sought. If
any particular provisions or portion of this Section 8.1 shall be adjudicated to
be invalid or unenforceable, this Section shall be deemed amended to delete
therefrom such provision or portion adjudicated to be invalid or unenforceable,
such amendment to apply only with respect to the operation of such Section in
the particular jurisdiction in which such adjudication is made.
The parties recognize that the performance of the obligations under this
Section 8.1 is special, unique and extraordinary in character, and that in the
event of the breach of the terms and conditions of this Section 8.1 to be
performed, Biometrics shall be entitled, if it so elects, to institute and
prosecute proceedings in any court of competent jurisdiction, either in law or
in equity, to obtain damages for any breach of this Section 8.1, or to enforce
the specific performance thereof by M.A. Xxxxxxx or to enjoin M.A. Xxxxxxx from
performing services for any such other person, firm or corporation.
ARTICLE 9.
SURVIVAL OF REPRESENTATIONS; WARRANTIES AND COVENANTS;
INDEMNITY
9.1 Survival of Representations, Warranties and Covenants. Except as otherwise
expressly provided herein, the respective representations, warranties and
covenants of the parties contained in this Agreement or in any Schedule attached
hereto shall survive the closing of the transactions contemplated hereby.
9.2 Indemnification by the Stockholders. The Xxxxxxxx agree, jointly and
severally, to indemnify and hold Lightec, Biometrics, Newco, and their officers,
directors and agents harmless from and against any and all damages, losses or
expenses (including, without limitation, reasonable counsel fees and expenses)
and any consequential, special, punitive, exemplary, or extra-contractual
damages required to be paid by Biometrics, Newco or Lightec to third parties
("Damages") based on, arising out of, resulting from, or relating to any breach
or violation of, or failure to properly perform, any covenant, agreement or
obligation, or any breach of any of the representations or warranties, made by
Lightec or either or both of the Xxxxxxxx in this Agreement or in any Exhibit or
Schedule hereto.
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9.3 Indemnification by Biometrics. Biometrics and Newco, jointly and severally,
agree to indemnify and hold the Xxxxxxxx harmless from and against any and all
Damages based on, arising out of, resulting from, or relating to: any breach or
violation of, or failure to properly perform, any covenant, agreement or
obligation, or any breach of any of the representations or warranties, made by
Biometrics or Newco in this Agreement.
9.4 Threshold; Limitations. Anything contained in this Agreement to the contrary
notwithstanding, neither the Xxxxxxxx, on the one hand, or Biometrics and Newco
collectively, on the other hand shall be liable for any amounts for which the
other party is otherwise entitled to indemnification under the Agreement until
the aggregate amount for which such party is entitled to indemnification under
all such claims for indemnification under this Agreement (other than (a) the
obligation to pay the Note in accordance with its terms and (b) the
indemnification for a breach of the representations in Section 3.1.20, each of
which shall not be subject to the limitations of this section 9.4) in the
aggregate exceed Twenty Five Thousand Dollars ($25,000.00) (the "Threshold"), at
which time the responsible party shall be liable for such amounts, if any, in
excess of the Threshold.
9.5 Time Limits; Notice and Payment of Claims.
(a) The obligations of indemnification set forth in Sections 9.2 and 9.3
hereof shall be subject to the limitation that all claims asserted pursuant to
such obligations must be asserted in writing within the applicable statute of
limitations period; provided that indemnification obligations regarding legal
fees shall continue to apply to defend or avert any third party claims that are
brought beyond the statute of limitations period.
(b) The party seeking indemnification (the "Indemnified Party") shall
notify the party from whom indemnification is sought (the "Indemnifying Party")
within 45 days after becoming aware of, and shall provide to the Indemnifying
Party as soon as practicable thereafter all information and documentation
necessary to support and verify, any damages that the Indemnified Party shall
have determined have given or could give rise to a claim for indemnification
hereunder, and the Indemnifying Party shall be given access to all books and
records in the possession or under the control of the Indemnified Party which
the Indemnifying Party reasonably determines to be related to such claim.
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(c) Any actions for indemnification under this Article 9 shall be paid by
the Indemnifying Party on demand in immediately available funds in U.S. dollars
after such action and the liability for damages thereunder shall have been
finally determined. An action and the liability for damages thereunder shall be
deemed to be "finally determined" for purposes of this Article 9 when the
parties to such action shall have so determined by mutual agreement or, if
disputed, when an order of a court having competent jurisdiction shall have been
entered and become final with all appeals therefrom being exhausted and the time
for any further appeal having expired.
