SHARE EXCHANGE AGREEMENT
SHARE EXCHANGE AGREEMENT (this "Agreement"), dated as of May 20, 2003, by
and among SCL VENTURES, LTD., a British Virgin Islands company("SCL") having an
address at Suite 4000, 000 X. Xxx Xxxxx Xxxxx X, Xxxx Xxxxxxxxxx, XX 00000,
LASER RECORDING SYSTEMS, INC., a New Jersey corporation ("Laser" or "Company")
having an address at 0000 Xxx Xxxx Xxxxxx, Xxxxxxxxxx Xxxxxxx, XX 00000, certain
shareholders of SCL signatory hereto ("SCL Signatory Shareholders) together with
additional parties that may hold SCL Common prior to the date of the Closing, as
defined herein who sign and become bound by this agreement (who jointly with the
SCL Signatory Shareholders are referred to herein as the "Sellers"), and certain
shareholders of Laser signatory hereto (the "Laser Signatory Shareholders").
WHEREAS, SCL has 600,000 shares of common shares, par value $.001 per share
("SCL Common") issued and outstanding on the date hereof;
WHEREAS, the SCL Shareholders are the owners of 100% (the "SCL Shares") of
the outstanding SCL Common on the date hereof;
WHEREAS, SCL intends to issue additional shares of SCL Common (the "SCL
Additional Shares") prior to the Closing Date, as defined below, (i) owned by
the SCL Signatory Shareholders, and (ii) the SCL Additional Shares referred to
as the "SCL Exchange Shares");
WHEREAS, Laser has, or will have on the Closing Date, 400,000,000 shares of
common stock, par value $.001 per share ("Laser Common") and 1,000,000 shares of
preferred stock, par value $.001 per share ("Laser Preferred") authorized for
issuance on the date hereof;
WHEREAS, there are 10,000,000 shares of Laser Common and no shares of Laser
Preferred issued and outstanding on the date hereof;
WHEREAS, the Laser Signatory Shareholders are the owners of approximately
68% of the issued and outstanding Laser Common as of the date hereof;
WHEREAS, subject to certain conditions precedent set forth herein and
acknowledging that additional SCL Shares are intended to be issued prior to
completion of the transaction described herein, Laser desires to acquire from
the Sellers, and the Sellers desire to sell to the Laser, in a transaction
intended to be a tax-free exchange pursuant to Section 368 of the Internal
Revenue Code of 1986, all of the SCL Exchange Shares in exchange for the
issuance by the Laser of an aggregate of Laser Common equaling ninety-five (95%)
percent of the issued and outstanding capital stock of the Laser on a fully
diluted basis and two (2%) percent of same to the Sellers' consultants,
financial advisors, and professional service providers, on the terms and
conditions set forth below;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, the parties hereto, intending to be legally
bound, do hereby agree as follows:
1. INCORPORATION OF RECITALS; CERTAIN DEFINITIONS; CONSTRUCTION.
1.1 The recitals set forth above are incorporated unto this Agreement as if
they were set forth in full in the body of this Agreement.
1.2 As used in this Agreement, the following terms shall have the following
respective meanings:
"Accredited Investor" shall have the meaning given to such term in
Rule 501 of Regulation D.
"Additional Laser Shares" means the number of shares of Laser Common
that will equal 2% of the outstanding shares of Laser Common immediately
following the Closing, on a fully-diluted basis to be reserved for issuance
on or after the Closing Date to consultants, financial advisors and
professional service providers to SCL.
"Affiliate" shall mean (1) a Person who directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is
under common control with the Person specified; or (ii) any relative or
spouse of such Person, or any relation of such spouse, who has the same
home as such Person. As used in this definition, the term "control"
(including the terms "controlling," "controlled by" and "under common
control") means the possession, direct or indirect, of the power, whether
exercised or not, to direct or cause the acquisition and/or disposition by
such Person of securities of the other Person, whether through the
ownership of voting securities or otherwise.
"Amendment" means the amendment to the certificate of incorporation of
Laser to be filed by Laser to effect the Reverse Split.
"Blue Sky Law" shall mean the securities laws and regulations of the
various states of the United States.
"Closing" shall mean the closing of the Exchange.
"Closing Date" shall mean the date of the Closing, as prescribed by
Section 5 hereof.
"Code" means the United States Internal Revenue Code of 1986, as
amended, or any successor law.
"Encumbrance" means any mortgage, charge, claim, community property
interest, lien, option, pledge, security interest, pre-emptive right, right
of first refusal or restriction, including restriction on use, voting,
transfer, receipt of income or exercise of any other attribute of
ownership, or any other adverse claim of any kind.
"Environmental Laws" means any federal, state, local or foreign law
(including, without limitation, common law), treaty, judicial decision,
regulation, rule, judgment, order, decree, injunction, permit or
2
governmental restriction or requirement or any agreement with any
governmental authority or other third party, relating to human health and
safety or the environment and arising from the use, presence, disposal,
discharge or release of pollutants, contaminants, wastes or chemicals or
any toxic, radioactive, ignitable, corrosive, reactive or otherwise
hazardous substances, wastes or materials.
"Environmental Permits" mean, with respect to any person, all permits,
licenses, franchises, certificates, approvals and other similar
authorization of governmental authorities relating in any way to, the
business of such person as currently conducted.
"ERISA" means the United States Employee Retirement Income Security
Act of 1974.
"Escrow Agent " means Raice, Paykin & Xxxxx, LLP.
"Escrow Agreement" means that certain Deposit Escrow Agreement, dated
as of March 28, 2003, by and among SCL, Laser and Escrow Agent.
"Exchange" means the exchange of Laser Exchange Shares for SCL
Exchange Shares to take place on the Closing Date pursuant to the terms of
this Agreement.
"Exchange Act" means the United States Securities Exchange Act of
1934, as amended.
"Fund" means EPG Capital Management, Inc.
"GAAP" means generally accepted U.S. accounting principles
consistently applied.
"Governmental Authority" means any court, tribunal, authority, agency,
commission, bureau, department, arbitrator or official or other
instrumentality of the United States, British Virgin Islands or any other
country or any provincial, state, local, county, city or other political
subdivision.
"Governmental Permit" means any license, franchise, permit or other
authorization, consent or approval of any Governmental Authority.
"Intellectual Property Right" means any right to use, whether through
ownership, licensing or otherwise, or any title to, any patents,
trademarks, service marks, trade names, copyrights, trade secrets and other
proprietary rights and processes.
"Laser Board" means the Board of Directors of Laser.
"Laser Common" means common stock of Laser, par value $0.001 per
share.
3
"Laser Disclosure Schedule" means the disclosure schedule of Laser
attached as Exhibit A to this Agreement.
"Laser Exchange Shares" means the shares of Laser Common to be issued
by Laser in exchange for SCL Exchange Shares pursuant to the terms of this
Agreement.
"Laser Information Statement" means the Definitive Information
Statement of Laser dated May 7, 2002.
"Laser SEC Filings" shall have the meaning set forth in Section 6.9
(a) hereof.
"Laser's 2002 Annual Report" means the annual report on Form 10-K for
the year ended January 31, 2003.
"Letter of Intent" means that certain letter of intent, dated as of
March 28, 2003, by and among SCL, Laser and the Laser Signatory
Shareholders with respect to the Exchange.
"Lien" means any lien, pledge, hypothecation, levy, mortgage, deed of
trust, security interest, claim, lease, charge, option, right of first
refusal, easement, or other real estate declaration, covenant, condition,
restriction or servitude, transfer restriction under any shareholder or
similar agreement, encumbrance, other adverse claim of any kind or any
other restriction or limitation whatsoever.
"Material Adverse Effect" means any change, effect, event, occurrence
or state of facts that has had, or would reasonably be expected to have, a
material adverse effect on the business operations, financial condition or
results of operations of the entity in questions and its subsidiaries, if
any, taken as a whole; and for purposes of this definition, subsidiaries of
Laser shall include the subsidiaries of Laser, if any, prior to Closing and
SCL and its subsidiaries
"Minimum Equity Investment" means an equity investment in SCL of not
less than $2,200,000 to be realized on or prior to the Closing Date.
"NJCL" shall mean the state of New Jersey corporation law.
"Person" means any individual, corporation, company, partnership,
limited liability company or partnership, association, trust or other
entity or organization, including any government or political subdivision
or any agency or instrumentality thereof.
"Regulation D" means Regulation D promulgated under the Securities
Act.
"Regulation FD" means Regulation FD promulgated under the Exchange
Act.
"Reverse Split" means a one-for-four split of the Laser Common to be
effected by Laser pursuant to the Laser Information Statement and Section
3.4 hereof.
4
"Rule 144" means Rule 144 promulgated under the Securities Act.
"SCL Amendment" means any amendment to SCL's memorandum of association
and/or by-laws to be filed prior to the Closing to effectuate any
modifications or amendments thereto required to give effect to the
transactions contemplated hereby or by the Xxxxx Transaction.
"SCL Board" shall mean the Board of Directors of SCL.
"SCL Disclosure Schedule" means the disclosure schedule of SCL
attached as Exhibit B to this Agreement.
"SCL Exchange Shares" means the shares of SCL Common to be exchanged
by SCL Shareholders for Laser Exchange Shares pursuant to the terms of this
Agreement.
"SCL Shareholders" shall mean all beneficial owners of SCL Common
immediately prior to the Closing.
"SCL Signatory Shareholders" means the current holders of SCL Common
listed as signatories to this Agreement.
"SEC" means the United States Securities and Exchange Commission, or
any successor body.
"Securities Act" means the United States Securities Act of 1933, as
amended, or any successor statute.
"Standstill Agreement" shall mean the covenants, representations and
warranties of the parties contained in Section 10.4 hereof.
"Termination Date" shall mean the date of termination of this
Agreement as set forth in Section 13.2 hereof.
"Taxes" means any and all federal, state, local, foreign or other
taxes of any kind (together with any and all interest, penalties, additions
to tax and additional amounts imposed with respect thereto) imposed by any
taxing authority including, without limitation, taxes or other charges on
or with respect to income, franchises, windfall or other profits, gross
receipts, sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation or net worth, and taxes or
other charges in the nature of excise, withholding, ad valorem or value
added.
"Transaction Documents" means this Agreement (including all exhibits
hereto), the Put Agreement, the Escrow Agreement and all other documents
and instruments delivered by SCL or Laser pursuant to this Agreement.
5
"Xxxxx" means Xxxxx Communications Technology Company Limited, a
company organized under the laws of the Peoples' Republic of China.
"Xxxxx Transaction" means the acquisition by SCL of the equivalent of
a 51% equity interest in a sino-equity joint venture to be formed by SCL
and Xxxxx.
1.3 The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. In this Agreement
(i) words denoting the singular include the plural and vice versa, (ii) "it" or
"its" or words denoting any gender include all genders, (iii) the word
"including" shall mean "including without limitation," whether or not expressed,
(iv) any reference to a statute shall mean the statute and any regulations
thereunder in force as of the date of this Agreement or the Closing, as
applicable, unless otherwise expressly provided, (v) any reference herein to a
Section, Schedule or Exhibit refers to a Section of or a Schedule or Exhibit to
this Agreement, unless otherwise stated, and (vi) when calculating the period of
time within or following which any act is to be done or steps taken, the date
which is the reference day in calculating such period shall be excluded and if
the last day of such period is not a Business Day, then the period shall end on
the next day that is a Business Day. Each party acknowledges that he, she or it
has been advised and represented by counsel in the negotiation, execution and
delivery of this Agreement and accordingly agrees that if an ambiguity exists
with respect to any provision of this Agreement, such provision shall not be
construed against any party because such party or its representatives drafted
such provision.
2. PLAN OF REORGANIZATION. The transactions contemplated by this Agreement are
intended to be a reorganization under both Sections 351 and 368(a)(1)(B) of the
Code. Upon the terms and subject to the conditions of this Agreement and on the
basis of the representations, warranties and covenants contained herein, at the
Closing, the SCL Signatory Shareholders and the remaining SCL Shareholders shall
exchange all of the shares of SCL Common then held by them (collectively, "SCL
Exchange Shares") for Laser Exchange Shares at the ratio provided in Section 3
hereof, (the "Exchange").
