1
EXHIBIT 2.4
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
PACIFIC LITHIUM LIMITED
AND
LITHIUM TECHNOLOGY CORPORATION
DATED AS OF JANUARY 19, 2000
AS AMENDED AND RESTATED ON MAY 12, 2000
2
TABLE OF CONTENTS
Page
RECITALS.....................................................................................................2
ARTICLE I DEFINITIONS........................................................................................3
1.1 Definitions...................................................................................3
ARTICLE II THE MERGER.......................................................................................10
2.1 The Merger...................................................................................10
2.2 Effective Time...............................................................................10
2.3 Effect of the Merger.........................................................................10
2.4 Certificate of Incorporation.................................................................10
2.5 Bylaws.......................................................................................10
2.6 Directors and Officers.......................................................................10
ARTICLE III CONVERSION OF SECURITIES........................................................................10
3.1 Shares of the Surviving Corporation.........................................................10
3.2 No Conversion of PLL Common..................................................................11
3.3 Conversion of LTC Common; Assumption of Warrants.............................................11
3.4 Exchange Agent...............................................................................11
3.5 No Fractional Shares.........................................................................11
3.6 Rights of the LTC Shareholders...............................................................11
3.7 Exchange.....................................................................................12
3.8 Closing of Stock Transfer Books..............................................................12
3.9 Changes in PLL or LTC Common.................................................................13
ARTICLE IV CLOSING AND CLOSING DELIVERIES...................................................................13
4.1 The Closing..................................................................................13
4.2 Deliveries of LTC............................................................................13
4.3 Deliveries by PLL............................................................................14
ARTICLE V REPRESENTATIONS AND WARRANTIES OF LTC.............................................................15
5.1 Corporate Existence and Power................................................................15
5.2 Corporate Authorization; Enforceability......................................................15
5.3 Governmental Authorization...................................................................15
5.4 Non-Contravention; Consents..................................................................16
5.5 Capitalization...............................................................................16
5.6 Subsidiaries.................................................................................16
5.7 LTC Financial Statements; Book and Records...................................................17
5.8 No Undisclosed Liabilities...................................................................17
5.9 Tax Matters..................................................................................17
5.10 Absence of Certain Changes...................................................................19
5.11 Contracts....................................................................................19
5.12 Insurance Coverage...........................................................................20
5.13 Litigation...................................................................................21
5.14 Compliance with Laws; Permits................................................................21
5.15 Properties; Sufficiency of Assets............................................................21
5.16 Intellectual Property........................................................................22
5.17 Environmental Matters........................................................................23
5.18 Plans and Material Documents.................................................................24
5.19 Affiliate Transactions.......................................................................25
3
5.20 Employee Matters.............................................................................25
5.21 Finders' Fees................................................................................26
5.22 Millennium Compliance........................................................................27
5.23 SEC Filings..................................................................................27
5.24 Registration Statement, Other Documents......................................................27
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PLL........................................................27
6.1 Corporate Existence and Power................................................................28
6.2 Corporate Authorization; Enforceability......................................................28
6.3 Governmental Authorization...................................................................28
6.4 Non-Contravention; Consents..................................................................28
6.5 Capitalization...............................................................................29
6.6 Subsidiaries.................................................................................29
6.7 PLL Financial Statements; Books and Records..................................................29
6.8 No Undisclosed Liabilities...................................................................30
6.9 Tax Matters..................................................................................30
6.10 Absence of Certain Changes...................................................................31
6.11 Contracts....................................................................................31
6.12 Insurance Coverage...........................................................................31
6.13 Litigation...................................................................................32
6.14 Compliance with Laws; Permits................................................................32
6.15 Properties; Sufficiency of Assets............................................................32
6.16 Intellectual Property........................................................................33
6.17 Environmental Matters........................................................................33
6.18 Plans and Material Documents.................................................................34
6.19 Affiliate Transactions.......................................................................34
6.20 Employee Matters.............................................................................35
6.21 Finders' Fees................................................................................35
6.22 Millennium Compliance........................................................................35
6.23 New Zealand Filings..........................................................................35
6.24 Registration Statement, Other Documents......................................................35
6.25 Available Funds..............................................................................36
ARTICLE VII
CERTAIN COVENANTS............................................................................36
7.1 Conduct of Business of LTC...................................................................36
7.2 Exclusive Dealing............................................................................37
7.3 Review of LTC; Confidentiality...............................................................38
7.4 Reasonable Best Efforts......................................................................39
7.5 Transfer of Employees and Benefit Plans......................................................39
7.6 Proxy and Registration Statements............................................................40
7.7 LTC SEC Filings; Disclosure of Material Information..........................................41
7.8 Transfer Taxes...............................................................................41
7.9 Further Assurances...........................................................................41
7.10 Insurance....................................................................................41
7.11 Transfer of Intellectual Property Rights.....................................................42
7.12 Board of Directors...........................................................................42
7.13 Repricing of Options and Warranties; Purchase of Additional Stock............................42
7.14 Bridge Financing; Additional Security........................................................42
7.15 Line of Business; Non-Compete................................................................43
7.16 IPO; Reincorporation.........................................................................43
7.17 Consulting Services..........................................................................43
5
4
ARTICLE VIII
CONDITIONS TO CLOSING........................................................................45
8.1 Conditions to Obligations of PLL.............................................................45
8.1.1 Representations, Warranties and Covenants of LTC...................................45
8.1.2 No Injunction, etc.................................................................45
8.1.3 No Proceedings.....................................................................45
8.1.4 Ancillary Closing Agreements.......................................................45
8.1.5 Third-Party Consents; Governmental Approvals.......................................45
8.1.6 No Material Adverse Change.........................................................46
8.1.7 Transfer of Intellectual Property Rights...........................................46
8.1.8 SEC Filings........................................................................46
8.1.9 Due Diligence......................................................................46
8.1.10 IPO Closing........................................................................46
8.1.11 ...................................................................................46
8.2 Conditions to Obligations of LTC.............................................................46
8.2.1 Representations, Warranties and Covenants of PLL...................................46
8.2.2 No Injunction, etc.................................................................46
8.2.3 No Proceedings.....................................................................46
8.2.4 Ancillary Closing Agreements.......................................................47
8.2.5 Third-Party Consents; Governmental Approvals.......................................47
8.2.6 No Material Adverse Change.........................................................47
8.2.7 IPO Closing........................................................................47
8.2.8 Fairness Opinion...................................................................47
8.2.9 Tax Opinion........................................................................47
ARTICLE IX
TERMINATION; REMEDIES........................................................................47
9.1 Termination..................................................................................47
9.2 Remedies.....................................................................................48
ARTICLE X
MISCELLANEOUS................................................................................49
10.1 Non-Survival of Representations and Warranties...............................................49
10.2 Notices......................................................................................49
10.3 Waiver.......................................................................................49
10.4 Amendments, Supplements, Etc.................................................................49
10.5 Delegation...................................................................................49
10.6 Expenses.....................................................................................50
10.7 Successors and Assigns.......................................................................50
10.8 No Third-Party Beneficiaries.................................................................50
10.9 Governing Law................................................................................50
10.10 Jurisdiction.................................................................................50
10.11 WAIVER OF JURY TRIAL.........................................................................51
10.12 Public Announcements.........................................................................51
10.13 Counterparts.................................................................................51
10.14 Table of Contents; Headings..................................................................51
10.15 Entire Agreement.............................................................................51
10.16 Severability; Injunctive Relief..............................................................51
10.17 Certain Interpretive Matters.................................................................52
6
5
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
January 19, 2000, by and between PACIFIC LITHIUM LIMITED, a New Zealand
corporation (together with its successors is referred to herein as "PLL"), and
LITHIUM TECHNOLOGY CORPORATION, a Delaware corporation ("LTC") as amended and
restated by the parties as of May 12, 2000.
RECITALS
WHEREAS, LTC is engaged in the business of developing and
commercializing proprietary battery cell structures and processes to manufacture
"thin film" rechargeable solid-state, lithium-ion polymer and lithium metal
polymer batteries.