9.6 Matters Involving Third Parties.
(a) If any third party shall commence an action against any Indemnified
Party with respect to any matter (a "Third Party Claim") which may give rise to
a claim for indemnification against any Indemnifying Party under this Article 9,
the Indemnified Party shall notify the Indemnifying Party thereof in writing
within ten (10) business days after receipt of notice of the commencement of
such action; provided, however, that no delay on the part of the Indemnified
Party in notifying the Indemnifying Party shall relieve the Indemnifying Party
from any obligation hereunder unless (and then solely to the extent that) the
Indemnifying Party is thereby prejudiced.
(b) The Indemnifying Party shall have the right to defend the Indemnified
Party against the Third Party Claim with counsel of the Indemnifying Party's
choice reasonably satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing within ten (10)
business days after the Indemnified Party has given notice of the Third Party
Claim that the Indemnifying Party shall indemnify the Indemnified Party from and
against the entirety of any damages the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the Third
Party Claim, subject to the limitations provided in Section 9.4, (ii) the
Indemnifying Party provides the Indemnified Party with evidence that, in the
Indemnified Party's reasonable judgment, the Indemnifying Party (as a group if
more than one) will have the financial resources to defend against the Third
Party Claim and fulfill its indemnification obligations hereunder, (iii) the
Third Party Claim involves only money damages and does not seek an injunction or
other equitable relief which, if granted, is reasonably likely to have a
material adverse effect on the Indemnified Party, and (iv) settlement of, or an
adverse judgment with respect to, the Third
48
Party Claim is not, in the good faith judgment of the Indemnified Party, likely
to establish a precedential custom or practice materially adverse to the
continuing business interests of the Indemnified Party.
(c) So long as the Indemnifying Party is conducting the defense of the
Third Party Claim in accordance with Section 9.5(b) above, (i) the Indemnified
Party may retain separate co-counsel at the Indemnified Party's sole cost and
expense and participate in the defense of the Third Party Claim, (ii) the
Indemnified Party shall not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld or delayed, and (iii) the Indemnifying Party shall not consent to the
entry of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnified Party, which
consent shall not be unreasonably withheld or delayed; provided, however, that,
in the event such consent is withheld, the Indemnifying Party shall not be
liable for any amount of any eventual judgment or settlement in excess of the
amount for which the matter could have been settled if consent was granted.
(d) Unless any of the conditions set forth in Section 9.5(b) above are met,
(i) the Indemnified Party may defend against, and consent to the entry of any
judgment or enter into any settlement with respect to, the Third Party Claim in
any manner the Indemnified Party may deem appropriate, in the Indemnified
Party's sole discretion (and the Indemnified Party shall consult in good faith
with, but need not obtain any consent from, any Indemnifying Party in connection
therewith), (ii) the Indemnifying Party shall reimburse the Indemnified Party
promptly and periodically for the cost of defending against the Third Party
Claim (including, without limitation, all attorney's fees and expenses), (iii)
the Indemnifying Party shall remain fully liable for any damages the Indemnified
Party may suffer resulting from, arising out of, relating to, in the nature of,
or caused by the Third Party Claim to the fullest extent provided in this
Article 9, and (iv) the Indemnifying Party shall cooperate fully with the
Indemnified Party in the Indemnified Party's defense of the Third Party Claim.
9.7 Remedies Exclusive. Except as otherwise provided in the last paragraph of
Section 8.1 as to a breach of Article 8, the remedies provided in this Article 9
shall be the exclusive remedies of the parties hereto from and after the Closing
in connection with any breach of a representation or warranty, or
49
non-performance, partial or total, of any covenant or agreement contained
herein. The provisions of this Article 9 shall apply to claims for
indemnification asserted as between the parties hereto as well as to third-party
claims.
ARTICLE 10.