3. THE EXCHANGE; REVERSE SPLIT.
3.1 Exchange. Upon the terms and subject to the conditions contained in
this Agreement, at the Closing, each Seller shall exchange, transfer and assign
all of such Seller's right, title and interest in and to the SCL Exchange Shares
held by such Seller for Laser Exchange Shares by delivering share certificates
therefor or other evidence of title and transfer sufficient to transfer such
right, title and interest under British Virgin Islands law, and Laser shall
issue Laser Exchange Shares in exchange for shares of SCL Exchange Shares so
tendered by the Seller in the ratio set forth in Section 3.2 hereof, by
delivering to each Seller a certificate or certificates evidencing the Laser
Exchange Shares issuable to such Seller. As a result of the Exchange, SCL shall
be a wholly owned subsidiary of Laser.
3.2 Exchange Ratio. Each SCL Exchange Share shall be exchanged for one
share of Laser Common. The result of such reorganization shall be that if all
Sellers participate in the reorganization on the Closing Date, and there has
been delivered to SCL $6,000,000 in equity investments, the Sellers shall
6
receive at Closing, 95% of the Laser Common outstanding immediately following
the Closing, on a fully-diluted basis. To the extent that less than $6,000,000
has been delivered to SCL, the number of shares delivered to the Sellers shall
be effectively reduced so that the Laser Shareholders percentage of Laser Common
ownership shall only be reduced to 3% at such time as a full $6,000,000 has been
delivered to SCL or directly to Laser in consideration of the issuance of new
Laser Common.
3.3 Reverse Split. Prior to the Closing, Laser shall consummate the Reverse
Split by filing the Amendment with the New Jersey Secretary or Department of
State and shall immediately upon such filing obtain a certified copy of the
Amendment and provide same to SCL and its counsel. All of the terms of the
Exchange set forth in this Section 3 and elsewhere in this Agreement assume
consummation of the Reverse Split, and shall be calculated on a fully-diluted
basis.
3.4 No Liens or Encumbrances. Except as otherwise expressly provided
herein, the SCL Exchange Shares and the Laser Exchange Shares delivered in the
Exchange at the Closing shall be free and clear of all Liens and Encumbrances.
3.5 Restrictions on Transfer. The parties acknowledge and agree that as of
the Closing Date:
3.5.1 None of the Laser Exchange Shares will be registered under U.S.
federal or Blue Sky Laws and are intended to be issued pursuant to an
exemption therefrom under Rule 506 of Regulation D, Section 4(2) or other
applicable exemption, shall be "restricted stock" within the meaning of
Rule 144 promulgated under the Securities Act, and may not be resold, offer
for resale, transferred, pledged, distributed or otherwise hypothecated
unless registered under the Securities Act and applicable Blue Sky Laws or
exempt from such registration under the terms of Rule 144 or otherwise, and
Laser receives an opinion of counsel satisfactory to Laser in its
reasonable discretion to the effect that such registration is not required.
Each Laser Exchange Share certificate shall bear a legend substantially in
the following form:
"THE SECURITIES OF LASER RECORDING SYSTEMS, INC. (THE "COMPANY")
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933 (THE "ACT") OR APPLICABLE STATE SECURITIES LAWS AND
ARE "RESTRICTED SECURITIES" WITHIN THE MEANING OF RULE 144 UNDER THE ACT.
THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, OR PURSUANT
TO AN EXEMPTION FROM SUCH REGISTRATION AND THE COMPANY RECEIVES AN OPINION
OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED."
7
3.5.2 The SCL Exchange Shares have not been registered under the
Securities Act or applicable Blue Sky Laws and will be offered and
exchanged pursuant to this Agreement in compliance with an exemption from
such registration under Rule 506 of Regulation D, or Section 4(2) and may
not be offered, resold, pledged, hypothecated or otherwise transferred
unless registered under the Securities Act and applicable Blue Sky Laws, or
exempt from such registration and Laser receives an opinion of counsel
satisfactory to Laser in its reasonable discretion to the effect that such
registration is not required. Each SCL Exchange Share certificate shall
bear a legend substantially in the following form:
"THE COMMON SHARES OF SCL VENTURES, LTD., A BRITISH VIRGIN ISLANDS COMPANY
(THE "COMPANY") REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR THE SECURITIES LAWS OF
APPLICABLE STATES OF THE UNITED STATES ("STATE LAWS"), AND MAY NOT BE
OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS
REGISTERED UNDER THE SECURITIES ACT AND APPLICABLE STATE LAWS OR EXEMPT
FROM SUCH REGISTRATION AND THE COMPANY RECEIVES AN OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED."
3.5.3 On the Closing Date, SCL and Laser shall instruct their
respective transfer agents to annotate the applicable records to reflect
the restrictions on transfer with respect to SCL Exchange Shares and the
Laser Exchange Shares, respectively, contained in this Agreement.
3.6 Reservation of Shares for Issuance. Prior to the Closing: (a) Laser
shall have reserved for issuance pursuant to this Agreement the number of shares
of Laser Common sufficient to issue the shares of Laser Common equal to 97% of
the shares of Laser Common to be outstanding immediately following the Closing,
on a fully-diluted basis, after giving effect to the Reverse Split (the "Laser
Exchange Shares"), which shares shall include the Additional Laser Shares; and
(b) SCL shall have increased its authorized share capital and reserved for
issuance the number of shares of SCL Common required to be issued to those who
contribute equity capital to SCL prior to the Closing.
3.7 Exchange Procedures. Each of the Sellers shall exchange their shares of
SCL Common for shares of Laser Common, as follows:
3.7.1 the Company shall issue and deliver to each of the Sellers and
their designees the number of authorized but unissued shares of Company
Common Stock as provided for herein, and
3.7.2 each Seller agrees to deliver to the Company, all of the SCL
Common owned by Seller with an appropriately executed stock power endorsed
in favor of the Company.
8
4. SCL EQUITY FINANCING; PUT; XXXXX TRANSACTION. The parties acknowledge and
agree that this transaction was subject to certain terms as set forth in the
Letter of Intent. The parties hereby agree that in lieu of those terms, they
have agreed to proceed in accordance with the terms of this Agreement as:
4.1 SCL has secured the Minimum Equity Investment prior to the Closing;
4.2 SCL has delivered a fully executed agreement providing for completion
of the Xxxxx Transaction;
4.3 SCL is continuing to actively pursue the SUNTEK agreement described in
the Letter of Intent; and
4.4 SCL has entered into an agreement with the Fund (the "Put Agreement")
providing that to the extent that SCL does not have equity investments equaling
$6,000,000 at the time of Closing, (i) the Fund shall have the right for a
period of 180 days after the Closing to invest in SCL and after the Closing in
Laser, the difference between the actual equity investment and $6,000,000 and
receive Laser Common as if the funds were provided before the Closing and
treated as part of the Exchange, and (ii) subject to receipt of notice that
audits of SUNTEK are available, Laser, and/or the Laser Signatory Shareholders,
shall have the right at any time after 90 days and up to 180 days after the
Closing to demand that the Fund provide such funds under these terms.
5. CLOSING; CLOSING DATE.
5.1 The Closing of the Exchange shall take place upon five days written
notice from SCL to Laser, but no later than the earlier of (i) 180 days from the
date hereof or (ii) date which is seventy-five (75) days following SCL's receipt
of written notice from its auditors, Deloitte & Touche (and/or any other firm or
firms of auditors selected by SCL in its sole discretion) that its audits of
Laser and SCL shall be completed (the "Auditor's Notice") in not less than sixty
(60)days following the date of notice (the "Closing Date").
5.2 Notwithstanding the foregoing sub-section, the parties acknowledge that
applicable NJCL may require that shareholders of Laser be given the right to
dissent from the Exchange provided by this Agreement and be paid the fair value
of their Laser Common. In this connection:
5.2.1 The Closing Date shall not be earlier than that permitted under
NJCL after giving notice to the shareholders of Laser of their right to
dissent together with such information (the "Information Statement") as may
be required under NJCL, the Securities Act, the Exchange Act or other
applicable rules and regulations.
5.2.2 The parties shall cooperate fully in the preparation and
delivery of the Information Statement. The Laser Signatory Shareholders
agree to reimburse Laser for 50% of the legal and administrative costs and
fees incurred in connection with the preparation and delivery of the
Information Statement to a maximum amount of $30,000 (i.e. their cost is
capped at $15,000) and SCL shall provide the balance thereof.
9
5.2.3 In the event that shareholders representing more than 10% of the
outstanding Laser Common exercise their dissenter's rights, SCL shall have the
right to terminate this agreement as if such exercise was a Material Adverse
Effect.
6. REPRESENTATIONS AND WARRANTIES OF LASER AND THE LASER SIGNATORY SHAREHOLDERS.
Laser and the Laser Signatory Shareholders represent and warrant:
6.1 Corporate Existence and Power. Laser is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of New Jersey and has all corporate powers and all Governmental Permits required
to carry on its business as now conducted, except for those Governmental Permits
the absence of which would not, individually or in the aggregate, have a
Material Adverse Effect. Laser is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where such
qualification is necessary, except for those jurisdictions where failure to be
so qualified would not, individually or in the aggregate, have a Material
Adverse Effect on Laser.
6.2 Articles of Incorporation and By-laws; Minute Books. The copies of the
Articles of Incorporation and By-laws (or similar governing documents) of the
Company, and all amendments to each are true, correct and complete. The minute
books of the Company contains true and complete records of all meetings and
consents in lieu of meetings of its Board of Directors (and any committees
thereof), or similar governing bodies, since the time of its organization. The
stock books of the Company are true, correct and complete.
6.3 Corporate Authorization. The execution, delivery and performance by
Laser of this Agreement and the other Transaction Documents and the consummation
by it of the transactions contemplated hereby and thereby are within Laser s
corporate powers and have been duly authorized by all necessary corporate
action. No vote of the holders of the outstanding shares of Laser Common or any
other securities of Laser is necessary in connection with the consummation of
the Exchange and the other transactions contemplated hereby. This Agreement and
each of the other Transaction Documents constitutes a valid and binding
agreement of Laser enforceable against Laser in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally now or hereafter in effect and subject to the application of equitable
principles and the availability of equitable remedies.
6.4 Laser Board Consent. The execution, delivery and performance by Laser
of this Agreement and each of the other Transaction Documents has been duly
authorized by Laser s Board of Directors, which, at a meeting duly called and
held, has duly (a) determined that this Agreement and the other Transaction
Documents, the Exchange and the other transactions contemplated hereby and
thereby are fair to and in the best interests of Laser s shareholders, and (b)
approved and adopted this Agreement, the other Transaction Documents, the
Exchange and the other transactions contemplated hereby or thereby, which
approval satisfies in full any applicable requirements of the NJCL. The
resolutions of the Laser Board attached to Exhibit 6.4 hereto are true, complete
and correct copies of the resolutions adopted by Laser's Board relating to the
Exchange, this Agreement and the other Transaction Documents.
10
6.5 Governmental Authorization. The execution, delivery and performance by
Laser of this Agreement and the other Transaction Documents and the consummation
by Laser of the transactions contemplated hereby or thereby require no action by
or in respect of, or filing with, any Governmental Authority other than (a) the
filing of the Amendment to effect the Reverse Split in accordance with the NJCL,
(b) filing with the SEC of Current Reports on Form 8-K with respect to (i) the
execution and delivery of this Agreement and (ii) the Closing, and (c)
compliance with any applicable requirements of Regulation D and Blue Sky Laws,
(d) approval, if required, by Governmental Authorities of British Virgin Islands
of Laser's ownership of the SCL Exchange Shares, and (e) any other filings,
including an information statement in connection with dissenters rights, and/or
other approvals or authorizations which, if not obtained, would not,
individually or in the aggregate, have a material adverse effect on Laser or
materially impair the ability of Laser to consummate the transactions
contemplated by this Agreement.
6.6 Non-Contravention. The execution, delivery and performance by Laser of
this Agreement and the other Transaction Documents and the consummation by Laser
of the transactions contemplated hereby and thereby do not and will not (a)
violate the certificate of incorporation or bylaws of Laser, (b) assuming
compliance with the matters referred to in Section 6.5(d), violate any
applicable law, rule, regulation, judgment, injunction, order or decree, (c)
require any consent or other action by any person under, constitute a default
under, or give rise to any right of termination, cancellation or acceleration of
any right or obligation of Laser or to a loss of any benefit to which Laser is
entitled under any provision of any agreement or other instrument binding upon
Laser or any Governmental Permit, or other similar authorization affecting, or
relating in any way to, the assets or business of Laser, or (d) result in the
creation or imposition of any Lien or Encumbrance on any asset of Laser except,
in the case of clauses (b), (c) and (d), for such matters as would not,
individually or in the aggregate, have Material Adverse Effect on Laser or
materially impair the ability of Laser to consummate the transactions
contemplated by this Agreement.