WHEREAS, PLL desires to domesticate into the United States and become a
Delaware corporation pursuant to the provisions of Section 388 of the Delaware
General Corporation Law ("DGCL") (the "Domestication"), change its name to Ilion
Technology Corporation and consummate an IPO (as herein defined);
WHEREAS, PLL and LTC desire that after the Domestication LTC merge with
and into PLL under and pursuant to the DGCL, upon the terms and conditions
hereinafter set forth (the merger described in this Agreement and the
Certificate of Merger (as defined in Section 2.1) herein called the "Merger");
WHEREAS, the Board of Directors of PLL has adopted resolutions
approving this Agreement and the Certificate of Merger and the consummation of
the transactions contemplated hereby and thereby and authorizing the execution
and delivery of this Agreement and the Certificate of Merger attached as Exhibit
A;
WHEREAS, the Board of Directors of LTC has adopted resolutions
approving this Agreement and the Certificate of Merger and the consummation of
the transactions contemplated hereby and thereby and authorizing the execution
and delivery of this Agreement and the Certificate of Merger;
WHEREAS, it is intended that the Merger will be a tax-free
reorganization under Section 368 of the Internal Revenue Code of 1986, as
amended;
WHEREAS, PLL and LTC have entered into Bridge Loan Financing Agreements
(as herein defined) pursuant to which PLL has agreed to advance funds to LTC in
the amounts set forth therein;
NOW, THEREFORE, in consideration of these premises and the mutual
agreements, provisions and covenants contained in this Agreement, PLL and LTC
agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere herein, the
following terms, as used herein, have the following meanings when used herein
with initial capital letters:
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
the first Person and, if such first Person is an individual, any member of the
immediate family (including parents, spouse and children) of such individual and
any trust whose principal beneficiary is such individual or one or more members
of such immediate family and any Person who is controlled by any such member or
trust. For the purposes of this Agreement, "control," when used with respect to
any Person, means the possession, directly or indirectly, of the power to (a)
vote 10% or
7
6
more of the securities having ordinary voting power for the election of
directors (or comparable positions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agreement" means this Merger Agreement, as the same may be amended
from time to time in accordance with the terms hereof.
"Ancillary Closing Agreements" means (i) the Certificate of Merger,
(ii) the Employment Agreements; and (iii) all other instruments, certificates
and other agreements entered into in connection with the consummation of the
transactions contemplated by this Agreement.
"Benefit Plan" means any employee benefit plan within the meaning of
Section 3(3) of ERISA, and any other plan, program, agreement, arrangement,
policy, contract, commitment or scheme, written or oral, statutory or
contractual, that provides for compensation or benefits, including, but not
limited to, any deferred compensation, executive compensation, bonus or
incentive plan, any cafeteria plan or any holiday or vacation plan or practice.
"Bonuses" has the meaning ascribed to such term in Section 5.20(g).
"Bridge Loan Financing Agreements" means (i) the Bridge Loan Financing
Agreement, dated as of November 29, 1999, between LTC and PLL (the "Bridge Loan
Financing Agreement"), (ii) the Convertible Bridge Notes, (iii) the Convertible
Operating Notes, (iv) the License and Option Agreement, (v) the Packaging
Security Agreement and (vi) the LTC Warrants.
"Business" means the business of LTC as currently conducted or proposed
to be conducted.
"Business Day" means a day that is not a Saturday, Sunday or a day on
which commercial banking institutions located in New York City, New York or
Auckland, New Zealand are authorized or required to close.
"Capitalized Lease Obligations" means, for any applicable period, the
obligations of such Person that are required to be classified and accounted for
as capital lease obligations under GAAP, together with all obligations to make
termination payments under such capitalized lease obligations.
"Capital Stock" means (a) with respect to any Person that is a
corporation, any and all shares, interests, participation or other equivalents
(however designated and whether or not voting) of corporate stock, including,
but not limited to, the common stock and the preferred stock and the preferred
stock of such Person and (b) with respect to any Person that is not a
corporation, any and all partnership or other equity interests of such Person.
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, 42 U.S.C. Sections 9601, et seq., as amended.
"Certificate of Merger" has the meaning ascribed to such term in
Section 2.1.
"Closing" has the meaning ascribed to such term in Section 4.1.
"Closing Date" has the meaning ascribed to such term in Section 4.1.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Computer Systems" has the meaning ascribed to such term in Section
5.22.
8
7
"Constituent of Concern" means any substance defined as a "hazardous
substance", hazardous waste, hazardous material, pollutant or contaminant by any
Environmental Law, any petroleum hydrocarbon and any degradation product of a
petroleum hydrocarbon, asbestos, PCB or similar substance, the generation,
recycling, use, treatment, storage, transportation, Release, disposal or
exposure of or to which is subject to regulation under any Environmental Law.
"Contracts" has the meaning ascribed to such term in Section 5.11(a).
"Convertible Bridge Notes" means (i) the Convertible Secured Promissory
Note, dated as of November 29, 1999, made by LTC in favor of PLL, in the amount
of $125,000 and (ii) the Convertible Promissory Note, dated as of January 10,
2000, made by LTC in favor of PLL, in the amount of $975,000 delivered in
connection with the Bridge Loan Financing Agreements.
"Convertible Operating Notes" means the convertible promissory notes
made by LTC in favor of PLL and delivered in connection with the Bridge Loan
Financing Agreements.
"Dissenting Shares" has the meaning ascribed to such term in Section
3.3.
"Effective Time" has the meaning ascribed to such term in Section 2.2.
"Employment Agreements" means the employment agreements, dated as of
the Closing Date, between PLL and each of Xxxxx Xxxx and Xxxxxx Ferment,
substantially in the standard form used by PLL and attached hereto as Exhibits B
and C, respectively.
"Environmental Claims" means administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, citations, summonses,
notices of non-compliance or violation, requests for information, investigations
or proceedings relating in any way to the Release of Constituents of Concern or
any Environmental Law or any Permit issued under any such Law, including (a)
Environmental Claims by Governmental Authorities for enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law and (b) Environmental Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Constituents of Concern or arising from alleged
injury or threat of injury to human health and safety or the environment.
"Environmental Condition" means a condition with respect to the
environment which has resulted or could reasonably be expected to result in a
material loss, liability, cost or expense.
"Environmental Law" means any Law, judicial or administrative
interpretation, judicial or administrative order, consent decree or judgment,
relating to the environment, human health and safety, including CERCLA; and any
state and local counterparts or equivalents.
"Environmental Permits" means all Permits, licenses, authorizations,
certificates and approvals of Governmental Authorities relating to or required
by Environmental Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor thereto.
"ERISA Affiliate" means any Person that, together with LTC, would be
considered a single employer within the meaning of Section 4001 of ERISA or
Section 414 of the Code.
9
8
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"GAAP" means U.S. or New Zealand, as the case may be, generally
accepted accounting principles, consistently applied.
"Governmental Authority" means any domestic or foreign governmental or
regulatory agency, authority, bureau, commission, department, official or
similar body or instrumentality thereof, or any governmental court, arbitral
tribunal or other body administering alternative dispute resolution.
"Indebtedness" means with respect to any Person, at any date, without
duplication, (a) all obligations of such Person for borrowed money, including,
without limitation, all principal, interest, premiums, fees, expenses,
overdrafts and penalties with respect thereto, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (c)
all obligations of such Person to pay the deferred purchase price of the
property or services, except trade payables incurred in the Ordinary Course of
Business, (d) all obligations of such Person to reimburse any bank or other
Person in respect of amounts paid under a letter of credit or similar
instrument, (e) all Capitalized Lease Obligations, (f) all other obligations of
a Person which would be required to be shown as indebtedness on a balance sheet
of such Person prepared in accordance with GAAP, and (g) all indebtedness of any
other Person of the type referred to in clauses (a) to (f) above directly or
indirectly guaranteed by such Person or secured by any assets of such Person,
whether or not such Indebtedness has been assumed by such Person.
"Intellectual Property Right" means any trademark, service xxxx, trade
name, product designation, logo, slogan, invention, patent, trade secret,
copyright, know-how, proprietary design or process, computer software and
database, Internet address or domain name (including any registrations or
applications for registration or renewal of any of the foregoing), research in
progress, or any other similar type of proprietary intellectual property right,
including, but not limited to, the intellectual property rights set forth on
Schedule 5.16(a) hereto, of LTC, whether existing on the date hereof or acquired
thereafter.
"Interim Agreements" means the Bridge Loan Financing Agreements and the
Security Agreement and Assignment of Lease.
"IPO" means an initial public offering and sale of common stock of
Ilion Technology Corporation, in the United States public markets (and
potentially in certain other markets) which results in aggregate gross proceeds
to PLL in an amount which, when added to the aggregate gross proceeds of all
equity funding received by PLL at any time during the period from September 29,
1999 until the time of the IPO, equals at least twenty-five million dollars
($25,000,000).
"IPO Date" means the date on which PLL closes an IPO.
"IRS" means the Internal Revenue Service.
"Law" means any federal, foreign, state or local statute, law, rule,
regulation, ordinance, code, permit, license, policy or rule of common law.