TAX AUDITS
10.1 Tax Audits. Upon receipt of notification from a governmental entity of any
audit, proceeding or adjustment ("Proposed Audit") with respect to taxes for
which Lightec or either or both of the Xxxxxxxx would be liable under this
Agreement including, without limitation, Sections 1.3 and 9.2. above, Biometrics
or Lightec shall promptly, but in all events within twenty (20) days after such
notification, notify the Xxxxxxxx in writing. The Xxxxxxxx shall have the right
but not the obligation to participate in any such Proposed Audit at their
expense. If any such Proposed Audit results in a proposed adjustment pertaining
to taxes which might result in an additional amount of taxes due for which the
Xxxxxxxx may be liable (an "Adjustment"), Lightec or Biometrics shall notify the
Xxxxxxxx in writing within twenty (20) days of receipt of notice of such
Adjustment. The Xxxxxxxx' shall notify Biometrics within twenty (20) days of
receiving Notice from Lightec or Biometrics of any Proposed Audit of the
Xxxxxxxx' intention to undertake the defense and handling of such Proposed Audit
at their expense. If the Xxxxxxxx do not timely notify Biometrics of their
intention to contest such Proposed Audit, their right is thereafter forfeited.
Biometrics shall then not be required to contest such Proposed Audit or defend
against any proceeding to collect any deficiency in Taxes. If the Xxxxxxxx do
not timely elect to contest any Proposed Audit, such Adjustment resulting
therefrom shall be considered a final determination unless otherwise contested
by Biometrics at its own expense. If timely notice is received by Biometrics of
the Xxxxxxxx' intention to contest such Proposed Audit, Biometrics will not
concede the correctness of any part of such Proposed Audit and will not enter
into any closing or compromise agreement with respect to any of the issues which
form the basis for such Proposed Audit, absent the written consent of the
Xxxxxxxx, which consent shall not be unreasonably withheld or delayed. The
Xxxxxxxx, with the cooperation of Biometrics to the extent necessary to contest
effectively such Proposed Audits shall contest such Proposed Audits at their
expense through the appropriate administrative channels and in a court of
initial jurisdiction, and, if necessary, in a court of appellate jurisdiction.
The Xxxxxxxx shall advise Biometrics of all
50
meetings with representatives of any audit authority, grant Biometrics or its
representatives the right to attend thereat, and shall deliver to Biometrics
copies of all correspondence pertaining to any Proposed Audit. Nothing contained
herein shall require Biometrics to contest or refrain from settling a claim
which it otherwise would be required to contest or not settle pursuant hereto if
Biometrics shall waive the payment by the Xxxxxxxx of any amount that might be
payable by them hereunder by way of indemnity with respect to such claim. In
connection with a Proposed Audit, the Xxxxxxxx may in good faith pursue or
forego any and all administrative appeals, proceedings, hearings and conferences
with the taxing authorities in respect of such audit and may either pay the tax
claimed and xxx for a refund (where applicable law permits such refund suits) or
contest the audit in any permissible manner. If any Proposed Audit results in a
final determination that additional taxes (including any related interest or
penalties) are due for which the Xxxxxxxx are liable under Section 9.2, the
Xxxxxxxx shall pay such amount within thirty (30) days of receiving written
Notice from Biometrics or the governmental entity of such final determination.
ARTICLE 11.
MISCELLANEOUS
11.1. Termination. This Agreement and the transactions contemplated hereby and
the provisions herein may be terminated at any time on or before the Closing
Date:
(a) by mutual consent of Biometrics and M.A. Xxxxxxx;
(b) by Biometrics or M.A. Xxxxxxx, if the transactions contemplated by
this Agreement have not been or are incapable of being consummated by
July 15, 2002, as extended (the "Termination Date"), unless such
failure of consummation is due to the failure of the terminating party
to perform or observe the covenants, agreements, and conditions hereof
to be performed or observed by him, her or it at or before the Closing
Date; provided, that the non-breaching party's cause of action
resulting from such failure to perform or to observe the covenants,
agreements and conditions hereof shall not be terminated; or
(c) by Biometrics or M.A. Xxxxxxx if the transactions contemplated hereby
violate any non-appealable final order, decree, or judgment of any
court or governmental body or agency having competent jurisdiction.
51
11.2. Entire Agreement. This Agreement and the exhibits hereto contain the
complete agreement among the parties with respect to the transactions
contemplated hereby and supersede all prior agreements and understandings among
the parties with respect to such transactions. Section and other headings are
for reference purposes only and shall not affect the interpretation or
construction of this Agreement. The parties hereto have not made any
representation or warranty except as expressly set forth in this Agreement or in
any certificate or schedule delivered pursuant hereto. The obligations of any
party under any agreement executed pursuant to this Agreement shall not be
affected by this section.