6.7 Capitalization; Validity of Securities. As of the Closing Date, the
authorized capital stock of Laser will consist of 400,000,000 shares of Laser
Common and 10,000,000 shares of Laser Preferred. As of the date hereof there are
outstanding (i) 10,000,000 shares of Laser Common, and (ii) no shares of Laser
Preferred. All outstanding shares of capital stock of Laser have been duly
authorized and validly issued an are fully paid and non-assessable. Except as
set forth in this Section, there are no outstanding (a) shares of capital stock
or voting securities of Laser, (b) securities of Laser convertible into
exchangeable for shares of capital stock or voting securities of Laser or (c)
options, restricted stock, other stock-based compensation awards or other rights
to acquire from Laser or other obligation of Laser to issue, any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of Laser. There are no outstanding obligations of
Laser or any of its subsidiaries to repurchase, redeem or otherwise acquire any
securities referred to in clauses (a), (b) or (c) above. Prior to the Closing,
Laser will reserve for issuance a number of shares of Laser Common sufficient to
issue the Laser Exchange Shares. The Laser Exchange Shares, when issued, sold
and delivered according to the terms of this Agreement, will be duly and validly
issued (including, without limitation, compliance with Regulation D and
applicable Blue Sky Laws), fully-paid, and non-assessable.
11
6.8 Subsidiaries. The Company does not own, directly or indirectly, any
capital stock, equity or interest in any corporation, firm, partnership, joint
venture or other entity.
6.9 SEC Filings.
6.9.1 Laser has delivered to SCL (a) Laser's 2002 Annual Report, (b)
proxy or information statements relating to meetings of, or actions taken
without a meeting by, the shareholders of Laser held since December 31,
2000 and (C) all of its other reports, statements, schedules and
registration statements filed with the SEC since January 1, 2000 (the
documents referred to in this Section 6.9.1(a) being referred to
collectively as the "Laser SEC Filings."
6.9.2 As of its filing date, each Laser SEC Filing complied as to form
in all material respects with the applicable requirements of the Securities
Act and the Exchange Act and did not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which
they were made, not misleading.
6.10 Financial Statements. The audited consolidated financial statements
and unaudited consolidated interim financial statements of Laser included in the
SEC Filings fairly present, in conformity with GAAP (except, as to application
on a consistent basis, as may be indicated in the notes thereto), the
consolidated financial position of Laser as of the dates there of and their
consolidated results of operations and cash flows for the periods then ended
(subject to normal year- end adjustments in the case of any unaudited interim
financial statements). For purposes of this Agreement, "Laser Balance Sheet"
means the consolidated balance sheet of Laser as of January 31, 2003 set forth
in Laser's 2002 Annual Report and "Laser Balance Sheet Date" means January 31,
2003.
6.11 Absence of Certain Changes. Since Laser Balance Sheet Date, the
business of Laser has been conducted in the ordinary course consistent with past
practices and there has not been:
6.11.1 any event, occurrence, development or state of circumstances or
facts which would, individually or in the aggregate, have a Material
Adverse Effect on Laser, other than adverse effects resulting from the
execution and performance of this Agreement;
6.11.2 any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of Laser;
6.11.3 except for the Amendment, there has not been any amendment of
any material term of any outstanding security of Laser.
6.11.4 any incurrence, assumption or guarantee by Laser of any
material indebtedness for borrowed money other than in the ordinary course
and in amounts and on terms consistent with past practices;
12
6.11.5 any creation or other incurrence by Laser of any Lien or
Encumbrance on any material asset other than in the ordinary course
consistent with past practices;
6.11.6 any making of any material loan, advance or capital
contributions to or investment in any person;
6.11.7 any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of Laser which
would, individually or in the aggregate, have a Material Adverse Effect on
Laser;
6.11.8 any transaction or commitment made, or any contract or
agreement entered into, by Laser relating to its assets or business
(including the acquisition or disposition of any assets) or any
relinquishment by Laser of any contract or other right, in either case,
material to Laser as a whole, other than transactions and commitments in
the ordinary course consistent with past practices and those contemplated
by this Agreement;
6.11.9 any change in any method of accounting, method of tax
accounting, or accounting practice by Laser except for any such change
required by reason of a concurrent change in GAAP or Regulation S-X
promulgated under the Exchange Act;
6.11.10 any (i) grant of any severance or termination pay to any
current or former director, officer or employee of Laser, (ii) increase in
benefits payable under any existing severance or termination pay policies
or employment agreements, (iii) entering into of any employment, deferred
compensation or other similar agreement (or any amendment to any such
existing agreement) with any current or former director, officer or
employee of the Laser, (iv) establishment, adoption or amendment (except as
required by applicable law) of any collective bargaining, bonus, profit
sharing, thrift, pension, retirement, deferred compensation, compensation,
stock option, restricted stock or other benefit plan or arrangement
covering any current or former director, officer or employee of Laser, or
(v) increase in compensation, bonus or other benefits payable or otherwise
made available to any current or former director, officer or employee of
Laser;
6.11.11 any material dispute or, with any officer, director or
employee of Laser; or any tax election or any settlement or compromise of
any tax liability, in either case that is material to Laser, taken as a
whole.
6.12 No Undisclosed Material Liabilities. As of the date hereof, there are
no liabilities of Laser of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, and there is no existing
condition, situation or set of circumstances which could reasonably be expected
to result in such a liability, other than:
6.12.1 liabilities or obligations provided for in Laser Balance Sheet
or disclosed in the notes thereto;
13
6.12.2 other liabilities or obligations, which would not, individually
or in the aggregate, have a Material Adverse Effect on Laser; and
6.12.3 liabilities or obligations under this Agreement.
6.13 Compliance with Laws and Court Orders. Laser is and has been in
compliance with, and to the best knowledge of Laser, is not under investigation
with respect to and has not been threatened to be charged with or given notice
of any violation of, any applicable law, rule, regulation, judgment, injunction,
order or decree, including, without limitation, the requirements of the Exchange
Act and the Securities Act, except for such matters as would not, individually
or in the aggregate, have a Material Adverse Effect on Laser.
6.14 Litigation. There is no claim, dispute, action, suit, proceeding or
investigation pending or, to the knowledge of the Company, threatened, against
or affecting the business of the Company, or challenging the validity or
propriety of the transactions contemplated by this Agreement, at law or in
equity or admiralty or before any federal, state, local, foreign or other
governmental authority, board, agency, commission or instrumentality, nor to the
knowledge of the Company, has any such claim, dispute, action, suit, proceeding
or investigation been pending or threatened, during the 12 month period
preceding the date hereof; (b) there is no outstanding judgment, order, writ,
ruling, injunction, stipulation or decree of any court, arbitrator or federal,
state, local, foreign or other governmental authority, board, agency, commission
or instrumentality, against or materially affecting the business of the Company
; and (c) the Company has not received any written or verbal inquiry from any
federal, state, local, foreign or other governmental authority, board, agency,
commission or instrumentality concerning the possible violation of any law, rule
or regulation or any matter disclosed in respect of its business.
6.15 Finder's Fee. There is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of
Laser who might be entitled to any fee or commission in connection with the
transactions contemplated by this Agreement.
6.16 Taxes. Except as set forth in the Laser Balance Sheet (including the
notes thereto) and except as would not, individually or in the aggregate, have a
Material Adverse Effect on Laser, (a) all tax returns, statements, reports and
forms (collectively, the "Laser Returns") required to be filed with any taxing
authority by, or with respect to, Laser and each affiliated, combined,
consolidated or unitary group of which Laser is a member are true, correct and
complete and have been filed in accordance with all applicable laws; (b) Laser
has timely paid all taxes shown as due and payable on the Laser Returns that
have been so filed (other than taxes which are being contested in good faith and
for which adequate reserves are reflected on the Laser Balance Sheet) and, as of
the time of filing, the Laser Returns correctly reflected the facts regarding
the income, business, assets, operations, activities and the status of Laser;
(c) Laser has made adequate provision in accordance with GAAP for all taxes
payable by Laser for which no Laser Return has yet been filed; (d) the charges,
accruals and reserves for taxes with respect to Laser reflected on the Laser
Balance Sheet are adequate under GAAP to cover the tax liabilities accruing
through the date thereof; (e) there is no action, suit, proceeding, audit or
claim now proposed or pending against or with respect to Laser in respect of any
tax where there is a reasonable possibility of an adverse determination; (f)
14
Laser is not and has not been a member of an affiliated, consolidated, combined
or unitary group other than one of which Laser was the common parent.
6.17 Employees Benefit Plans. Other than as shall be fully described on the
Laser Disclosure Schedule as of the Closing, which plan has been inactive, the
Company does not maintain, nor has the Company maintained in the past, any
employee benefit plans ("as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), or any plans, programs,
policies, practices, arrangements or contracts (whether group or individual)
providing for payments, benefits or reimbursements to employees of the Company,
former employees, their beneficiaries and dependents under which such employees,
former employees, their beneficiaries and dependents are covered through an
employment relationship with the Company, any entity required to be aggregated
in a controlled group or affiliated service group with the Company for purposes
of ERISA or the Internal Revenue Code of 1986 (the "Code") (including, without
limitation, under Section 414(b), (c), (m) or (o) of the Code or Section 4001 of
ERISA, at any relevant time ("Benefit Plans").
6.18 Environmental Matters. Except as set forth in Laser SEC Filings prior
to the date hereof and except as would not, individually or in the aggregate,
have a Material Adverse Effect on Laser,
6.18.1 no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been filed,
no penalty has been assessed, and no investigation, action, claim, suit,
proceeding or review is pending or, to the knowledge of Laser, is
threatened by any governmental entity or other person relating to or
arising out of any Environmental Law;
6.18.2 Laser is and has been in compliance with all Environmental Laws
and all Environmental Permits; and
6.18.3 There are no liabilities of or relating to Laser of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable
or otherwise arising under or relating to any Environmental Law and there
are no facts, conditions, situations or set of circumstances which could
reasonably be expected to result in or be the basis for any such liability.
6.18.4 The terms "Laser" shall, for purposes of this Section, include
any entity which is, in whole or in part, a corporate predecessor of Laser
or any of its subsidiaries.
6.19 Patents and Other Proprietary Rights. Laser does not have any
Intellectual Property Right that is material to its business as now conducted.
To the best of Laser's knowledge, Laser has not and does not violate or infringe
any Intellectual Property Right of any other person, and Laser has not received
any communication alleging that it violates or infringes any Intellectual
Property Right of any other person. Except for such matters as would not,
individually or in the aggregate, have a Material Adverse Effect on Laser, Laser
has not been sued for infringing any Intellectual Property Right of another
person.
15
6.20 Antitakeover Statutes. Excluding any statute or regulation applicable
solely by virtue of the jurisdiction in which SCL has been formed as to which
Laser takes no position nor makes any representation or warranty, no
antitakeover or similar statute or regulation applies to the transactions
contemplated hereby.
6.21 Affiliate Transactions. Neither the Company nor any officer, director
or employee of the Company (or any of the relatives or Affiliates of any of the
aforementioned Persons) is a party to any agreement, contract, commitment or
transaction with the Company or affecting the business of the Company, or has
any interest in any property, whether real, personal or mixed, or tangible or
intangible, used in or necessary to the Company which will subject the Sellers
to any liability or obligation from and after the Closing Date.
6.22 Trading. The Laser Common is currently listed for trading on the OTC
Bulletin Board, and the Company has received no notice that the Laser Common is
subject to being delisted therefrom.
6.23 Investment Representations. Laser is acquiring the SCL Exchange Shares
for investment for its own account and not as a nominee or agent, and not with a
view to the resale or distribution of any part thereof. Laser understands that
the offer and sale of the SCL Exchange Shares have not been and will not be
registered under the Securities Act on the ground that the sale and the issuance
of securities hereunder is exempt from registration under the Securities Act
pursuant to Section 4(2) thereof, and that Laser's reliance on such exemption is
predicated on such Seller's representations set forth herein.