"Lien" means, with respect to any property or asset, any mortgage,
lien, pledge, charge, security interest, encumbrance or other adverse claim of
any kind in respect of such property or asset. For the purposes of this
Agreement, a Person will be deemed to own, subject to a Lien, any property or
asset which it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such property or asset.
10
9
"License and Option Agreement" means the License and Option Agreement,
effective as of October 1, 1999, made by LTC in favor of PLL and delivered in
connection with the Bridge Loan Financing Agreements.
"LTC Audited Financials" means the audited balance sheet of LTC for its
fiscal year ended December 31, 1998, together with the related statement of
income, retained earnings and cash flows for such period.
"LTC Common" means all the issued and outstanding shares of common
stock, par value $0.01 per share, of LTC as of the Effective Time.
"LTC's Continuing Costs" means LTC's continuing corporate costs as
agreed with PLL for the period from the Closing Date to the IPO Date as set
forth in Section 2(d) of the Bridge Loan Financing Agreement.
"LTC Interim Financials" means the unaudited balance sheet of LTC for
the quarter ended September 30, 1999, together with the related unaudited
statement of income, retained earnings and cash flows for such period.
"LTC Warrants" means the warrants to purchase 7.5 million shares of
common stock of LTC at $.15 per share delivered by LTC to PLL pursuant to the
Bridge Loan Financing Agreements.
"Material Adverse Effect" means a material adverse effect on the
business, assets, liabilities, condition (financial and other), results of
operations or prospects of LTC and its subsidiaries, taken as a whole, or PLL
and its subsidiaries, taken as a whole, as the context in which such term is
used may require.
"Merger Consideration" means the Merger Securities and the cash payable
in lieu of fractional shares as provided by Section 3.5 hereto.
"Merger Securities" has the meaning ascribed to such term in
Section 3.3.
"Millennium Compliance" means that the Computer Systems are capable of
the following, before, during and after January 1, 2000: (a) handling date
information involving all and any dates (including the recording of February 29,
2000), including accepting input, providing output and performing date
calculations in whole or in part; (b) operating accurately without interruption
on and in respect of any and all dates and without change in performance; (c)
responding to and processing two digit year input without creating any ambiguity
as to the century; and (d) storing and providing date input information without
creating any ambiguity as to the century.
"Mitsubishi Materials" means the agreements set forth on Schedule 5.4.
"Monthly Financial Statements" means the unaudited monthly balance
sheets of LTC at the end of each calendar month beginning January 1, 2000
through and including the Closing Date, together with the related monthly
statements of earnings and cash flows.
"Options" has the meaning ascribed to such term in Section 7.5(c).
"Order" means any judgment, injunction, judicial or administrative
order or decree.
"Ordinary Course of Business" means, with respect to any Person, the
ordinary course of business of such Person, consistent with such Person's past
practice and custom, including, with respect to any category, quantity or dollar
amount, term and frequency of payment, delivery, accrual, expense or any other
accounting entry.
11
10
"Packaging Security Agreement" means the Security Agreement dated
November 29, 1999 delivered by LTC in favor of PLL in connection with the Bridge
Loan Financing Agreements pursuant to which LTC granted PLL a security interest
in the packaging equipment described therein.
"Permit" has the meaning ascribed to such term in Section 5.14(b).
"Permitted Lien" means (a) mechanics', workmen's, carriers',
repairmen's or other like Liens arising or incurred in the Ordinary Course of
Business in respect of obligations that are not overdue, (b) statutory liens for
Taxes, assessments and other similar governmental charges that are not overdue,
or (c) Liens that arise under zoning, land use and other similar imperfections
of title that arise in the Ordinary Course of Business and that, in the
aggregate, do not materially affect the value, use or marketability of the
property subject thereto.
"Person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust or other entity or
organization or Governmental Authority.
"PLL Audited Financials" means the audited balance sheet of PLL for its
fiscal year ended March 31, 1999, together with the related statement of income,
retained earnings and cash flows for such period.
"PLL Interim Financials" means the unaudited balance sheet of PLL for
the six month period ended September 30, 1999, together with the related
unaudited statements of income, retained earnings and cash flows for such
period.
"PLL Common" has the meaning ascribed to such term in Section 3.3.
"Pre-Closing Tax Period" means any Tax period (or portion thereof) that
ends on or before the Closing Date.
"Property" means any real property and improvements at any time owned,
leased, used, operated or occupied (whether for storage, disposal or otherwise)
by LTC or PLL, as applicable.
"Proxy Statement" has the meaning ascribed to such term in Section
5.24.
"Public Documents" means LTC's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1998 and LTC's Quarterly Reports on Form 10-QSB
for the quarters ended March 31, 1999, June 30, 1999 and September 30, 1999.
"Real Property" has the meaning ascribed to such term in Section
5.15(b).
"Registration Statement" has the meaning ascribed to such term in
Section 5.24.
"Release" means any release, spill, emission, discharge, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the environment (including, without limitation, ambient air,
surface water, groundwater and surface or subsurface strata) or into or out of
any property, including the movement of Constituents of Concern through or in
the air, soil, surface water, groundwater or property.
"Returns" has the meaning ascribed to such term in Section 5.9(a)(i).
"Securities Act" means the Securities Act of 1933, as amended.
"Security Agreement and Assignment of Lease" means the Security
Agreement and Assignment of Lease made by LTC in favor of PLL in the form
attached as Exhibit G to the Bridge Loan Financing Agreement.
12
11
"Shareholders' Meetings" has the meaning ascribed to such term in
Section 5.24.
"Subsidiary" means, with respect to any Person, (a) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation have or might have voting power by reason of the happening of
any contingency) is at the time owned by such Person, directly or indirectly
through Subsidiaries, and (b) any partnership, limited liability company,
association, joint venture, trust or other entity in which such Person, directly
or indirectly through Subsidiaries, is either a general partner, has a 50% or
greater equity interest at the time or otherwise owns a controlling interest.
"Surviving Corporation" means PLL after the Domestication and after the
Merger.
"Tax" means (a) any net income, alternative or add-on minimum tax,
gross income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, profits, license, withholding on amounts paid to or by a party to
this Agreement, payroll, employment, excise, severance, stamp, occupation,
premium, property, environmental or windfall profit tax, custom, duty or other
tax, governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest, penalty, addition to tax or additional amount
imposed by any Taxing Authority, (b) any liability of a party to this Agreement
for the payment of any amounts of any of the foregoing types as a result of
being a member of an affiliated, consolidated, combined or unitary group, or
being a party to any agreement or arrangement whereby liability of a party to
this Agreement for payment of such amounts was determined or taken into account
with reference to the liability of any other Person, and (c) any liability of a
party to this Agreement for the payment of any amounts as a result of being a
party to any Tax-Sharing Agreements or with respect to the payment of any
amounts of any of the foregoing types as a result of any express or implied
obligation to indemnify any other Person.
"Tax-Sharing Agreements" means all existing Tax-sharing agreements or
arrangements (whether or not written) binding on a party to this Agreement.
"Taxing Authority" means any Governmental Authority having jurisdiction
over the assessment, determination, collection or other imposition of any Tax.
"Third-Party Claim" means any claim, demand, action, suit or proceeding
made or brought by any Person who or which is not a party to this Agreement or
who or which is not an Affiliate of any party to this Agreement.
"Transferred Employees" has the meaning ascribed to such term in
Section 7.5(a).
ARTICLE II
THE MERGER
2.1 The Merger. Prior to the Closing, each of the parties shall execute
and deliver the Certificate of Merger in substantially the form set forth in
Exhibit A to this Agreement (the "Plan of Merger").
2.2 Effective Time. As soon as practicable after satisfaction or waiver
of all conditions to the Merger, including, but not limited to, the
Domestication and the IPO, the Certificate of Merger shall be certified,
executed, acknowledged and filed in accordance with Section 256 of the DGCL. The
Merger shall be effective at such time as a certificate of merger is issued by
the Secretary of State of Delaware in accordance with Section 256 of the DGCL
(the "Effective Time").
13
12
2.3 Effect of the Merger. At the Effective Time, the separate existence
of LTC shall cease, and PLL, as the surviving corporation (the "Surviving
Corporation"), (i) shall continue to possess all of its assets, rights, powers
and property as constituted immediately prior to the Effective Time, (ii) shall
be subject to all actions previously taken by its and LTC's Board of Directors,
(iii) shall succeed, without other transfer, to all of the assets, rights,
powers and property of LTC in the manner as more fully set forth in Section 259
of the Delaware General Corporation Law, (iv) shall continue to be subject to
all of its debts, liabilities and obligations as constituted immediately prior
to the Effective Time, and (v) shall succeed, without other transfer, to all of
the debts, liabilities and obligations of LTC in the same manner as if PLL had
itself incurred them, all as more fully provided under the applicable provisions
of the Delaware General Corporation Law and the laws of New Zealand.