11.3. Expenses. The parties hereto shall pay all of their own expenses relating
to the transactions contemplated by this Agreement, including, without
limitation, the fees and expenses of their respective counsel and financial
advisers.
11.4. Counterparts; Facsimile Signatures. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original, and such counterparts together shall constitute only one
original. Execution and delivery of this Agreement (and any of the Exhibits,
Schedules and other documents and instruments executed in connection herewith)
by facsimile shall be equally as effective as delivery of a manually executed
counterpart, and the failure to deliver a manually executed counterpart shall
not affect the enforceability or binding effect of this Agreement.
52
11.5. Notices. All notices, demands, requests, or other communications that may
be or are required to be given, served, or sent by any party to any other party
pursuant to this Agreement shall be in writing and shall be sent by facsimile
transmission, nationally recognized overnight courier, or mailed by first-class,
registered or certified mail, return receipt requested, postage prepaid, or
transmitted by hand delivery, addressed as follows:
(i) If to the Xxxxxxxx or either of them:
0000 Xxxx Xxxxx Xxxxxxxx
Xxxxxxxx Xxxxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy (which alone shall not constitute notice) to:
Xxxxxxx X. Xxxx, Esq.
Xxxxxx & Galt, LLP
0000 Xxxxxxx Xxxx
Xxxxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
(ii) If to Biometrics:
Security Biometrics, Inc.
1410 - 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx XX X0X 0X0
Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxx Xxxxxx, Chief Financial Officer
with a copy (which alone shall not constitute notice) to:
Xxxxx X. Xxxxx, Esq.
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Each party may designate by notice in writing a new address to which any notice,
demand, request, or communication may thereafter be so given, served, or sent.
Each notice,
53
demand, request, or communication that is mailed, delivered, or transmitted in
the manner described above shall be deemed sufficiently given, served, sent, and
received for all purposes at such time as it is delivered to the addressee (with
the return receipt, the delivery receipt or the affidavit of messenger being
deemed conclusive evidence of such delivery) or at such time as delivery is
refused by the addressee upon presentation.
11.6. Successors; Assignments. This Agreement and the rights, interests, and
obligations hereunder shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned, by operation of law or otherwise, by any of the parties hereto without
the prior written consent of the other.
11.7. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of New York without regard to conflicts of
laws rules thereof.
11.8. Waiver and Other Action. This Agreement may be amended, modified, or
supplemented only by a written instrument executed by the parties against which
enforcement of the amendment, modification or supplement is sought.
11.9. Severability. If any provision of this Agreement is held to be illegal,
invalid, or unenforceable, such provision shall be fully severable, and this
Agreement shall be construed and enforced as if such illegal, invalid, or
unenforceable provision were never a part hereof; the remaining provisions
hereof shall remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance; and in lieu of
such illegal, invalid, or unenforceable provision, there shall be added
automatically as part of this Agreement, a provision as similar in its terms to
such illegal, invalid, or unenforceable provision as may be possible and be
legal, valid, and enforceable provided that the overall intent of the parties
can be achieved absent the illegal, invalid or unenforceable provision.
54
11.10. Amendments. This Agreement may not be changed orally, but only by an
agreement in writing signed by the party or parties to be bound.
11.11. Third Party Beneficiaries. Each party hereto intends that this Agreement
shall not benefit or create any right or cause of action in or on behalf of any
Person other than the parties hereto.
11.12. Context of Words. Unless the context clearly indicates a contrary intent
or unless otherwise specifically provided herein: words used in this Agreement
shall be used interchangeably in singular or plural form; the words "this
Agreement" shall mean "this Agreement and any and all schedules, exhibits or
riders annexed hereto and any and all amendments, modifications and supplements
hereof"; any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms; the words "include", "including", and "such as" shall
each be construed as if followed by the phrase "without being limited to"; and
the words "herein", "hereof", "hereunder" and words of similar import shall be
construed to refer to this Agreement as a whole and not to any particular
paragraph or section of this Agreement.
11.13. Resolution of Disputes. The parties shall attempt in good faith to
resolve any dispute arising out of or relating to this Agreement promptly by
negotiations between executives or other persons who have authority to settle
the controversy. Any party may give the other disputing party written notice of
any dispute not resolved in the normal course of business. Within five (5) days
after the effective date of that notice, executives of the disputing parties
shall agree upon a mutually acceptable time and place to meet and shall meet at
that time and place, and thereafter as often as they reasonably deem necessary,
to exchange relevant information and to attempt to resolve the dispute. The
first of those meetings shall take place within thirty (30) days of the
effective date of the disputing party's notice. All negotiations pursuant to
this Section 11.13 shall be treated as compromise and settlement negotiations
for the purposes of applicable rules of evidence and procedure.