7. REPRESENTATION AND WARRANTIES OF SCL AND THE SCL SIGNATORY SHAREHOLDERS. SCL
and the Sellers represent and warrant that:
7.1 Corporate Existence and Power. SCL is a company duly incorporated,
validly existing and in good standing under the laws of British Virgin Islands
and has all corporate powers and all Governmental Permits required to carry on
its business as now conducted, except for those Governmental Permits the absence
of which would not, individually or in the aggregate, have a Material Adverse
Effect.
7.2 Articles of Incorporation and By-laws; Minute Books. The copies of the
Articles of Incorporation and By-laws (or similar governing documents) of SCL,
and all amendments to each are true, correct and complete. The minute books of
SCL contains true and complete records of all meetings and consents in lieu of
meetings of its Board of Directors (and any committees thereof), or similar
governing bodies, since the time of its organization. The stock books of SCL are
true, correct and complete.
7.3 Corporate Authorization. The execution, delivery and performance by SCL
of this Agreement and the other Transaction Documents and the consummation by it
of the transactions contemplated hereby and thereby are within SCL s corporate
powers and have been duly authorized by all necessary corporate action. If any
vote of or consent by the holders of the outstanding shares of SCL Common or any
other securities of SCL is necessary in connection with the consummation of the
16
Exchange and the other transactions contemplated hereby, each SCL Signatory
Shareholder shall vote in favor thereof or provide written consent thereto. This
Agreement and each of the other Transaction Documents constitutes a valid and
binding agreement of SCL, enforceable against SCL in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally now or hereafter in effect and subject to the application of equitable
principles and the availability of equitable remedies. This Agreement and each
of the other Transaction Documents constitutes a valid and binding agreement of
each Seller, enforceable against each Seller in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally now or hereafter in effect and subject to the application of equitable
principles and the availability of equitable remedies.
7.4 SCL Board Consent. The execution, delivery and performance by SCL of
this Agreement and each of the other Transaction Documents has been duly
authorized by SCL s Board of Directors, which, approved and adopted this
Agreement, the other Transaction Documents, the Exchange and the other
transactions contemplated hereby or thereby, which approval satisfies in full
any applicable requirements of the British Virgin Islands. The resolutions of
the SCL Board attached as Exhibit 7.4 hereto are true, complete and correct
copies of the resolutions adopted by SCL's Board relating to the Exchange, this
Agreement and the other Transaction Documents.
7.5 Governmental Authorization. The execution, delivery and performance by
SCL, and of each Seller, of this Agreement and the other Transaction Documents
and the consummation by SCL, and each Seller, of the transactions contemplated
hereby or thereby require no action by or in respect of, or filing with, any
Governmental Authority other than compliance with any applicable requirements of
Regulation D and Blue Sky Laws, and any other filings, approvals or
authorizations which, if not obtained, would not, individually or in the
aggregate, have a material adverse effect on SCL or materially impair the
ability of SCL or any of the Sellers to consummate the transactions contemplated
by this Agreement.
7.6 Non-Contravention. The execution, delivery and performance by SCL or
any of the Sellers, of this Agreement and the other Transaction Documents and
the consummation by SCL of the transactions contemplated hereby and thereby do
not and will not (a) violate the memorandum of association or bylaws of SCL, (b)
assuming compliance with the matters referred to in Sections 6.5 and 7.5,
violate any applicable law, rule, regulation, judgment, injunction, order or
decree, (c) require any consent or other action by any person under, constitute
a default under, or give rise to any right of termination, cancellation or
acceleration of any right or obligation of SCL or to a loss of any benefit to
which SCL is entitled under any provision of any agreement or other instrument
binding upon SCL or any Governmental Permit other similar authorization
affecting, or relating in any way to, the assets or business of SCL or any of
its subsidiaries, or (d) result the creation or imposition of any Lien or
Encumbrance on any asset of SCL except, in the case of clauses (b), (c) and (d),
for such matters as would not, individually or in the aggregate, have Material
Adverse Effect on SCL or materially impair the ability of SCL to consummate the
transactions contemplated by this Agreement.
17
7.7 Capitalization; Validity of Securities. The authorized capital stock of
SCL consists of 100,000,000 shares of SCL Common. As of the date hereof there
are outstanding 600,000 shares of SCL Common. All outstanding shares of capital
stock of SCL have been duly authorized and validly issued an are fully paid and
non-assessable. Except as set forth in this Section, there are no outstanding
(a) shares of capital stock or voting securities of SCL, (b) securities of SCL
convertible into exchangeable for shares of capital stock or voting securities
of SCL or (c) options, restricted stock, other stock-based compensation awards
or other rights to acquire from SCL or other obligation of SCL to issue, any
capital stock, voting securities or securities convertible into or exchangeable
for capital stock or voting securities of SCL, except with respect to the Xxxxx
Transaction. There are no outstanding obligations of SCL or any of its
subsidiaries to repurchase, redeem or otherwise acquire any securities referred
to in clauses (a), (b) or (c) above. Prior to the Closing, SCL will reserve for
issuance a number of shares of SCL Common sufficient to issue the SCL Exchange
Shares. The SCL Exchange Shares, when transferred and delivered pursuant to the
terms of this Agreement, will be duly and validly issued (including, without
limitation, compliance with Regulation D and applicable Blue Sky Laws),
fully-paid, and non-assessable. The assignments, endorsements, stock powers and
other instruments of transfer delivered by each Seller to Laser at the Closing
will be sufficient to transfer such Seller's entire interest, legal and
beneficial, in the SCL Exchange Shares. Each Seller has full power and authority
to convey good and marketable title to all of the SCL Exchange Shares, and upon
transfer to Laser of the instruments representing such SCL Exchange Shares,
Laser will receive good and marketable title to such SCL Exchange Shares, free
and clear of all liens, claims or encumbrances.
7.8 Subsidiaries. SCL does not as of the date hereof own, directly or
indirectly, any capital stock, equity or interest in any corporation, firm,
partnership, joint venture or other entity. As disclosed herein, SCL intends to
acquire interests in Xxxxx and Suntek.
7.9 Financial Statements; Absence of Certain Changes. For purposes of this
Agreement, "SCL Balance Sheet" means the unaudited balance sheet of SCL, as of
the date of its organization, included as Exhibit 7.9 to this Agreement, and
"SCL Balance Sheet Date" means such date of organization. Since SCL Balance
Sheet Date, the business of SCL and its subsidiaries has been conducted in the
ordinary course consistent with past practices and there has not been:
7.9.1 any even, occurrence, development or state of circumstances or
facts which would, individually or in the aggregate, have a Material
Adverse Effect on SCL, other than adverse effects resulting from the
execution and performance of this Agreement;
7.9.2 any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of SCL;
7.9.3 except for the SCL Amendment, there has not been any amendment
of any material term of any outstanding security of SCL or any of its
subsidiaries;
7.9.4 any incurrence, assumption or guarantee by SCL or any of its
subsidiaries of any material indebtedness for borrowed money other than in
the ordinary course and in amounts and on terms consistent with past
practices;
18
7.9.5 any creation or other incurrence by SCL or any of its
subsidiaries of any Lien or Encumbrance on any material asset other than in
connection with the Xxxxx Transaction or in the ordinary course consistent
with past practices;
7.9.6 any making of any material loan, advance or capital
contributions to or investment in any person other than loans, advances or
capital contributions (i) to or investments in Xxxxx or any subsidiaries of
SCL formed to effectuate to the Xxxxx Transaction or (ii) made in the
ordinary course consistent with past practices;
7.9.7 any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of SCL or any of its
subsidiaries which would, individually or in the aggregate, have a Material
Adverse Effect on SCL.
7.9.8 any transaction or commitment made, or any contract or agreement
entered into, by SCL or any of its subsidiaries relating to its assets or
business (including the acquisition or disposition of any assets) or any
relinquishment by SCL or any of its subsidiaries of any contract or other
right, in either case, material to SCL and its subsidiaries, taken as a
whole, other than transactions and commitments in the ordinary course
consistent with past practices and those contemplated by this Agreement;
7.9.9 any (i) grant of any severance or termination pay to any current
or former director, officer or employee of SCL or any of its subsidiaries,
(ii) increase in benefits payable under any existing severance or
termination pay policies or employment agreements, (iii) entering into of
any employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any current or former
director, officer or employee of the Laser or any of its subsidiaries, (iv)
establishment, adoption or amendment (except as required by applicable law)
of any collective bargaining, bonus, profit sharing, thrift, pension,
retirement, deferred compensation, compensation, stock option, restricted
stock or other benefit plan or arrangement covering any current or former
director, officer or employee of SCL or any of its subsidiaries, or (v)
increase in compensation, bonus or other benefits payable or otherwise made
available to any current or former director, officer or employee of SCL or
any of its subsidiaries;
7.9.10 any material dispute or, with any officer, director or employee
of SCL; or any tax election or any settlement or compromise of any tax
liability, in either case that is material to SCL and its subsidiaries,
taken as a whole.
7.10 No Undisclosed Material Liabilities. As of the date hereof, there are
no liabilities of SCL or any of its subsidiaries of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, and there
is no existing condition, situation or set of circumstances which could
reasonably be expected to result in such a liability, other than:
7.10.1 liabilities or obligations provided for in SCL Balance Sheet or
disclosed in the notes thereto;
19
7.10.2 other liabilities or obligations, which would not, individually
or in the aggregate, have a Material Adverse Effect on SCL;
7.10.3 liabilities or obligations under this Agreement; and
7.10.4 liabilities or obligations incurred or to be incurred in
connection with the Xxxxx Transaction.
7.11 Compliance with Laws and Court Orders. SCL and each of its
subsidiaries is and has been in compliance with, and to the best knowledge of
SCL, is not under investigation with respect to and has not been threatened to
be charged with or given notice of any violation of, any applicable law, rule,
regulation, judgment, injunction, order or decree, except for such matters as
would not, individually or in the aggregate, have a Material Adverse Effect on
SCL.
7.12 Litigation. There is no claim, dispute, action, suit, proceeding or
investigation pending or, to the knowledge of SCL, threatened, against or
affecting the business of SCL, or challenging the validity or propriety of the
transactions contemplated by this Agreement, at law or in equity or admiralty or
before any federal, state, local, foreign or other governmental authority,
board, agency, commission or instrumentality, nor to the knowledge of SCL, has
any such claim, dispute, action, suit, proceeding or investigation been pending
or threatened, during the 12 month period preceding the date hereof; (b) there
is no outstanding judgment, order, writ, ruling, injunction, stipulation or
decree of any court, arbitrator or federal, state, local, foreign or other
governmental authority, board, agency, commission or instrumentality, against or
materially affecting the business of SCL ; and (c) SCL has not received any
written or verbal inquiry from any federal, state, local, foreign or other
governmental authority, board, agency, commission or instrumentality concerning
the possible violation of any law, rule or regulation or any matter disclosed in
respect of its business.
7.13 Finder's Fee. There is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of SCL
or any of its subsidiaries who might be entitled to any fee or commission in
connection with the transactions contemplated by this Agreement.
7.14 Taxes. Except as set forth in the SCL Balance Sheet (including the
notes thereto) and except as would not, individually or in the aggregate, have a
Material Adverse Effect on SCL, (a) all tax returns, statements, reports and
forms (collectively, the "SCL Returns") required to be filed with any taxing
authority by, or with respect to, SCL and its subsidiaries and each affiliated,
combined, consolidated or unitary group of which SCL is a member are true,
correct and complete and have been filed in accordance with all applicable laws;
(b) SCL and its subsidiaries have timely paid all taxes shown as due and payable
on the SCL Returns that have been so filed (other than taxes which are being
contested in good faith and for which adequate reserves are reflected on the SCL
Balance Sheet) and, as of the time of filing, the SCL Returns correctly
reflected the facts regarding the income, business, assets, operations,
activities and the status of SCL and its subsidiaries; (c) the charges, accruals
and reserves for taxes with respect to SCL and its subsidiaries reflected on the
SCL Balance Sheet are adequate under GAAP to cover the tax liabilities accruing
through the date thereof; (d) there is no action, suit, proceeding, audit or
20
claim now proposed or pending against or with respect to SCL or any of its
subsidiaries in respect of any tax where there is a reasonable possibility of an
adverse determination; and (e) neither SCL nor any of its subsidiaries has been
a member of an affiliated, consolidated, combined or unitary group other than
one of which SCL was the common parent.