2.4 Certificate of Incorporation. Upon the effectiveness of the Merger,
the Certificate of Incorporation of PLL as in effect immediately prior to the
Effective Time shall continue in full force and effect as the Certificate of
Incorporation of the Surviving Corporation until duly amended in accordance with
the provisions thereof and applicable law.
2.5 Bylaws. The Bylaws of PLL as in effect immediately prior to the
Effective Time shall continue in full force and effect as the Bylaws of the
Surviving Corporation until duly amended in accordance with the provisions
thereof and applicable law.
2.6 Directors and Officers. The directors and officers of PLL
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation until their respective successors shall have been duly
elected and qualified or as otherwise provided by law or the Certificate of
Incorporation of the Surviving Corporation or the Bylaws of the Surviving
Corporation.
ARTICLE III
CONVERSION OF SECURITIES
3.1 Shares of the Surviving Corporation. The authorized number and par
value of shares of all classes of capital stock of PLL immediately prior to the
Effective Time shall be the authorized number and par value of shares of the
classes of capital stock of the Surviving Corporation (as defined in the Plan of
Merger) from and after the Effective Time.
3.2 No Conversion of PLL Common. Each share of Common Stock, par value
per share, of PLL issued and outstanding immediately prior to the Effective Time
shall continue to be an issued and outstanding share of Common Stock, par value
$0.01 per share, of the Surviving Corporation from and after the Effective Time.
3.3 Conversion of LTC Common; Assumption of Warrants.
At the Effective Time, all of the then issued and outstanding shares of
LTC Common, other than shares of LTC Common (i) held in the treasury of LTC,
which shall not be considered as outstanding for purposes of this Agreement or
the Plan of Merger, (ii) held by PLL, (iii) held by any wholly owned subsidiary
of PLL or LTC (other than shares held in a fiduciary capacity) or (iv) as to
which the holder has commenced as of the Effective Time all procedures necessary
through the Effective Time to assert dissenters' rights in accordance with the
DGCL ("Dissenting Shares"), shall, by virtue of the Merger, be converted into an
aggregate of 3.5 million shares of Common Stock of PLL plus the additional
number of shares of Common Stock of PLL as set forth in Section 7.13(b) of this
Agreement (the "Merger Securities"). The Merger Securities shall be issued to
the LTC shareholders on a pro-rata basis. Each share of LTC Common held (i) in
the treasury of LTC, (ii) by PLL or (iii) by any wholly owned subsidiary of PLL
or LTC (other than shares held in a fiduciary capacity)
14
13
immediately prior to the Effective Time shall, by virtue of the Merger,
forthwith and without any action on the part of the holder thereof be canceled
and retired and all rights in respect thereof shall cease to exist. Holders of
Dissenting Shares shall, upon the effectiveness of the Merger with respect to
such Dissenting Shares, have only such rights, if any, as they may have pursuant
to the DGCL, and any amounts required by the DGCL to be paid to any holder of
Dissenting Shares with respect to such Dissenting Shares shall be paid by the
Surviving Corporation. The assumption of warrants, if any, and the
non-assumption of options of LTC shall be governed by Sections 7.5 and 7.13.
3.4 Exchange Agent. A national or state bank as mutually agreed upon by
PLL and LTC shall be engaged to act as agent for purposes of mailing and
receiving transmittal letters and distributing certificates for PLL Common to
LTC shareholders (the "Exchange Agent").
3.5 No Fractional Shares. Notwithstanding any other provision of this
Agreement or the Plan of Merger, neither certificates nor scrip for fractional
shares of PLL Common shall be issued in the Merger. Each holder of shares of LTC
Common who otherwise would have been entitled to a fraction of a share of PLL
Common shall receive in lieu thereof cash in an amount determined by multiplying
the fractional share interest to which such holder would otherwise be entitled
by the fair market value of such fraction on the date of conversion (as
determined in good faith by the Board of Directors of PLL).
3.6 Rights of the LTC Shareholders. At the Effective Time, each holder
of an outstanding certificate or certificates for shares of LTC Common shall
cease to have any rights as a shareholder of LTC, except such rights, if any, as
such holder may have with respect to Dissenting Shares. Each such holder of any
outstanding certificate or certificates for shares of LTC Common converted in
the Merger, upon proper surrender of each such certificate (accompanied by a
duly completed and executed letter of transmittal in the form to be sent to all
former LTC shareholders and such other evidences of authority and documentation
as PLL or the Exchange Agent may require and subject to any required
withholdings of taxes) to the Exchange Agent, shall receive promptly in exchange
for each such certificate Merger Securities and cash in lieu of fractional
shares as provided by this Agreement. Pending such surrender and exchange, such
holder's certificate or certificates for shares of LTC Common shall be deemed
for all corporate purposes, by virtue of the Merger and without any action on
the part of the holder thereof, to evidence Merger Securities subject to the
provisions of this Agreement and the Plan of Merger and the right to receive
cash in lieu of fractional shares as provided by this Agreement and the Plan of
Merger. The registered owner on the books and records of PLL or the Exchange
Agent of any shares of stock represented by such outstanding certificate shall,
until such certificate shall have been surrendered for transfer or conversion or
otherwise accounted for to PLL or the Exchange Agent, have and be entitled to
exercise any voting and other rights with respect to and to receive dividends
and other distributions upon the shares of capital stock of PLL represented by
such outstanding certificate as provided above. Neither PLL nor the Exchange
Agent shall pay any applicable stock transfer taxes incurred by any shareholder
in connection with the Merger.
3.7 Exchange. As soon as practicable at or after the Effective Time,
the Exchange Agent shall distribute Merger Securities and cash in lieu of
fractional shares as provided by this Agreement and the Plan of Merger. PLL
shall deliver to the Exchange Agent one or more certificates representing in the
aggregate the number of Merger Securities to be delivered in connection with the
Merger in sufficient time for the Exchange Agent to make such distribution. The
obligation of PLL to exchange Merger Securities for LTC Common and distribute
cash in lieu of fractional shares as provided herein shall not be discharged,
reduced or otherwise affected by the failure of the Exchange Agent to make such
exchanges and distributions for any reason whatsoever. The Exchange Agent shall
not be entitled to vote or to exercise any rights of ownership with respect to
the Merger Securities held by it from time to time hereunder, except that it
shall receive and hold all dividends or other distributions paid or distributed
with respect to such shares for the account of the persons entitled thereto. One
hundred eighty days following the Effective Time, the Exchange Agent shall
deliver to PLL any Merger Securities and funds (including any interest received
with respect thereto) which PLL has made available to the Exchange Agent and
which have not been disbursed to holders of certificates representing
15
14
shares of LTC Common, and thereafter such holders shall be entitled to look to
the Surviving Corporation (subject to abandoned property, escheat or other
similar laws) with respect to the Merger Securities and cash in lieu of
fractional shares deliverable or payable upon due surrender of their
certificates. Notwithstanding the foregoing neither the Exchange Agent nor any
party hereto shall be liable to any holder of shares of LTC Common for any
consideration paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
3.8 Closing of Stock Transfer Books. The stock transfer books of LTC
shall be closed at the close of business on the business day immediately
preceding the date of the Effective Time. In the event of a transfer of
ownership of LTC Common which is not registered in the transfer records of LTC,
the consideration to be distributed pursuant to this Agreement and the Plan of
Merger may be delivered to a transferee, if the certificate representing such
LTC Common is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by payment of any applicable
stock transfer taxes. PLL and the Exchange Agent shall be entitled to rely upon
the stock transfer books of LTC to establish the identity of those persons
entitled to receive the Merger Consideration specified in this Agreement and the
Plan of Merger for their shares of LTC Common, which books shall be conclusive
with respect to the ownership of such shares. In the event of a dispute with
respect to the ownership of any such shares, PLL and the Exchange Agent shall be
entitled to deposit any consideration represented thereby in escrow with an
independent party and thereafter be relieved with respect to any claims to such
consideration.
3.9 Changes in PLL or LTC Common. If between the date of this Agreement
and the Effective Time, the shares of PLL Common shall be changed into a
different number of shares by reason of any reclassification, recapitalization,
split-up, combination or exchange of shares, or if a stock dividend thereon
shall be declared with a record date within said period, the number of shares of
PLL Common delivered pursuant to this Agreement shall be adjusted accordingly.