11.14. Legal Proceedings. The parties agree that any legal action or proceeding
with respect to this Agreement or the Note must be brought in the New York
Xxxxxxx Xxxxx, Xxx
00
Xxxx Xxxxxx, Xxx Xxxx or in the United States District Court for the Southern
District of New York, and by execution and delivery of this Agreement and the
other documents, instruments and agreements to which it is a party, each party
irrevocably submits to the exclusive jurisdiction of such courts, and to
appellate courts therefrom, for purposes of legal actions and proceedings
hereunder and, in the case of any such legal action or proceeding brought in the
above-named New York courts, hereby irrevocably consent, during such time, to
the service of process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered mail,
postage prepaid, to a party at its, his or her respective addresses as provided
herein, or by any other means permitted by applicable law. If it becomes
necessary for the purpose of service of process out of any such courts, each
party shall take all such action as may be required to authorize a special agent
to receive, for and on behalf of it, service of process in any such legal action
or proceeding, and shall take all such action as may be necessary to continue
said appointment in full force and effect so that the party will at all times
have an agent for service of process for the above purposes in the State of New
York. To the extent permitted by law, final judgment against a party in any such
legal action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on an unsatisfied judgment. TO THE EXTENT THAT A PARTY HAS
OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY OF THE
ABOVE-NAMED COURTS OR FROM ANY LEGAL PROCESS THEREIN, SUCH PARTY HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY, AND EACH PARTY HEREBY IRREVOCABLY WAIVES AND
AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY LEGAL
ACTION OR PROCEEDING BROUGHT HEREUNDER IN ANY OF THE ABOVE-NAMED COURTS (I) ANY
CLAIM THAT IT, HE OR SHE IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF THE
ABOVE-NAMED COURTS, (II) THAT IT, HE OR SHE OR ANY OF ITS, HIS OR HER PROPERTY
IS IMMUNE FROM THE ABOVE DESCRIBED LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, OR
OTHERWISE), (III) THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM, THAT VENUE FOR THE ACTION OF PROCEEDING IS IMPROPER OR THAT THIS
AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT MAY NOT BE ENFORCED IN OR BY SUCH
COURTS, OR (IV) ANY DEFENSE THAT WOULD HINDER OR DELAY THE LEVY, EXECUTION OR
COLLECTION OF ANY AMOUNT TO WHICH EITHER PARTY HERETO IS ENTITLED PURSUANT TO A
FINAL JUDGMENT OF ANY COURT HAVING
56
JURISDICTION. THE PARTIES EXPRESSLY ACKNOWLEDGE THAT THE FOREGOING WAIVER BY
SUCH PARTY IS INTENDED TO BE IRREVOCABLE AND HEREBY WAIVE ANY RIGHT WHICH IT, HE
OR SHE MAY HAVE TO REQUEST A TRIAL BY JURY IN ANY ACTION RELATING TO THIS
AGREEMENT OR THE NOTE.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
____________________________________
XXXXXXXX XXXXXXX, INDIVIDUALLY
____________________________________
XXXXXXX XXXXXXX, INDIVIDUALLY
SECURITY BIOMETRICS, INC.
BY: ________________________________
XXXXXXX XXXX, PRESIDENT
LIGHTEC COMMUNICATIONS INC.
BY: ________________________________
XXXXXXX XXXXXXX, PRESIDENT
LT ACQUISITION CORP.