7.15 Employees Benefit Plans. SCL does not maintain, nor has SCL maintained
in the past, any employee benefit plans ("as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), or any
plans, programs, policies, practices, arrangements or contracts (whether group
or individual) providing for payments, benefits or reimbursements to employees
of SCL, former employees, their beneficiaries and dependents under which such
employees, former employees, their beneficiaries and dependents are covered
through an employment relationship with SCL, any entity required to be
aggregated in a controlled group or affiliated service group with SCL for
purposes of ERISA or the Internal Revenue Code of 1986 (the "Code") (including,
without limitation, under Section 414(b), (c), (m) or (o) of the Code or Section
4001 of ERISA, at any relevant time.
7.16 Environmental Matters. Except as would not, individually or in the
aggregate, have a Material Adverse Effect on SCL: (a) no notice, notification,
demand, request for information, citation, summons or order has been received,
no complaint has been filed, no penalty has been assessed, and no investigation,
action, claim, suit, proceeding or review is pending or, to the knowledge of
SCL, is threatened by any governmental entity or other person relating to or
arising out of any Environmental Law; and (b) there are no liabilities of or
relating to SCL or any of its subsidiaries of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise arising
under or relating to any Environmental Law and there are no facts, conditions,
situations or set of circumstances which could reasonably be expected to result
in or be the basis for any such liability.
7.17 Patents and Other Proprietary Rights. Neither SCL nor any of its
subsidiaries has any Intellectual Property Right that is material to its
business as now conducted. To the best of SCL's knowledge, neither SCL nor any
of its subsidiaries has not and does not violate or infringe any Intellectual
Property Right of any other person, and neither SCL nor any of its subsidiaries
has received any communication alleging that it violates or infringes any
Intellectual Property Right of any other person. Except for such matters as
would not, individually or in the aggregate, have a Material Adverse Effect on
SCL, neither SCL nor any of its subsidiaries has been sued for infringing any
Intellectual Property Right of another person.
7.18 Antitakeover Statutes. Except as provided in Section 7.5 hereof, no
antitakeover or similar statute or regulation applies to the transactions
contemplated hereby.
7.19 Investment Representations.
7.19.1 Each Seller is acquiring the Laser Exchange Shares for
investment for such Seller's own account and not as a nominee or agent, and
not with a view to the resale or distribution of any part thereof.
21
7.19.2 Each Seller understands that the offer and sale of the Laser
Exchange Shares have not been and will not be registered under the
Securities Act on the ground that the sale and the issuance of securities
hereunder is exempt from registration under the Securities Act pursuant to
Section 4(2) thereof, and that Laser's reliance on such exemption is
predicated on such Seller's representations set forth herein.
7.19.3 Each Seller is an Accredited Investor.
7.19.4 Each Seller acknowledges that such Seller can bear the economic
risk of this investment, and has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks
of the investment in the Laser Exchange Shares.
8. COVENANTS OF LASER AND LASER SIGNATORY SHAREHOLDER PENDING CLOSING. Each of
the Laser Signatory Shareholders, to the extent within each Shareholder's
control, and Laser covenants that from the date hereof until the first to occur
of the Closing Date and the Termination Date, except as otherwise provided in
this Agreement:
8.1 Preservation. Laser shall:
8.1.1 maintain its corporate existence in good standing;
8.1.2 preserve intact in all material respects its business
organization, preserve its goodwill, exercise reasonable efforts to keep
available the services of Laser's current officers and employees, to
preserve the goodwill of those having business relations with Laser, and
perform all contracts to which Laser is a party; and
8.1.3 maintain in effect all of its currently existing insurance
coverage, if any, or substantially equivalent insurance coverage; and
8.1.4 notify SCL immediately of any litigation or other proceeding in
which Laser or any of its executive officers or directors is named as a
defendant or respondent.
8.2 Negative Covenants. Laser shall not and the Laser Signatory
Shareholders agree they shall not, except as contemplated by this Agreement or
as may be necessary to effect the transactions contemplated by this Agreement,
do or propose to do or vote their shares in favor of or consent to any of the
following:
8.2.1 amend or otherwise modify its certificate of incorporation or
by-laws;
8.2.2 issue, sell, dispose of or subject to any Lien or Encumbrance or
authorize the issuance, sale, disposition, or Encumbrance of, or grant or
issue any option, warrant or other right to acquire, or make any agreement
with respect to, any shares of any class of Laser's capital stock or any
security convertible into or exercisable for any such shares, or alter any
of the terms of any outstanding security or make any change in its
authorized or outstanding capital stock or its capitalization, whether by
22
reason of any reclassification, recapitalization, stock split, combination,
exchange or readjustment of shares, any stock dividend or otherwise, or
permit the exercise of any outstanding options;
8.2.3 declare, set aside, make or pay any dividend or other
distribution to any shareholder with respect to any class of its capital
stock;
8.2.4 redeem, purchase or otherwise acquire any of its outstanding
securities;
8.2.5 encumber any of its material assets or properties;
8.2.6 increase the compensation or other remuneration or benefits
payable or to become payable to any director or executive officer, or
increase the compensation or other remuneration of benefits payable or to
become payable to any other employee, consulting or agent;
8.2.7 adopt or, except as required by applicable law, amend or make
any unscheduled contribution to any employee benefit plan for or with
employees, or hire any employees;
8.2.8 enter into any material contracts or terminate or modify any
contract, other than in furtherance of the purposes of this Agreement,
except for any termination upon the expiration of any contract prior to the
earlier of the Closing Date or Termination Date in accordance with the
terms of such contract;
8.2.9 create, incur, assume or otherwise become liable for any
indebtedness in an aggregate amount in excess of $5,000, other than
indebtedness in furtherance of the transactions contemplated by any of the
Transaction Documents;
8.2.10 commence any new operations, whether by acquiring or developing
any line of business;
8.2.11 cancel, compromise, release or waive any material receivable,
claim or right;
8.2.12 change its method of accounting or the accounting principles or
practices used in the preparation of the Laser Financial Statements, other
than as required by GAAP or SEC accounting rules or as may be requested in
writing by SCL's auditors;
8.2.13 make any loan or advance to any person or acquire any capital
stock or other securities or ownership interest in or any material amount
of assets of any other business enterprise, or make any material capital
investment or expenditure or capital improvement;
8.2.14 institute or settle any action or proceeding before any
Governmental Authority relating to Laser, the issuance of any securities of
Laser, or any of its material assets or properties;
23
8.2.15 adopt any plan of dissolution or liquidation;
8.2.16 make any new election or change in any current election with
respect to any Taxes, or settle or compromise any federal, state local or
foreign Tax liability or agree to the extension of any statute of
limitations;
8.2.17 take any action that would render any of the representations or
warranties of Laser contained in this Agreement misleading, untrue or
incorrect in any material respect (subject to any limitations on
materiality set forth therein), or cause Laser or any Laser Signatory
Shareholder to breach or fail to satisfy or comply with any covenant,
condition or agreement of Laser or any Laser Signatory Shareholder
contained herein or in any of the other Transaction Documents in any
material respect.
8.2.18 violate the terms of the Standstill Agreement.
8.3 Access and Information. Subject to the provisions of Section 10.3
hereof, Laser shall give to SCL and to SCL's counsel, accountants, and other
representatives full access, during normal business hours throughout the period
from the date hereof through the Closing Date, to all of Laser's properties,
books, contracts, commitments, and records, and furnish SCL during such period
with all such information concerning Laser's affairs as SCL may reasonably
request.
8.4 Reservation of Laser Exchange Shares. Prior to the Closing, Laser shall
have reserved for issuance pursuant to this Agreement the number of shares of
Laser Common sufficient to issue the Laser Exchange Shares, including the
Additional Laser Shares, as provided in Section 3 to this Agreement.
8.5 Board of Directors.
8.5.1 Laser and each Laser Signatory Shareholder who is a member of
the Laser Board, hereby covenants and agrees from the Closing Date, and
subject to the Board of Directors consisting of no less than a total of
five (5) directors, that the SCL Signatory Shareholders shall have the
right to designate two directors to the Laser Board and acceptable to the
Laser Board in the good faith exercise of its reasonable business
judgment(the "SCL Designees"), which right shall not be assignable. To the
extent that there are any openings on the Laser Board as of the Closing
Date, Laser and each Laser Signatory Shareholder who is a member of the
Laser Board shall take such steps as to have such vacancies filled by the
SCL Designees. Laser and each Laser Signatory Shareholder who is a member
of the Laser Board further agrees that they shall take such action
necessary to nominate such SCL Designees at the initial annual meeting of
stockholders held after the Closing and at every annual meeting thereafter
unless waived by the SCL Signatory Shareholders, to insure that the SCL
Designees remain Directors.
8.5.2 The SCL Designees may not be removed or replaced without the
prior written consent of the SCL Signatory Shareholders, except for any
removal of such individual for Cause (but subject to the rights of the SCL
Signatory Shareholders to fill such vacancy and of the Board of Directors
to except the SCL Designee, as provided herein).
24
8.5.3 Laser agrees that the SCL Designees shall be entitled to and
shall receive the same compensation as other members of the Laser Board
receive for serving on the Laser Board.
8.5.4 Anything contained in this Section to the contrary
notwithstanding, Laser, the Laser Board and each Laser Signatory
Shareholder who is a member of the Laser Board shall not have any
obligation under this Section to do any act or thing which violates any
provision of applicable law, rules or regulations whether of New Jersey or
applicable Federal or state securities laws, rules or regulations.
8.6 Covenants of Laser Signatory Shareholders. By executing this Agreement,
the Laser Signatory Shareholders agree to vote their respect shares in favor of,
or consent to, an action that may be required to be taken by Laser Shareholders
in connection with the transactions contemplated by this Agreement or any other
Transaction Document. Further each Laser Signatory Shareholder who is a member
of the Laser Board agrees to act furtherance of the obligations provided in
Paragraph 8.5.
9. COVENANTS OF SCL AND THE SCL SIGNATORY SHAREHOLDERS PENDING CLOSING. SCL and
the SCL Signatory Shareholders, as applicable, covenant and agree that from the
date hereof until the first to occur of the Closing Date and the Termination
Date, except as otherwise provided in this Agreement:
9.1 Preservation. SCL shall:
9.1.1 maintain its corporate existence in good standing;
9.1.2 preserve intact in all material respects its business
organization, preserve its goodwill, exercise reasonable efforts to keep
available the services of its current officers and perform all contracts to
which SCL is or becomes a party;
9.1.3 maintain in effect all of its currently existing insurance
coverage, if any, or substantially equivalent insurance coverage; and
9.1.4 notify Laser immediately of any litigation or other proceeding
in which SCL or any of its executive officers or directors is named as a
defendant or respondent.
9.2 Negative Covenants. SCL shall not and the SCL Signatory Shareholders
agree they shall not, except as contemplated by this Agreement or as may be
necessary to effect the transactions contemplated by this Agreement, including,
without limitation, the Xxxxx Transaction, raising the Minimum Equity Investment
and selling SCL Common in consideration therefor, do or propose to do or vote
their shares or otherwise consent to any of the following:
9.2.1 amend or otherwise modify its memorandum of association or
by-laws;
9.2.2 issue, sell, dispose of or subject to any Lien or Encumbrance or
authorize the issuance, sale, disposition, or Encumbrance of, or grant or
25
issue any option, warrant or other right to acquire, or make any agreement
with respect to, any shares of any class of Laser's capital stock or any
security convertible into or exercisable for any such shares, or alter any
of the terms of any outstanding security or make any change in its
authorized or outstanding capital stock or its capitalization, whether by
reason of any reclassification, recapitalization, stock split, combination,
exchange or readjustment of shares, any stock dividend or otherwise, or
permit the exercise of any outstanding options;
9.2.3 declare, set aside, make or pay any dividend or other
distribution to any shareholder with respect to any class of its capital
stock;
9.2.4 redeem, purchase or otherwise acquire any of its outstanding
securities;
9.2.5 increase the compensation or other remuneration or benefits
payable or to become payable to any director or executive officer, or
increase the compensation or other remuneration of benefits payable or to
become payable to any other employee or consultant or agent;
9.2.6 adopt or, except as required by applicable law, amend or make
any unscheduled contribution to any employee benefit plan for or with
employees, or higher any employees;
9.2.7 terminate or modify any contract, other than in furtherance of
the purposes of this Agreement, except for any termination upon the
expiration of any contract prior to the earlier of the Closing Date or
Termination Date in accordance with the terms of such contract;
9.2.8 create, incur, assume or otherwise become liable for any
indebtedness in an aggregate amount in excess of $60,000, other than
indebtedness in furtherance of the transactions contemplated by any of the
Transaction Documents, including, without limitation, the Xxxxx
Transaction;
9.2.9 cancel, compromise, release or waive any material receivable,
claim or right of SCL;
9.2.10 adopt accounting principles or practices other than as required
by GAAP or SEC accounting rules or as may be recommended by SCL's auditors;
9.2.11 make any loan or advance to any person or acquire any capital
stock or other securities, or ownership interest in or any material amount
of assets, of any other business enterprise, or make any material capital
investment or expenditure or capital improvement;
9.2.12 adopt any plan of dissolution or liquidation;
9.2.13 settle or compromise any federal, state local or foreign Tax
liability or agree to the extension of any statute of limitations;
26
9.2.14 take any action that would render any of the representations or
warranties of SCL contained in this Agreement misleading, untrue or
incorrect in any material respect (subject to any limitations on
materiality set forth therein), or cause SCL or any SCL Signatory
Shareholder to breach or fail to satisfy or comply with any covenant,
condition or agreement of SCL or any SCL Signatory Shareholder contained
herein or in any of the other Transaction Documents in any material
respect.