ARTICLE IV
CLOSING AND CLOSING DELIVERIES
4.1 The Closing. The closing of the Merger (the "Closing") will take
place at the offices of Xxxxx, Day, Xxxxxx & Xxxxx located at 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, X.X. 00000, at 10:00 a.m., New York time, three Business Days
after satisfaction or waiver of the conditions to Closing set forth in Article
XIII, other than Section 8.1.10 and contemporaneously with the closing of the
IPO, unless the parties agree in writing to change the Closing to another time,
date or place. The date upon which the Closing occurs is herein called the
"Closing Date".
4.2 Deliveries of LTC At the Closing, LTC will deliver to PLL:
(i) certificate of the Chief Executive Officer of LTC
confirming LTC's compliance with the condition set forth in Section
8.1.1;
(ii) certificate of LTC's Secretary or Assistant Secretary
certifying as to LTC's certificate of incorporation, bylaws or other
comparable documents and to the due adoption of resolutions adopted by
its Board of Directors authorizing the execution of this Agreement, the
Interim Agreements and each Ancillary Closing Agreements to which it
will be a party at Closing and the taking of any and all actions deemed
necessary or advisable to consummate the transactions contemplated
herein and therein;
(iii) the opinion of Xxxxxxxxx, Xxxxxx & Xxxxxx, counsel to
LTC, dated the Closing Date, relating to corporate fundamentals as
customary for transactions of the type described herein;
16
15
(iv) evidence or copies of any consents, approvals, orders,
qualifications or waivers required by any third party or Governmental
Authority to consummate the transactions contemplated by this
Agreement;
(v) each Ancillary Closing Agreements required to be duly
executed and delivered by parties other than PLL or its Affiliates;
(vi) if PLL deems it necessary, evidence of Transfer of all
Intellectual Property Rights to an entity formed in the Netherland
Antilles or any similar jurisdiction, for tax purposes;
(vii) evidence of approval by the shareholders of LTC of the
Merger and this Agreement;
(viii) a non-foreign person affidavit as required by Section
1445 of the Code;
(ix) evidence of transfer of all Environmental Permits or
applications thereof listed on Schedule 6.14(b) from LTC to PLL;
(x) a copy of the Agreement and Plan of Merger duly executed
by LTC for filing with the Secretary of State of the State of Delaware
in connection with the Closing; and
(xi) such other documents and instruments as may be reasonably
required to consummate the transactions contemplated by this Agreement
and the Ancillary Closing Agreements and to comply with the terms
hereof and thereof.
4.3 Deliveries by PLL. At the Closing, PLL will deliver or cause
to be delivered to LTC:
(i) certificate of the Chief Executive Officer of PLL
confirming PLL's compliance with the condition set forth in Section
8.2.1;
(ii) certificate of PLL's Secretary or Assistant Secretary
certifying as to PLL's certificate of incorporation, bylaws or other
comparable documents and to the due adoption of resolutions adopted by
its Board of Directors authorizing the execution of this Agreement, the
Interim Agreements and each Ancillary Closing Agreements to which it
will be a party at Closing and the taking of any and all actions deemed
necessary or advisable to consummate the transactions contemplated
herein and therein and to effectuate the Domestication;
(iii) evidence or copies of any consents, approvals, orders,
qualifications or waivers required by any third party or Governmental
Authority to consummate the transactions contemplated by this
Agreement;
(iv) the opinions of Xxxxx Young, New Zealand counsel to PLL
and Xxxxx, Day, Xxxxxx & Xxxxx, special United States counsel to PLL,
dated the Closing Date, relating to corporate fundamentals as customary
for transactions of the type described herein;
(v) the duly executed Option Agreements for the Transferred
Employees who are being granted Options;
(vi) evidence of approval by the shareholders of PLL of the
Domestication and the transactions contemplated under this Agreement,
the Interim Agreements and the Ancillary Closing Agreements (as
applicable);
17
16
(vii) each Ancillary Closing Agreements required to be duly
executed and delivered by PLL or its Affiliates;
(viii) a copy of the Agreement and Plan of Merger duly
executed by PLL (or its successor) for filing with the Secretary of
State of the State of Delaware in connection with the Closing; and
(ix) such other documents and instruments as may be reasonably
required to consummate the transactions contemplated by this Agreement
and the Ancillary Closing Agreements and to comply with the terms
hereof and thereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF LTC
LTC represents and warrants to PLL as of the date hereof as follows,
subject to any exceptions set forth in a Schedule hereto referencing the number
of the Section to which it relates:
5.1 Corporate Existence and Power. LTC is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. LTC has all corporate power and all governmental licenses,
authorizations, Permits, consents and approvals required to carry on its
business as now conducted. LTC is duly qualified to conduct business as a
foreign corporation and is in good standing in each jurisdiction where such
qualification is necessary, except for those jurisdictions where the failure to
be so qualified or in good standing could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. LTC has heretofore
delivered to PLL true and complete copies of the certificate of incorporation
and bylaws of LTC, in each case as amended to date.
5.2 Corporate Authorization; Enforceability. The execution, delivery
and performance by LTC of this Agreement, the Interim Agreements and each of the
Ancillary Closing Agreements to which it will be a party are within LTC's
corporate powers and have been duly authorized by the board of directors of LTC
and, subject to the approval by the shareholders of LTC, no other corporate
action on the part of LTC is necessary to authorize this Agreement, the Interim
Agreements or any of the Ancillary Closing Agreements to which LTC will be a
party at the Closing. This Agreement, the Bridge Loan Financing Agreements, each
of the Ancillary Closing Agreements and Interim Agreements to which LTC will be
a party will be duly executed and delivered by LTC Assuming the due execution
and delivery of this Agreement and each of the Ancillary Closing Agreements and
Interim Agreements to which LTC will be a party and assuming approval by the
shareholders of LTC, this Agreement constitutes, and each Ancillary Closing
Agreements and Interim Agreements to which LTC will be a party will constitute,
valid and binding agreements of LTC, enforceable against LTC in accordance with
their terms, except to the extent that their enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity.
5.3 Governmental Authorization. The execution, delivery and performance
by LTC of this Agreement and each Ancillary Closing Agreements and Interim
Agreements to which LTC will be a party require no consent, approval, order,
authorization or action by or in respect of, or filing with, any Governmental
Authority other than filings pursuant to the Securities Act and applicable state
securities and corporate laws and the approval of the shareholders of LTC
5.4 Non-Contravention; Consents. The execution, delivery and
performance by LTC of this Agreement and each Ancillary Closing Agreement to
which LTC will be a party at the Closing, and the consummation of the
transactions contemplated hereby and thereby do not and will not at the Closing,
except as set forth on Schedule 5.4, (a) violate the certificate of
incorporation or bylaws of LTC, (b) violate any applicable Law or Order, (c)
require any filing with or Permit, consent or approval of, or the giving of any
18
17
notice to, any Person (including filings, consents or approvals required under
any Permits of LTC or any licenses to which LTC is a party), (d) result in a
violation or breach of, conflict with, constitute (with or without due notice or
lapse of time or both) a default under, or give rise to any right of
termination, cancellation or acceleration of any right or obligation of LTC or
to a loss of any benefit to which LTC is entitled under, any Contract, agreement
or other instrument binding upon LTC or any license, franchise, Permit or other
similar authorization held by LTC, or (e) result in the creation or imposition
of any Lien on any asset of LTC
5.5 Capitalization. The authorized, issued and outstanding Capital
Stock of LTC as of December 1, 1999 is as follows: LTC has 50,100,000 shares,
par value $0.01 per share of authorized capital stock of which 50,000,000 shares
are designated "Common Stock" and 100,000 shares are designated "Preferred
Stock", of which 48,280,749 shares of Common Stock and no shares of Preferred
Stock are outstanding, and no shares of Preferred Stock will become outstanding
prior to the Effective Time except in accordance with the Bridge Loan Financing
Agreement. All of the outstanding shares of Capital Stock of LTC are duly
authorized, validly issued and fully paid and nonassessable. There are no
existing subscriptions, options, warrants, calls, commitments, agreements,
conversion rights or other rights of any character (contingent or otherwise) to
purchase or otherwise acquire from LTC at any time, or upon the happening of any
stated event, any shares of the capital stock of LTC whether or not presently
issued or outstanding, except as set forth on Schedule 5.5.