BY: ________________________________
XXXXXXX XXXX, PRESIDENT
57
INDEX OF EXHIBITS AND SCHEDULES
I. EXHIBITS
A. PROMISSORY NOTE
B. SECURITY AGREEMENT
C. EMPLOYMENT AGREEMENT
II. SCHEDULES
3.1.2 Foreign Qualification
3.1.5 Restrictions and Conflicts
3.1.6 Capitalization of Lightec
3.1.7 Financial Statements
3.1.8 Books and Records
3.1.9 Title to Properties; Encumbrances
3.1.10(b) Real Property
3.1.10(c) Inventory
3.1.11 Leases
3.1.12 Material Contracts
3.1.13 Restrictions
3.1.14 Litigation
3.1.15 Taxes
3.1.17 Insurance
58
3.1.18 Intellectual Properties
3.1.23 Environmental Laws and Regulations
3.1.24 Interests in Clients, Suppliers, Etc.
3.1.25 Bank Accounts, Powers of Attorney and Employees
3.1.26 Changes Since Beginning Balance Sheet Date
3.1.27 Broker's/Finder's Fees
3.1.29 Customers and Suppliers
3.1.30 Warranties.
59
EXHIBIT A: NOTE
EXHIBIT B: SECURITY AGREEMENT
EXHIBIT C: EMPLOYMENT AGREEMENT
SCHEDULE 3.1.2 - FOREIGN QUALIFICATION
NONE
SCHEDULE 3.1.5 - RESTRICTIONS AND CONFLICTS
NONE
SCHEDULE 3.1.6 - CAPITALIZATION
Fifty (50) shares, no par value.
SCHEDULE 3.1.7 - FINANCIAL STATEMENTS
1. Balance Sheets (copies annexed):
a. May 14, 2002;
b. March 14, 2002;
c. December 31, 2001;
d. December 31, 2000.
2. Income Statements (copies annexed):
a. March 14, 2002 through May 31, 2002;
b. Fiscal Year ending December 31, 2001;
c. Fiscal Year ending December 31, 2000.
SCHEDULE 3.1.8 - BOOKS AND RECORDS
Staffline, Inc. 00 Xxxxxxx Xxxxxx, Xxxxxxxxxxxx, X.X. maintains
payroll/benefit records for Lightec.
SCHEDULE 3.1.9 - TITLE TO PROPERTIES; ENCUMBRANCES
1. Liens on vehicles owned by Lightec per Asset Depreciation Schedules set
forth on 3/14/02 and 5/14/02 Balance Sheets (copies annexed).
60
SCHEDULE 3.1.10(B) - REAL PROPERTY
NONE
SCHEDULE 3.1.10(C) - INVENTORY
NONE
SCHEDULE 3.1.11 - LEASES
1. Lease Agreement dated August 1, 2001, between Xxxxxxx X. Xxxxx, as
Landlord, and Lightec, as Tenant, for Lightec's offices located at 0
Xxxxxxx Xxxxxx, Xxxxx #0, Xxxxxxxx Xxxxxx, X.X. 00000 (copy annexed).
SCHEDULE 3.1.12 - MATERIAL CONTRACTS
1. Bridgeport, CT Multi-Year Contract dated January 17, 2001 including
Year 4 Funding Commitment Letter(s) (copies annexed).
SCHEDULE 3.1.13 - RESTRICTIONS
NONE
SCHEDULE 3.1.14 - LITIGATION
1. XXXXXXX X. XXXXXX-PUITTI and XXXX PUITTI vs. XXXXX X. XXXXX and LIGHTEC
COMMUNICATIONS, INC. On or about November 22, 1999, an employee of the
company was involved in an accident with another vehicle while driving
a company vehicle. The driver of the other vehicle and her spouse
subsequently filed suit against
61
the company seeking damages of $1.25 million dollars. The company's
insurance policy includes liability coverage up to $2 million dollars.
The matter has been referred to, and is being defended by, the
company's insurance carrier. The company expects any potential damages
to be covered under the policy. Based on the facts as they are
presently understood by the company and the Xxxxxxxx, the company and
the Xxxxxxxx do not believe the suit will have a material adverse
effect on the company.
SCHEDULE 3.1.15 - TAXES
None
SCHEDULE 3.1.17 - INSURANCE
Copy annexed.
SCHEDULE 3.1.18 - INTELLECTUAL PROPERTIES
None
SCHEDULE 3.1.23 - ENVIRONMENTAL LAWS AND REGULATIONS
None
SCHEDULE 3.1.24 - INTERESTS IN CLIENTS, SUPPLIERS, ETC.
None
SCHEDULE 3.1.25 - BANK ACCOUNTS, POWERS OF ATTORNEY
AND EMPLOYEES
Copy annexed
62
SCHEDULE 3.1.26 - CHANGES SINCE
BEGINNING BALANCE SHEET DATE
None
SCHEDULE 3.1.27 - BROKER'S FINDER'S FEES
None
SCHEDULE 3.1.29 - CUSTOMERS AND SUPPLIERS
Copy annexed
SCHEDULE 3.1.30 - WARRANTIES
None
63