9.2.15 violate the terms of the Standstill Agreement.
9.3 Access and Information. Subject to the provisions of Section 10.3
hereof, SCL shall give to Laser and to Laser's counsel, accountants, and other
representatives full access, during normal business hours throughout the period
from the date hereof through the earlier of the Closing Date and the Termination
Date, to all of SCL's properties, books, contracts, commitments, and records,
and furnish Laser during such period with all such information concerning SCL's
affairs as Laser may reasonably request.
9.4 Reservation of SCL Exchange Shares. Prior to the Closing, SCL shall
have reserved for issuance pursuant to this Agreement the number of shares of
SCL Common sufficient to issue the SCL Exchange Shares, as provided in Section 3
to this Agreement.
9.5 Covenants of SCL Signatory Shareholders. The SCL Signatory Shareholders
agree to vote their respective shares in favor of, or consent to, an action that
may be required to be taken by SCL Shareholders in connection with the
transactions contemplated by this Agreement or any other Transaction Document.
10. COVENANTS OF THE PARTIES PENDING AND FOLLOWING CLOSING.
10.1 British Virgin Island Filings. The parties shall cooperate with each
other and SCL's U.S. and BVI counsel in preparing and filing, and shall, upon
execution and delivery of this Agreement, prepare and file with the appropriate
Governmental Authority or Authorities all documents and instruments that may be
required to permit the Laser Shareholders, including, without limitation, the
Laser Signatory Shareholders, to effectuate the Exchange of SCL Exchange Shares
for Laser Exchange Shares. SCL represents and warrants that as of the date
hereof, it is not aware of any filings being necessary.
10.2 Initial 8-K. Upon Closing, Laser shall prepare and cause its counsel
to prepare and provide to SCL and its counsel for review, a Current Report on
Form 8-K (the "Initial 8-K") for filing with the SEC with respect to the
execution and delivery of this Agreement. SCL and its counsel shall provide
Laser and its counsel with any comments on the Initial 8-K no later than one
business day prior to the due date for filing same with the SEC, provided that
SCL and its counsel shall have received a draft of same no later than five (5)
business days prior to such due date. SCL shall provide Laser with such
information as Laser may reasonably request in connection with the preparation
of the Initial 8-K without violating any of the requirements of Regualtion FD.
27
10.3 Confidentiality. Each of the parties covenant and agree to keep
confidential any and all material non-public information which it has heretofore
obtained or shall hereafter obtain, directly or indirectly, from Laser or SCL
pursuant to this Agreement or otherwise, and agrees not to use the same except
for the purpose of this Agreement or to disclose the same to any party except as
provided below, without Laser's prior written consent; provided that the terms
of this Section 10.3 shall not extend to any such information that: (a) is
already publicly known; (b) has become publicly known without any fault of the
disclosing party or anyone to whom SCL or Laser has made disclosure in
compliance with the terms of this Section 10.3; or (c) is required to be
disclosed to any Governmental Authority as a result of operation of law,
regulation, or court order; provided, however, that party wishing to make any
disclosure pursuant to this clause (c) shall have first given prompt written
notice, if permitted, of such requirement to SCL and Laser and cooperates with
Laser and SCL to restrict such disclosure and/or obtain confidential treatment
thereof. The foregoing notwithstanding, SCL may disclose such information to
each of its directors, officers and their respective affiliates, and their
employees, and representatives, which representatives have a need to know such
information; provided that SCL informs such persons of the restrictions set
forth in this Section 10.3 with respect to such information and such persons
agree in writing to comply with the provisions of this Section 10.3. SCL further
agrees to give prompt notice to Laser of any disclosure made by the Purchaser or
any of its directors, officers and their respective affiliates, its employees,
or representatives in breach of this Section 10.3, to the extent SCL has
knowledge of such disclosure; provided that SCL shall have no liability for
losses incurred by Laser or any of its directors, officers, employees,
shareholders or representatives solely as the result of Laser's failure,
following its actual receipt of notice from SCL of disclosure of information in
breach of this Agreement, to make prompt public disclosure of the information so
disclosed. For purposes of this Section 10.3, the knowledge of the Purchaser
shall mean the actual knowledge of Xxxxxxxx Xxxxxxxx or any successors to him as
President of SCL.
10.4 Standstill Agreement. Prior to the Closing or earlier termination of
this Agreement, neither Laser, SCL, nor any of the Laser Signatory Shareholders
or SCL Signatory Shareholders may discuss or negotiate with any other
corporation, firm or person, or entertain or consider any inquiries, or
proposals relating to the possible disposition of their shares of capital stock
of either SCL or Laser, and each of them will cause SCL or Laser, respectively,
to conduct business only in the ordinary course except that SCL may undertake
investigation, discussion and/or negotiations with potential acquisition
candidate companies and/or strategic investors, provided that such negotiations,
discussions and investigations are in furtherance of SCL's business plan or the
Xxxxx Transaction. Notwithstanding the foregoing, each party shall be free to
engage in activities mentioned in the preceding sentence which are designed to
further the mutual interests of the parties for the contemplated Exchange and
Reorganization of the companies and advancement of SCL's business plan.
10.5 Additional Filings. The parties shall cooperate with respect to all
other filings, applications and notices required to be submitted to any
Governmental Authorities and other Persons, or necessary or proper to carry out
the transactions contemplated by any of the Transaction Documents or the Xxxxx
Transaction.
28
10.6 Closing Report. Upon Closing, Laser shall prepare and cause its
counsel to prepare and provide to SCL and its counsel for review, a Current
Report on Form 8-K for filing with the SEC with respect to the consummation of
the transactions contemplated by this Agreement (the "Closing Report"). SCL and
its counsel shall provide Laser and its counsel with any comments on the draft
of the Closing 8-K no later than one business day prior to the due date for
filing same with the SEC, provided that SCL and its counsel shall have received
a draft of same no later than five (5) business days prior to such due date. SCL
shall provide Laser with such information as Laser may reasonably request in
connection with the preparation of the Closing 8-K without violating any of the
requirements of Regulation FD. SCL and Laser shall, and shall cause their
respective auditors to, cooperate in the preparation of the financial statements
required to be filed with or as an amendment to the Closing Report (the
"Exchange Financial Statements").
10.7 Notification as to Certain Events. Each party shall promptly notify
the others of (a) the occurrence or non-occurrence of any fact or event of which
such party has knowledge that would be reasonably likely (i) to cause any
representation or warranty of such party contained in this Agreement to be
untrue or incorrect in any material respect at any time from the date hereof to
the Closing or (ii) to cause any covenant, condition or agreement of such party
in this Agreement not to be complied with or satisfied in any material respect
and (b) any failure of such party to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder in any
material respect; provided, however, that no such notification shall affect any
of the representations or warranties of such party, or the right of the other
party to rely thereon, or the conditions to the obligations of the parties, or
the remedies available hereunder, except as otherwise provided in Section 13.
The parties shall give prompt notice to the other parties of any notice or other
communication from any third Person alleging that the consent of such third
Person is or may be required in connection with the transactions contemplated by
this Agreement.
10.8 Reasonable Efforts; Further Action. Upon the terms and subject to the
conditions contained herein, each of the parties hereto shall use its reasonable
efforts (exercised diligently and in good faith) to take, or cause to be taken,
all actions and to do, or cause to be done, all other things reasonably
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, to obtain in a
timely manner all necessary authorizations and approvals and to effect all
necessary registrations and filings, and otherwise to satisfy or cause to be
satisfied all conditions precedent to its obligations under this Agreement. If,
at any time after the Closing, any such further action is necessary or desirable
to carry out the purposes of this Agreement, the officers and directors of Laser
and SCL immediately prior to the Closing are fully authorized in the name of
their respective companies or otherwise to take, and will take, all such lawful
and necessary or desirable action.
10.9 Restriction on Sale of Laser Stock. Subject to Laser not issuing Laser
Common in any transaction where Laser, as an entity is valued at less than
$10,000,000 in the aggregate:
10.9.1 Each Laser Signatory Shareholder hereby agrees that such party
shall not (i) directly or indirectly sell, assign, mortgage, hypothecate,
transfer, pledge, lien, encumber, give or in any way otherwise dispose of
(collectively, a "Transfer") any of the Laser Common owned or controlled by
29
such party or (ii) announce an intent to perform a Transfer, for a period
of two (2) years from the date of the Closing.
10.9.2 Notwithstanding the provisions of the previous subparagraphs,
should Xxxxx Xxxxxxxx ("Xxxxxxxx") propose to accept one or more bona fide
offers from any persons to purchase shares of Stock from Xxxxxxxx or
participate in the public sale, pursuant to a registration statement, or
otherwise, (subject to applicable securities laws), (collectively the
"Purchase Offer"), then Xxxxxxxx shall promptly notify the Laser Signatory
Shareholders of the terms and conditions of such Purchase Offer.
(a) Right to Participate. Each of the Laser Shareholders (for the
purposes of this section, each electing party a "Participating
Shareholder") shall have the right, exercisable upon written notice to
Xxxxxxxx within twenty-one (21) business days after receipt of the notice
of the Purchase Offer, to participate in the sale of Laser Common as will
Xxxxxxxx on the same terms and conditions as Sepeniak. To the extent a
Participating Shareholder exercises such right of participation, the number
of shares of Laser Common which Xxxxxxxx may sell pursuant to such Purchase
Offer shall be correspondingly reduced. The right of participation of each
Participating Shareholder shall be subject to the following terms and
conditions:
(i) Each Participating Shareholder may sell all or any part of that
number of shares of Laser Common equal to the product obtained by
multiplying (i) the aggregate number of shares of Laser Common covered by
the Purchase Offer (or to be included in the public offering) by (ii) a
fraction the numerator of which is the number of shares of Laser Common at
the time owned by such Participating Shareholder and the denominator of
which is the combined number of shares of Laser Common at the time owned by
Xxxxxxxx (including, in each case, shares transferred to Permitted
Transferees as hereinafter defined in accordance herewith) and all of the
Participating Shareholders.
(ii) A Participating Shareholder may participate in the sale by
delivering to Xxxxxxxx for transfer to the Purchase Offeror (or as provided
in the registration statement) one or more certificates, properly endorsed
for transfer, which represent the number of shares of Laser Common which
such Participating Shareholder elects to sell pursuant to this Section.
(b) Consummation of Sale. The Laser Common certificate or certificates
which the Participating Shareholder delivers to Xxxxxxxx shall be
transferred by Sepaniak to the Purchase Offeror (or delivered per the
public offer) in consummation of the sale of the Laser Common pursuant to
the terms and conditions specified in the notice to the Participating
Shareholder, and Xxxxxxxx shall promptly thereafter remit to such
Participating Shareholder that portion of the sale proceeds to which such
Participating Shareholder is entitled by reason of its participation in
such sale.
(c) Ongoing Rights. The exercise or non-exercise of the rights of the
Laser Signatory Shareholders hereunder to participate in one or more sales
of Laser Common made by Xxxxxxxx shall not adversely affect the rights of
Laser Signatory Shareholders to participate in any subsequent sale of Laser
Common by Xxxxxxxx.