5.6 Subsidiaries. (a) Each of LTC's Subsidiaries listed in Schedule 5.6
is a corporation or other legal entity duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization. Each of LTC's
Subsidiaries has all corporate or similar powers and all governmental licenses,
authorizations, Permits, consents and approvals required to carry on its
business as now conducted. Each of LTC's Subsidiaries is duly qualified to
conduct business as a foreign corporation or other legal entity and is in good
standing in each jurisdiction where such qualification is necessary, except for
those jurisdictions where the failure to be so qualified or in good standing
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. LTC has heretofore delivered to PLL true and complete
copies of the certificate of incorporation, bylaws or comparable constituent
documents of each of LTC's Subsidiaries, in each case as amended to date. LTC
does not own, beneficially or of record, any stock or ownership interests in any
entity other than the Subsidiaries listed in Schedule 5.6.
(b) All the outstanding shares of Capital Stock of each such Subsidiary
have been validly issued and are fully paid and nonassessable and are owned
directly or indirectly by LTC, free and clear of all Liens. There are no
outstanding convertible or exchangeable securities or Contracts giving any
Person any right to acquire shares of Capital Stock of such Subsidiaries and no
voting trusts or other Contracts restricting the voting, dividend rights or
disposition of shares of such Subsidiaries.
5.7 LTC Financial Statements; Book and Records. (a) LTC has heretofore
furnished PLL with a true and complete copy of the LTC Audited Financials and
the LTC Interim Financials which have been prepared in accordance with United
States GAAP consistently applied. The LTC Audited Financials and the LTC Interim
Financials fairly present in all material respects the financial position of LTC
at the respective dates thereto and the results of the operations and cash flows
of LTC for the respective periods then ended.
(b) Since September 30, 1999, there have been no changes in LTC's
reserve, accrual or other material accounting policies.
(c) The books of account, minute books, stock record books and other
records of LTC, all of which have been made available to PLL, are complete and
correct in all material respects and have been maintained in accordance with
sound business practices and under an adequate system of internal controls. The
minute books of LTC contain accurate and complete records of all meetings held
of, and corporate and stockholder action taken by, the stockholders, Board of
Directors and committees of the Board of Directors of LTC, and no meeting of any
such stockholders, Board of Directors or committee of the Board of Directors has
been held for which minutes have not been prepared and are not contained in such
minute books.
19
18
5.8 No Undisclosed Liabilities. There are no liabilities or any facts
or circumstances which could give rise to liabilities, whether accrued,
contingent, absolute, determined, determinable or otherwise, of LTC other than
(a) liabilities fully disclosed in LTC's Public Documents, (b) liabilities
specifically disclosed in Schedule 5.8, and (c) other undisclosed liabilities
incurred since September 30, 1999 in the Ordinary Course of Business which,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
5.9 Tax Matters. (a) (i) All Tax returns, statements, reports and forms
(including estimated tax or information returns and reports) required to be
filed by or on behalf of LTC or any of LTC's Subsidiaries with any Taxing
Authority with respect to any Pre-Closing Tax Period (collectively, the
"Returns") have, to the extent required to be filed on or before the date
hereof, been filed and, to the extent required to be filed between the date
hereof and the Closing Date, will have been filed before the Closing, when due
in accordance with all applicable Laws and all Taxes owed by LTC or any of LTC's
Subsidiaries (whether or not shown as due and payable on the Returns that have
been filed) have been timely paid or will have been timely paid prior to the
Closing Date, or withheld (including withholding for independent contractors,
consultants and other employees) and remitted to the appropriate Taxing
Authority, or will have been timely withheld and remitted to the appropriate
Taxing Authority prior to the Closing Date;
(ii) The Returns correctly reflect in all material respects,
the facts regarding the income, business, assets, operations, and
activities and status of LTC and any of LTC's Subsidiaries;
(iii) Any reserves established for Taxes with respect to LTC
or any of LTC's Subsidiaries for any Pre-Closing Tax Period (including
any Pre-Closing Tax Period for which no Return has yet been filed)
reflected on the books of LTC or any of LTC's Subsidiaries are adequate
in accordance with GAAP;
(iv) Neither LTC nor any of LTC's Subsidiaries is delinquent
in the payment of any Tax or has requested any extension of time within
which to file any Return except for extensions granted as a matter of
right;
(v) Neither LTC nor any of LTC's Subsidiaries (or any member
of any affiliated, consolidated, combined or unitary group of which LTC
or any of LTC's Subsidiaries is or has been a member) has granted any
extension or waiver of the statute of limitations period applicable to
any Return, which period (after giving effect to such extension or
waiver) has not yet expired;
(vi) There is no action, suit, proceeding, audit or
investigation pending or, to the knowledge of LTC, threatened against
or with respect to LTC or any of LTC's Subsidiaries in respect of any
Tax. Since January 1, 1997, no claim has been made by any Taxing
Authority in any jurisdiction in which LTC or any of its Subsidiaries
does not file a Tax Return that it is or may be subject to taxation by
that jurisdiction and no such claim exists which has not been resolved
by a determination by such Taxing Authority that LTC or any of LTC's
Subsidiaries is not so subject to taxation;
(vii) Neither LTC nor any of LTC's Subsidiaries nor any other
Person on behalf of LTC or any of LTC's Subsidiaries has entered into
any agreement or consent pursuant to Section 341(f) of the Code;
(vii) There are no Liens for Taxes upon the assets of LTC or
any of LTC's Subsidiaries, except Liens for current Taxes not yet due;
(ix) Neither LTC nor any of LTC's Subsidiaries will be
required to include any adjustment in taxable income for any
Post-Closing Tax Period under Section 481(c) of the Code (or any
similar provision of the Tax Laws of any jurisdiction) as a result of a
change in method of accounting for a Pre-Closing Tax Period or pursuant
to the provisions of any agreement entered into with any Taxing
20
19
Authority with regard to the Tax liability of LTC or any of LTC's
Subsidiaries for any Pre-Closing Tax Period; and
(x) Neither LTC nor any of LTC's Subsidiaries has been a
member of an affiliated, consolidated, combined or unitary group or
participated in any other arrangement whereby any income, revenues,
receipts, gain or loss of LTC or any of LTC's Subsidiaries was
determined or taken into account for Tax purposes with reference to or
in conjunction with any income, revenues, receipts, gain, loss, asset
or liability of any other Person.
(xi) No property owned by LTC or any of LTC's Subsidiaries (a)
is or will be required to be treated as owned by another person under
Section 168(f)(8) of the Internal Revenue code of 1954, as in effect
immediately prior to the enactment of the Tax Reform Act of 1986, (b)
is "tax-exempt use" property within the meaning of Section 168(h)(l) of
the Code, or (c) is "tax-exempt bond financed property" within the
meaning of Section 168(g) of the Code.
(xii) Neither LTC nor any of LTC's Subsidiaries is or has at
any time been a "United States real property holding corporation"
within the meaning of Section 897(c) of the Code.
(b) Schedule 5.9(b) contains a list of all jurisdictions (whether
foreign or domestic) to which any Tax imposed is properly payable by LTC or any
of LTC's Subsidiaries in connection with LTC's conduct of the Business.
5.10 Absence of Certain Changes. Except as set forth in Schedule 5.10,
since September 30, 1999, there has not been any event, occurrence, development,
circumstances or state of facts which (a) has had or which could reasonably be
expected to have a Material Adverse Effect or (b) would have constituted a
violation of any covenant of LTC hereunder (including Section 7.1) had such
covenant applied to any of them since September 30, 1999. Since September 30,
1999, there has not occurred any damage, destruction or casualty loss (whether
or not covered by insurance) with respect to any of the Purchased Assets. LTC
has not sold, transferred, disposed of, or incurred a Lien upon, any
Intellectual Property Right or LTC's assets since September 30, 1999 except in
connection with the Bridge Financing Agreements.