30
(d) Permitted Exemptions. The participation rights of the Laser
Signatory Shareholders shall not apply to (a) any pledge of Laser Common
made by Xxxxxxxx pursuant to a bona fide loan transaction which creates a
mere security interest, (b) any transfer to the Company pursuant to a
written agreement between the Company and Xxxxxxxx providing for the right
of such repurchase or to Sepaniak's ancestors or descendants or spouse or
to a trustee for their benefit, or (c) any bona fide gift; provided that
(i) Xxxxxxxx shall inform the Laser Signatory Shareholders of such pledge,
transfer or gift prior to effecting it and (ii) the pledgee, transferee or
donee (collectively, the "Permitted Transferees") shall furnish the Laser
Signatory Shareholderss with a written agreement to be bound by and comply
with all provisions of this Agreement applicable to Xxxxxxxx.
(e) Termination of Co-Sale/Tag Along Rights. The rights of the Laser
Signatory Shareholders under this provision and the obligations of Xxxxxxxx
with respect to the Laser Signatory Shareholders shall terminate at such
time as the Laser Signatory Shareholders shall no longer be the owner of
any shares of Laser Common. Unless sooner terminated in accordance with the
preceding sentence, this Agreement shall terminate upon the occurrence of
any one of the following events:
(i) the liquidation, dissolution or indefinite cessation of the
business operations of the Company;
(ii) the execution by the Company of a general assignment for the
benefit of creditors or the appointment of a receiver or trustee to
take possession of the property and assets of the Company; or
(iii) the consummation of an underwritten public offering of the
Laser Common registered under the Securities Act of 1933, as amended.
10.9.3 This agreement is in addition to and not in lieu of any
restrictions on Transfer provided by applicable rules and regulations
including, without limitation, Rule 144 of the Securities Act.
11. DELIVERIES AT CLOSING.
11.1 Laser and the Laser Signatory Shareholders shall deliver to SCL at
Closing:
11.1.1 certificates representing the Laser Exchange Shares, duly
endorsed in blank for transfer;
11.1.2 a certificate of an executive officer of Laser certifying that
the representations and warranties of Laser contained in this Agreement are
true and correct on the Closing Date (except those representations and
warranties which by their terms refer to another date or dates and that
Laser has satisfied all of the conditions to Closing which it is required
to satisfy pursuant to Section 12 hereof;
31
11.1.3 a copy of a certificate of good standing for Laser issued not
more than ten (10) days prior to Closing by the New Jersey Secretary of
State; and
11.1.4 a certificate of the Secretary of Laser certifying as to the
incumbency and signatures of the officers of Laser executing and delivering
documents at Closing, and that attached to such certificate are true and
correct copies of the memorandum of association and by-laws of Laser, each
as amended to the Closing Date.
11.1.5 opinion of counsel to Laser to be annexed as Exhibit 11.1.5
hereto, in form and substance substantially as delivered in transactions of
this nature and legally satisfactory to counsel for SCL, in the exercise of
their reasonable legal judgement, provided that such opinion may be given
by Laser's New York State counsel and may refer to, and rely upon, an
opinion of New Jersey counsel to Laser as to matters of New Jersey law.
11.2 SCL and/or the SCL Signatory Shareholders shall deliver to Laser at
Closing:
11.2.1 certificates representing the SCL Exchange Shares or other
evidence of issuance and ownership thereof;
11.2.2 a certificate of an executive officer of SCL certifying that
the representations and warranties of SCL contained in this Agreement are
true and correct on the Closing Date (except those representations and
warranties which by their terms refer to another date or dates and that SCL
has satisfied all of the conditions to Closing which it is required to
satisfy pursuant to Section 12 hereof;
11.2.3 a copy of a certificate of good standing for SCL issued not
more than ten (10) days prior to Closing by appropriate British Virgin
Islands Governmental Authority, provided that good standing certificates
are generally available from such Authority on a timely basis; and
11.2.4 a certificate of the Secretary of SCL certifying as to the
incumbency and signatures of the officers of SCL executing and delivering
documents at Closing, and that attached to such certificate are true and
correct copies of the memorandum of association and by-laws of SCL, each as
amended to the Closing Date.
11.2.5 evidence that SCL has the Minimum Equity Investment;
11.2.6 an opinion of counsel to SCL to be annexed as Exhibit 11.2.6
hereto, in form and substance substantially as delivered in transaction of
this nature and legally satisfactory to counsel for Laser, in the exercise
of their reasonable legal judgement; provided that such opinion may be
given by SCL's U.S. counsel and may refer to, and rely upon, an opinion of
British Virgin Islands counsel to SCL as to matters of British Virgin
Islands law.
32
12. CONDITIONS TO OBLIGATIONS OF THE PARTIES.
12.1 Conditions to Obligations of All Parties. The obligations of the
parties to consummate the Exchange and the other transactions contemplated
hereby are subject to the satisfaction of the following conditions:
12.1.1 On or prior to the Closing Date, the British Virgin Islands
Monetary Authority and any other Governmental Authority in British Virgin
Islands having jurisdiction shall have approved the issuance of the SCL
Exchange Shares to Laser, the Fund and any other Person that contributes to
the Minimum Equity Investment.
12.1.2 SCL shall have filed a Form 99 and all other documents required
to be filed under New York Blue Sky Laws.
12.2 Conditions to Obligations of Laser and the Laser Signatory I
Shareholders. The obligations of Laser and the Laser Signatory Shareholders to
consummate the Exchange and the other transactions contemplated hereby are
subject to the satisfaction of the following conditions:
12.2.1 Each of SCL and the Sellers shall have performed, in all
material respects, all of their respective obligations under this Agreement
required to be performed by it at or prior to the Closing Date;
12.2.2 the respective representations and warranties of SCL and the
SCL Signatory Shareholders contained in this Agreement and in any
certificate or other writing delivered by SCL or any such Shareholder
pursuant to this Agreement shall be true in all material respects at and as
of the Closing Date as if made at and as of such time, except to the extent
that particular representations or warranties are made as of other
specified date or dates, in which event, they shall be true in all material
respects as of such other date or dates, respectively, and Laser shall have
received a certificate signed by an executive officer of SCL (which
certificate shall not impose any personal liability on such officer) to the
foregoing effect;
12.2.3 SCL shall have received the Minimum Equity Investment and shall
have provided evidence thereof reasonably satisfactory to Laser.
12.3 Conditions to Obligations of SCL and the SCL Signatory Shareholders.
The obligations of SCL and the SCL Signatory Shareholders to consummate the
Exchange and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions:
12.3.1 Each of Laser and the Laser Signatory Shareholders shall have
performed, in all material respects, all of their respective obligations
under this Agreement required to be performed by it at or prior to the
Closing Date;
12.3.2 the respective representations and warranties of Laser and the
Laser Signatory Shareholders contained in this Agreement and in any
certificate or other writing delivered by Laser or any such Shareholder
pursuant to this Agreement shall be true in all material respects at and as
of the Closing Date as if made at and as of such time, except to the extent
33
that particular representations or warranties are made as of other
specified date or dates, in which event, they shall be true in all material
respects as of such other date or dates, respectively, and Laser shall have
received a certificate signed by an executive officer of Laser (which
certificate shall not impose any personal liability on such officer) to the
foregoing effect;
12.3.3 The Reverse Split shall have been effected prior to the Closing
Date;
12.3.4 Laser shall remain, through the Closing Date, (i) a company in
good standing and whose shares are admitted for listing on the
Over-the-Counter Bulletin Board (the "OTCBB") and there shall be no inquiry
pending or threatened that could result in de-listing of Laser Common for
trading on the OTCBB and (ii) current in filing reports with the SEC;
12.3.5 The Exchange does not violate any Federal or state law, rule or
regulation to which Laser is subject, and Laser shall have received all
necessary approvals and consents of the Laser Board and its shareholders,
if applicable.
12.3.6 The number of shares of Laser Common, Laser Preferred and of
Options on the date hereof shall be no greater on the Closing Date, and no
other securities of Laser shall be outstanding and there shall be no
commitment outstanding on the Closing Date to issue any such securities
(other than as provided in this Agreement).
12.3.7 The applicable Governmental Authorities of British Virgin
Islands shall have authorized the issuance of the SCL Exchange Shares as
provided herein and Laser and the Laser Signatory Shareholders shall have
provided all documents and information required or requested by any such
Authority as a condition to authorizing such issuance.
13. TERMINATION.
13.1 Right to Terminate. This Agreement may be terminated prior to Closing,
and the contemplated transactions abandoned at any time prior to the Closing
Date without liability to either party, except as specified below in this
Section 13, upon:
13.1.1 by mutual written agreement of Laser and SCL;
13.1.2 by Laser or SCL if (i) any provision of any applicable law or
regulation or any judgment, injunction, order or decree of a court of
competent jurisdiction that prohibits the consummation of the Exchange is
entered and shall have become final and non-appealable, which law,
regulation, judgment, injunction, order or decree is not based upon the
requirement of approval of Laser's shareholders, provided that the party
seeking to terminate this Agreement pursuant to this clause (i) of this
paragraph (b) shall have used its reasonable best efforts to remove any
such injunction, order or decree; or (iii) SCL shall not have received the
Auditor's Notice by August 1, 2003.
34
13.1.3 by Laser if, at any time prior to the Closing Date: (i) SCL
does not raise the Minimum Equity Investment; or (ii) any of the conditions
to the obligations of Laser set forth in Section 12.2 hereof shall not have
been satisfied in any material respect; and
13.1.4 by SCL if, at any time prior to the Closing Date: (i) any of
the conditions to the obligations of SCL set forth in Section 12.3 hereof
shall not have been satisfied in any material respect; or (ii) if the due
diligence review by SCL or its representatives of Laser's books and records
reveals a breach of any of the representations and warranties of Laser or
any Laser Signatory Shareholder contained herein or in any certificate
delivered pursuant to this Agreement or there is any material adverse
change in the business or financial condition or its results of operations
of Laser from those as presented in the Laser 2002 Annual Report.
13.2 Termination Date; Notice of Termination. Any party may exercise its
right under Section 13.1 hereof to terminate this Agreement by giving notice
thereof in writing to each of the other parties (the "Termination Notice"). This
Agreement shall terminate on the date on which the first Termination Notice
shall have been received by SCL or Laser pursuant to Section 15 hereof.
13.3 Effects of Termination. In the event of termination of this Agreement
pursuant to this Section 13 ("Termination"), each of the parties hereby
expressly waive their rights to recover all other damages, fees, costs, and
expenses, including incidental, consequential and punitive damages, from any of
the other parties as a result of any termination of this Agreement; provided,
however, that: (i) the Escrow Funds deposited pursuant to the Deposit Escrow
Agreement shall be distributed by the Escrow Agent as provided therein, and this
Section shall constitute an amendment to the Deposit Escrow Agreement extending
the term thereof through the first to occur of the Closing Date and the
Termination Date; and (ii) if either SCL or Laser terminates this Agreement in
bad faith, the non-terminating party shall be entitled to recover reasonable
attorneys' and auditors' fees, costs and expenses expended in connection with
the Exchange. Effective as of the Termination Date, this Agreement shall
forthwith become void and of no further force or effect, except for: (x) the
obligations pursuant to this Section 13.3; and (y) the obligations of
confidentiality set forth in Section 10.3 hereof.
14. NATURE AND SURVIVAL OF REPRESENTATIONS. All representations, warranties and
covenants of the parties contained herein or in any certificate or other
instrument delivered by or on behalf of any of the parties pursuant hereto, or
in connection with the transactions contemplated hereby, shall be deemed
representations and warranties by such party, respectively, but shall not
survive the Closing, provided, however, that representations of any party with
respect to any Tax matter, any Environmental Liability, any ERISA matter or
matter related to any employee benefit plan shall survive until expiration of
the applicable statute of limitations.
15. NOTICES. All notices, requests and other communications to any party
hereunder shall be in writing (including facsimile transmission) and shall be
given,
If to Laser or any Laser Signatory Shareholder, to:
Xxxx Xxxxxxxxx
35
Chief Executive Officer
Laser Recording Systems, Inc.
13 00 Xxx Xxxx Xxxxxx
Xxxxxxxxxx Xxxxxxx, Xxx Xxxx 00000
Fax No: 000-000-0000
with a copy to:
Raice, Paykin & Xxxxx
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: (000)000-0000
Attention: Xxxx Xxxxxx, Esq.
If to SCL or any SCL Signatory Shareholder, to:
Xxxxxxxx Xxxxxxxx, President
SCL Ventures, Inc.