5.11 Contracts. (a) Except as set forth on Schedule 5.11(a), LTC is
neither a party to nor bound by any lease, agreement, contract, commitment or
other legally binding contractual right or obligation (whether written or oral)
(collectively, "Contracts") that is of a type described below:
(i) any lease (whether of real or personal property);
(ii) any agreement for the purchase of materials, supplies,
goods, services, equipment or other assets;
(iii) any sales, distribution or other similar agreement
providing for the sale by LTC of materials, supplies, goods, services,
equipment or other assets;
(iv) any partnership, joint venture or other similar agreement
or arrangement;
(v) any Contract pursuant to which any third party has rights
to own or use any material asset of LTC, including, without limitation,
any Intellectual Property Right of LTC;
(vi) any agreement relating to the acquisition or disposition
of any business (whether by merger, sale of stock, sale of assets or
otherwise) or granting to any Person a right of first refusal, first
offer or other right to purchase any of the Purchased Assets;
21
20
(vii) any agreement relating to Indebtedness (in any case,
whether incurred, assumed, guaranteed or secured by any asset);
(viii) any license, franchise or similar agreement;
(ix) any agency, dealer, sales representative, marketing or
other similar agreement;
(x) any Contract that may not be terminated by LTC without
payment of penalty on more than 90 days' prior notice;
(xi) any agreement that limits the freedom of LTC to compete
in any line of business, geographic area or with any Person or which
would so limit the freedom of PLL after the Closing Date;
(xii) any agreement with (A) any stockholder of LTC or any
other Affiliate of LTC, or (B) any director or officer of LTC or with
any "associate" or any member of the "immediate family" (as such terms
are respectively defined in Rules 12b-2 and 16a-1 of the Exchange Act)
of any such director or officer;
(xiii) any management service, consulting or any other similar
type of agreement;
(xiv) any warranty, guaranty or other similar undertaking with
respect to any contractual performance (or LTC's standard forms of any
of the foregoing) or agreement to indemnify any Person;
(xv) any employment, deferred compensation, severance, bonus,
retirement or other similar agreement or plan in effect as of the date
hereof and entered into or adopted by LTC;
(xvi) any other agreement, commitment, arrangement or plan not
made in the Ordinary Course of Business of LTC that is material to LTC
(b) Each Contract disclosed in or required to be disclosed in Schedule
5.11(a) is a valid and binding agreement of LTC and, to the knowledge of LTC,
each other party thereto, enforceable in accordance with their respective terms,
except to the extent that their enforceability may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
the enforcement of creditors' rights generally and by general equitable
principles. Neither LTC nor, to the knowledge of LTC, any other party to any
such Contract is in default or breach (with or without due notice or lapse of
time or both) in any material respect under the terms of any such Contract. To
the knowledge of LTC, there is no event, occurrence, condition or act which,
with the giving of notice or the passage of time or both, or the happening of
any other event or condition, could reasonably be expected to become a material
default or event of default under any such Contract. LTC has delivered or made
available to PLL true and complete originals or copies of all Contracts
disclosed in or required to be disclosed in Schedule 5.11(a).
5.12 Insurance Coverage. Schedule 5.12 contains a list of all of the
insurance policies and fidelity bonds covering the assets, Business, operations,
employees, officers and directors of LTC There is no material claim by LTC
pending under any of such policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of such policies or bonds.
All premiums due and payable under all such policies and bonds have been paid
and LTC has complied in all material respects with the terms and conditions of
all such policies and bonds. Such policies of insurance and bonds (or other
policies and bonds providing substantially similar insurance coverage) are in
full force and effect and are of the type and in amounts deemed by the
management of LTC to be sufficient in light of the business of LTC No insurance
coverage with respect to any of LTC's assets, Business, operations, employees,
officers or directors has lapsed for any period due to a failure to timely make
any premium payment or renewal or otherwise, nor has LTC been refused by any
insurance carrier to which it has applied for any such insurance. LTC has no
knowledge of any threatened
22
21
termination of, or premium increase with respect to, any of such policies or
bonds. Since the last renewal date of any insurance policy, there has not been
any material adverse change in the relationship of LTC with its respective
insurers or the premiums payable pursuant to such policies.
5.13 Litigation. There is no action, suit, investigation, arbitration
or administrative or other proceeding pending or, to the knowledge of LTC,
threatened, against or affecting LTC or its properties before any court or
arbitrator or any Governmental Authority or which in any manner challenges or
seeks to prevent, enjoin, alter or materially delay the transactions
contemplated by this Agreement, the Interim Agreements and the Ancillary Closing
Agreements to which LTC will be a party at Closing. LTC does not know of any
valid basis for any such action, proceeding or investigation. There are no
outstanding judgments, orders, injunctions, decrees, stipulations or awards
(whether rendered by a court, administrative agency, arbitral body or
Governmental Authority) against LTC, LTC's assets or the Business.
5.14 Compliance with Laws; Permits. (a) LTC is not in violation of, has
not been given notice of or been charged by any Governmental Authority with, or,
to LTC's knowledge, under investigation with respect to, any applicable Law or
Order that could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(b) Schedule 5.14(b) sets forth a list of each government or
regulatory license, authorization, permit, franchise, consent and approval (the
"Permits") issued and held by or on behalf of LTC or required to be so issued
and held to carry on the Business as currently conducted. Except as disclosed in
Schedule 5.14(b), each Permit is valid and in full force and effect and will not
be terminated or impaired (or become terminated or impaired) as a result of the
transactions contemplated hereby. LTC is not in default under, and no condition
exists that with notice or lapse of time or both could constitute a default or
could give rise to a right of termination, cancellation or acceleration under,
any material Permit held by LTC
5.15 Properties; Sufficiency of Assets. (a) Except for inventory
disposed of in the Ordinary Course of Business of LTC, LTC has good title to, or
in the case of leased property has valid leasehold interests in, the property
and assets of LTC (whether real or personal, tangible or intangible) reflected
in the LTC Public Documents or acquired after the date thereof, free and clear
of all Liens, except for Permitted Liens and Liens disclosed in Schedule
5.15(a).
(b) Schedule 5.15(b) sets forth a list of all real property assets
owned or leased ("Real Property") by LTC All such leases of Real Property are
valid and binding agreements of LTC and, to the knowledge of LTC, each other
party thereto, enforceable in accordance with their respective terms, except to
the extent that their enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles.
LTC is a tenant or possessor in good standing thereunder and all rents due under
such leases have been paid. Neither LTC nor, to the knowledge of LTC, any other
party to any such lease is in default or breach (with or without due notice or
lapse of time or both) in any material respect under the terms of any such
lease. To the knowledge of LTC, there is no event, occurrence, condition or act
which, with the giving of notice or the passage of time or both, or the
happening of any other event or condition, could reasonably be expected to
become a material default or event of default under any such lease. LTC is in
peaceful and undisturbed possession of the space and/or estate under each lease
of which it is a tenant and has good and valid rights of ingress and egress to
and from all the Real Property from and to the public street systems for all
usual street, road and utility purposes. LTC has not received any notice of any
appropriation, condemnation or like proceeding, or of any violation of any
applicable zoning Law or Order relating to or affecting the Real Property, and
to LTC's knowledge, no such proceeding has been threatened or commenced.
(c) The tangible personal property of LTC has been maintained by
LTC since January 1, 1997 in all material respects in good repair and operating
condition in accordance with LTC's general maintenance policies (normal wear and
tear excepted).
23
22
(d) The assets of LTC constitute all of the assets used or held
for use in connection with the Business and are adequate to conduct the Business
as currently conducted.
5.16 Intellectual Property. (a) Schedule 5.16(a) sets forth a list of
all Intellectual Property Rights which are owned by LTC or any of LTC's
Subsidiaries or which LTC or any of LTC's Subsidiaries is a licensor or
licensee, and all material licenses, sublicenses and other written agreements as
to which LTC or any of its Affiliates is a party and pursuant to which any
Person is authorized to use such Intellectual Property Right, including the
identity of all parties thereto.
(b) (i) All of the Intellectual Property Rights necessary for
or used in the conduct of the Business are set forth in Schedule
5.16(a).
(ii) The conduct of the Business by LTC as currently
conducted does not infringe upon any Intellectual Property Right of any
third party. There is no claim, suit, action or proceeding that is
either pending or, to the knowledge of LTC, threatened, that, in either
case, involves a claim of infringement by LTC of any Intellectual
Property Right of any third party, or challenging LTC's ownership,
right to use, or the validity of any Intellectual Property Right listed
or required to be listed in Schedule 5.16(a). LTC has no knowledge of
any basis for any such claim of infringement and no knowledge of any
continuing infringement by any other Person of any of the Intellectual
Property Rights listed or required to be listed in Schedule 5.16(a);
(iii) No Intellectual Property Right listed or required to
be listed in Schedule 5.16(a) is subject to any outstanding order,
judgment, decree, stipulation or agreement restricting the use thereof
by LTC or restricting the licensing thereof by LTC to any Person except
as set forth in Schedule 5.16(a);
(iv) LTC has not entered into any agreement to indemnify
any other Person against any charge of infringement of any Intellectual
Property Right;
(v) LTC has duly maintained all registrations for any
Intellectual Property Rights listed or required to be listed in
Schedule 5.16(a); and
(vi) LTC has obtained all assignments of any rights, title
and interest in the Intellectual Property Rights held by any Person
other than LTC except as set forth in Schedule 5.16(a).