000 Xxxxx Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
Fax No.: (000) 000-0000
with a copy to:
Xxxxxxx, Xxxxxxxxx & Xxxxxxxx
000 Xxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: (000) 000-0000
Attention: Xxxxxx Xxxxxxxx, Esq.
Or such other address or fax number as such party may hereafter specify for
purposes of notice by giving notice to the other parties hereto. All such
notices, requests and other communications shall be deemed given on the date of
receipt by the recipient thereof, if received prior to 5 p.m. in the place of
receipt and such day is a business day in the place of receipt, or if received
later, the next succeeding business day in the place of receipt.
16. AMENDMENTS; NO WAIVERS. Any provision of this Agreement may be amended or
waived prior to the last to occur of the Closing Date and the Termination Date
but only if such amendment or waiver is in writing and is signed, in the case of
an amendment, by each party to this Agreement, or in the case of a waiver, by
the party against whom the waiver is to be effective. No failure or delay by any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
36
17. GOVERNING LAW; ARBITRATION. This Agreement has been prepared, negotiated and
delivered in the State of New York and shall be governed by, and construed in
accordance with, the laws of that State, without giving effect to the principles
thereof relating to the conflict of laws. Any dispute arising pursuant to or in
any way related to this Agreement or the transactions contemplated hereby shall
be settled by arbitration, provided, however, that nothing in this Section shall
restrict the right of either party to apply to a court of competent jurisdiction
for emergency relief pending final determination of a claim by arbitration in
accordance with this Section. All arbitration shall be conducted in New York,
New York, in accordance with the rules and regulations of the American
Arbitration Association then obtaining. The laws of New York shall govern the
disposition of any such arbitration. The decision of the arbitrator shall be
binding upon the parties and judgment in accordance with that decision may be
entered in any court of competent jurisdiction. Each party hereby submits to the
jurisdiction of the American Arbitration Association and consents to the venue
stated in this Section.
18. ENFORCEABILITY. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, the parties
hereto hereby waive any provision of law which renders any provision hereof
prohibited or unenforceable in any respect.
19. SUCCESSORS AND ASSIGNS; NO THIRD PARTY BENEFICIARIES. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto, except that SCL may
transfer or assign, to one or more of its affiliates, the right to enter into
the transactions contemplated by this Agreement.
20. ENTIRE AGREEMENT. This Agreement and the Deposit Escrow Agreement constitute
the entire agreement between the parties with respect to the subject matter of
this Agreement and supersede all prior agreements and understandings, both oral
and written between or among any of the parties with respect to the subject
matter hereof and thereof.
21. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written, by signing on the appropriate signature page hereto.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
37
SCL SIGNATURE PAGE
TO
EXCHANGE AGREEMENT DATED MAY 20, 2003
SCL VENTURES, LTD.
By:_________________________________
Xxxxxxxx Xxxxxxxx
President
SCL SIGNATORY SHAREHOLDERS
----------------------------- -----------------------------
Xxxxxxxx Xxxxxxxx Xxxx Xxxx
------------------------------
Xxxxxx Xxxxxxxxx
38
LASER SIGNATURE PAGE
TO
EXCHANGE AGREEMENT DATED MAY 20, 2003
LASER RECORDING SYSTEMS, INC.
By:________________________________
Xxxx Xxxxxxxxx
Chief Executive Officer
LASER SIGNATORY SHAREHOLDERS:
----------------------------------- ----------------------------------
Xxxx Xxxxxxxxx Xxxxxx Neivera
-----------------------------------
Xxxxxx Xxxx
39
LIST OF EXHIBITS
Exhibit A - Laser Disclosure Schedule
Exhibit B - SCL Disclosure Schedule
40
EXHIBIT A
LASER DISCLOSURE SCHEDULE
No additional information required other than relative to inactive retirement
plan.
41
EXHIBIT B
SCL DISCLOSURE SCHEDULE
No additional information required.
42
EXHIBIT 6.4
Laser Board Consent
To be provided prior to or at Closing
EXHIBIT 7.4
SCL Board Consent
To be provided prior to or at Closing
EXHIBIT 7.9
SCL Financial Statements
To be provided prior to or at Closing
EXHIBIT 11.1.5
Laser opinion of counsel
To be provided prior to or at Closing
EXHIBIT 11.2.6
SCL opinion of counsel
To be provided prior to or at Closing
43
TABLE OF CONTENTS
1. INCORPORATION OF RECITALS; CERTAIN DEFINITIONS; CONSTRUCTION.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2. PLAN OF REORGANIZATION. . . . . . . . . . . . . . . . . . . . . 6
3. THE EXCHANGE; REVERSE SPLIT. . . . . . . . . . . . . . . . . . 6
3.1 Exchange. . . . . . . . . . . . . . . . . . . . .6
3.2 Exchange Ratio. . . . . . . . . . . . . . . . . .6
3.3 Reverse Split.. . . . . . . . . . . . . . . . . .6
3.4 No Liens or Encumbrances. . . . . . . . . . . . .7
3.5 Restrictions on Transfer. . . . . . . . . . . . .7
3.6 Reservation of Shares for Issuance. . . . . . . .8
3.7 Exchange Procedures.. . . . . . . . . . . . . . .8
4. SCL EQUITY FINANCING; PUT; XXXXX TRANSACTION. . . . . . . . . . 8
5. CLOSING; CLOSING DATE.. . . . . . . . . . . . . . . . . . . . . 9
6. REPRESENTATIONS AND WARRANTIES OF LASER AND THE LASER SIGNATORY
SHAREHOLDERS.. . . . . . . . . . . . . . . . . . . . . . . . . .9
6.1 Corporate Existence and Power.. . . . . . . . . .9
6.2 Articles of Incorporation and By-laws; Minute
Books . . . . . . . . . . . . . . . . . . . . . 10
6.3 Corporate Authorization.. . . . . . . . . . . . 10
6.4 Laser Board Consent.. . . . . . . . . . . . . . 10
6.5 Governmental Authorization. . . . . . . . . . . 10
6.6 Non-Contravention.. . . . . . . . . . . . . . . 11
6.7 Capitalization; Validity of Securities. . . . . 11
6.8 Subsidiaries. . . . . . . . . . . . . . . . . . 11
6.9 SEC Filings.. . . . . . . . . . . . . . . . . . 11
6.10 Financial Statements. . . . . . . . . . . . . . 12
6.11 Absence of Certain Changes. . . . . . . . . . . 12
6.12 No Undisclosed Material Liabilities.. . . . . . 13
6.13 Compliance with Laws and Court Orders.. . . . . 13
6.14 Litigation. . . . . . . . . . . . . . . . . . . 13
6.15 Finder's Fee. . . . . . . . . . . . . . . . . . 14
6.16 Taxes.. . . . . . . . . . . . . . . . . . . . . 14
6.17 Employees Benefit Plans.. . . . . . . . . . . . 14
6.18 Environmental Matters.. . . . . . . . . . . . . 14
6.19 Patents and Other Proprietary Rights. . . . . . 15
6.20 Antitakeover Statutes . . . . . . . . . . . . . 15
6.21 Affiliate Transactions. . . . . . . . . . . . . 15
6.22 Trading.. . . . . . . . . . . . . . . . . . . . 15
44
6.23 Investment Representations. . . . . . . . . . . 15
7. REPRESENTATION AND WARRANTIES OF SCL AND THE SCL SIGNATORY
SHAREHOLDERS.. . . . . . . . . . . . . . . . . . . . . . . . . 16
7.1 Corporate Existence and Power.. . . . . . . . . 16
7.2 Articles of Incorporation and By-laws; Minute
Books . . . . . . . . . . . . . . . . . . . . . 16
7.3 Corporate Authorization.. . . . . . . . . . . . 16
7.4 SCL Board Consent.. . . . . . . . . . . . . . . 16
7.5 Governmental Authorization. . . . . . . . . . . 16
7.6 Non-Contravention.. . . . . . . . . . . . . . . 17
7.7 Capitalization; Validity of Securities.. . . . 17
7.8 Subsidiaries. . . . . . . . . . . . . . . . . . 17
7.9 Financial Statements; Absence of Certain
Changes . . . . . . . . . . . . . . . . . . . . 18
7.10 No Undisclosed Material Liabilities.. . . . . . 19
7.11 Compliance with Laws and Court Orders. . . . . 19
7.12 Litigation. . . . . . . . . . . . . . . . . . . 19
7.13 Finder's Fee. . . . . . . . . . . . . . . . . . 19
7.14 Taxes.. . . . . . . . . . . . . . . . . . . . . 20
7.15 Employees Benefit Plans.. . . . . . . . . . . . 20
7.16 Environmental Matters.. . . . . . . . . . . . . 20
7.17 Patents and Other Proprietary Rights. . . . . . 20
7.18 Antitakeover Statutes.. . . . . . . . . . . . . 21
7.19 Investment Representations. . . . . . . . . . . 21
8. COVENANTS OF LASER AND LASER SIGNATORY SHAREHOLDER PENDING
CLOSING . . . . . . . . . . . . . . . . . . . . 21
8.1 Preservation. . . . . . . . . . . . . . . . . . 21
8.2 Negative Covenants. . . . . . . . . . . . . . . 22
8.3 Access and Information. . . . . . . . . . . . . 23
8.4 Reservation of Laser Exchange Shares. . . . . . 23
8.5 Board of Directors. . . . . . . . . . . . . . . 23
8.6 Covenants of Laser Signatory Shareholders.. . . 24
9. COVENANTS OF SCL AND THE SCL SIGNATORY SHAREHOLDERS PENDING
CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.1 Preservation. . . . . . . . . . . . . . . . . . 24
9.2 Negative Covenants. . . . . . . . . . . . . . . 25
9.3 Access and Information. . . . . . . . . . . . . 26
9.4 Reservation of SCL Exchange Shares. . . . . . . 26
9.5 Covenants of SCL Signatory Shareholders . . . . 26
10. COVENANTS OF THE PARTIES PENDING AND FOLLOWING CLOSING . . . . 26
10.1 British Virgin Island Filings.. . . . . . . . . 26
10.2 Initial 8-K.. . . . . . . . . . . . . . . . . . 26
10.3 Confidentiality.. . . . . . . . . . . . . . . . 27
45
10.4 Standstill Agreement. . . . . . . . . . . . . . 27
10.5 Additional Filings. . . . . . . . . . . . . . . 27
10.6 Closing Report. . . . . . . . . . . . . . . . . 28
10.7 Notification as to Certain Events.. . . . . . . 28
10.8 Reasonable Efforts; Further Action. . . . . . . 28
10.9 Restriction on Sale of Laser Stock. . . . . . . 28
(a) Right to Participate. . . . . . . . . . . . . . 29
(b) Consummation of Sale. . . . . . . . . . . . . . 29
(c) Ongoing Rights. . . . . . . . . . . . . . . . . 29
(d) Permitted Exemptions. . . . . . . . . . . . . . 30
(e) Termination of Co-Sale/Tag Along Rights.. . . . 30
11. DELIVERIES AT CLOSING. . . . . . . . . . . . . . . . . . . . . 30
12. CONDITIONS TO OBLIGATIONS OF THE PARTIES . . . . . . . . . . . 31
12.1 Conditions to Obligations of All Parties. . . . 31
12.2 Conditions to Obligations of Laser and the
Laser Signatory Shareholders. . . . . . . . . . 32
12.3 Conditions to Obligations of SCL and the
SCL Signatory Shareholders. . . . . . . . . . . 32
13. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.1 Right to Terminate. . . . . . . . . . . . . . . 33
13.2 Termination Date; Notice of Termination.. . . . 34
13.3 Effects of Termination. . . . . . . . . . . . . 34
14. NATURE AND SURVIVAL OF REPRESENTATIONS . . . . . . . . . . . . 34
15. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
16. AMENDMENTS; NO WAIVERS . . . . . . . . . . . . . . . . . . . . 35
17. GOVERNING LAW; ARBITRATION . . . . . . . . . . . . . . . . . . 35
18. ENFORCEABILITY . . . . . . . . . . . . . . . . . . . . . . . . 36
19. SUCCESSORS AND ASSIGNS; NO THIRD PARTY BENEFICIARIES . . . . . 36
20. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . 36
21. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . 36
LIST OF EXHIBITS. . . . . . . . . . . . . . . . . . . . . . . . . . 39
46