5.17 Environmental Matters. (a) (i) Constituents of Concern have not
been generated, recycled, used, treated or stored on, transported to or from, or
Released or disposed on, LTC Property or, to the knowledge of LTC, any property
adjoining or adjacent to any LTC Property, except in compliance with
Environmental Laws;
(ii) LTC has not disposed of Constituents of Concern from
LTC Property at any off-site facility except in compliance with
Environmental Laws;
(iii) LTC is in compliance in all material respects with
Environmental Laws and the requirements of Permits issued under such
Environmental Laws with respect to the LTC Property;
(iv) There are no pending or, to the knowledge of LTC,
threatened Environmental Claims against LTC or any LTC Property;
(v) LTC has no knowledge of any facts, circumstances,
conditions or occurrences regarding LTC's past or present business or
operations or with respect to any LTC Property or any property
adjoining any LTC Property that could reasonably be expected (i) to
form the basis of an Environmental Claim against LTC or any of the LTC
Property or assets or (ii) to cause any LTC Property or assets to be
24
23
subject to any restrictions on its ownership, occupancy, use or
transferability under any Environmental Law;
(vi) To the knowledge of LTC there are no underground
storage tanks or sumps located on any LTC Property or on any property
that adjoins or is adjacent to any LTC Property;
(vii) Neither LTC nor any LTC Property is listed or, to the
knowledge of LTC, proposed for listing on the National Priorities List
under CERCLA or CERCLIS (as defined in CERCLA) or on any similar
federal, state or foreign list of sites requiring investigation or
clean-up and LTC has not received any requests for information pursuant
to 104(e) of CERCLA or any state counterpart or equivalent;
(viii) LTC has obtained all required Environmental Permits
and is in compliance with the terms of each Environmental Permit in all
material respects. There are no Environmental Permits of LTC that are
nontransferable or require consent, notification or other action to
remain in full force and effect following the consummation of the
transactions contemplated hereby; and
(ix) LTC has no liability under any Environmental Law
(including an obligation to remediate any Environmental Condition
whether caused by LTC or any other Person).
(b) LTC has delivered or made available to PLL true and complete
copies of all environmental investigations, studies, audits, tests, reviews or
other analyses commenced or conducted by or on behalf of LTC (or by a third
party of which LTC has knowledge) in relation to the current or prior business
of LTC or any LTC Property.
(c) For purposes of this Section 5.17, the term "LTC" (including
the use of such term in the term "LTC Property") will include any entity which
is, in whole or in part, a predecessor of LTC
5.18 Plans and Material Documents. (a) Schedule 5.18(a) sets forth
a list of all Benefit Plans with respect to which LTC or any ERISA Affiliate has
or has had in the past any obligation or liability or which are or were in the
past maintained, contributed to or sponsored by LTC or any ERISA Affiliate for
the benefit of any current or former employee, officer or director of LTC or any
ERISA Affiliate. With respect to each Benefit Plan subject to ERISA, LTC has
delivered or made available to PLL a true and complete copy of each such Benefit
Plan (including all amendments thereto) and a true and complete copy of each
document (including all amendments thereto) prepared in connection with each
such Benefit Plan including, without limitation, (i) a copy of each trust or
other funding arrangement, (ii) each summary plan description and summary of
material modifications, (iii) the most recently filed IRS Form 5500 for each
such Benefit Plan, if any, and (iv) the most recent determination letter
referred to in Section 5.18(d). Neither LTC nor any of LTC's Subsidiaries has
any express or implied commitment to create, incur liability with respect to or
cause to exist any Benefit Plan or to modify any Benefit Plan, other than as
required by Law.
(b) None of the Benefit Plans is a plan that is or has ever been
subject to Title IV of ERISA, Section 302 of ERISA or Section 412 of the Code.
None of the Benefit Plans is a "multiemployer plan" as defined in Section 3(37)
of ERISA. Except as disclosed in Schedule 5.18(b), none of the Benefit Plans
provides for the payment of separation, severance, termination or similar-type
benefits to any person or provides for or, except to the extent required by Law,
promises retiree medical or life insurance benefits to any current or former
employee, officer or director of LTC or any ERISA Affiliate.
(c) Each Benefit Plan is in compliance in all material respects
with, and has always been operated in all material respects in accordance with,
its terms and the requirements of all applicable Laws, and LTC and the ERISA
Affiliates have satisfied in all material respects all of their statutory,
regulatory and contractual obligations with respect to each such Benefit Plan.
No legal action, suit or claim is pending or, to the knowledge of LTC,
threatened with respect to any Benefit Plan (other than claims for benefits in
the ordinary
25
24
course) and no fact or event exists that could reasonably be expected to give
rise to any such action, suit or claim.
(d) Each Benefit Plan or trust which is intended to be qualified
or exempt from taxation under Section 401(a), 401(k) or 501(a) of the Code has
received a favorable determination letter from the IRS that it is so qualified
or exempt, and nothing has occurred since the date of such determination letter
that would adversely affect the qualified or exempt status of any Benefit Plan
or related trust.
(e) There has been no non-exempt prohibited transaction (within
the meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to
any Benefit Plan. Neither LTC nor any ERISA Affiliate has incurred any material
liability for any excise tax arising under the Code with respect to a Benefit
Plan and no fact or event exists which could reasonably be expected to give rise
to such liability.
(f) All material contributions, premiums or payments required to
be made with respect to any Benefit Plan have been made on or before their due
dates. For completed plan years of such Benefit Plans, all such contributions
have been fully deducted for income tax purposes and no such deduction has been
challenged or disallowed by any Governmental Authority, and no fact or event
exists which could give rise to any such challenge or disallowance.
(g) There has been no amendment to, written interpretation of or
announcement (whether or not written) by LTC or any of LTC's Subsidiaries
relating to, or change in employee participation or coverage under, any Benefit
Plan that would increase materially the expense of maintaining such Benefit Plan
above the level of the expense incurred in respect thereto for the most recent
fiscal year ended prior to the date hereof.
(h) Except as set forth in Schedule 5.18(h), no employee or former
employee of LTC or any of LTC's Subsidiaries will become entitled to any bonus,
retirement, severance, job security or similar benefit or enhanced such benefit
(including acceleration of vesting or exercise of an incentive award) as a
result of the transactions contemplated by this Agreement.
5.19 Affiliate Transactions. (a) Except as set forth in Schedule
5.19(a), there are no outstanding payables, receivables, loans, advances and
other similar accounts between LTC, on the one hand, and any of its Affiliates,
on the other hand, relating to the Business.
(b) To the knowledge of LTC, no director, officer or employee of
LTC possesses, directly or indirectly, any ownership interest in, or is a
director, officer or employee of, any Person which is a supplier, customer,
lessor, lessee, licensor, developer, competitor or potential competitor of LTC
Ownership of 5% or less of any class of securities of a Person will not be
deemed to be an ownership interest for purposes of this Section 5.19.
5.20 Employee Matters. (a) The relationships of LTC with the
employees of LTC are good working relationships and except as disclosed in
Schedule 5.20(a) no employee has terminated or notified LTC of any intention to
terminate or materially alter its relationship with LTC since December 31, 1998
and LTC has no reason to believe that there will be any such change as a result
of the transactions contemplated by this Agreement.
(b) LTC is not a party to any labor or collective bargaining
agreement; there are no labor or collective bargaining agreements which pertain
to any current employee; and no current employee is represented by any labor
organization.
(c) No labor organization or group of LTC employees has made a
pending demand for recognition, there are no representation proceedings or
petitions seeking a representation proceeding presently pending or, to the
knowledge of LTC, threatened to be brought or filed with the National Labor
Relations Board or other labor
26
25
relations tribunal, and there is no organizing activity involving LTC pending
or, to the knowledge of LTC, threatened by any labor organization or group of
LTC employees.
(d) There are no (i) strikes, work stoppages, slow-downs, lockouts
or arbitrations or (ii) grievances or other labor disputes pending or, to the
knowledge of LTC, threatened against or involving LTC
(e) There are no complaints, charges or claims against LTC pending
or, to the knowledge of LTC, threatened to be brought by or filed with any
Governmental Authority based on, arising out of, in connection with, or
otherwise relating to the employment by LTC, of any LTC Employee, including any
claim for workers' compensation.
(f) LTC is in material compliance with all Laws and Orders in
respect of employment and employment practices and the terms and conditions of
employment and wages and hours, and has not, and is not, engaged in any unfair
labor practice.
(g) Schedule 5.20(g) contains a complete and accurate list of the
following information for each employee, officer or director of LTC, including
each employee on leave of absence or layoff status: employer; name; job title;
current compensation paid or payable and any change in compensation since
December 31, 1998; vacation accrued as of a recent date; and service credited as
of a recent date for purposes of vesting and eligibility to participate under
any pension, retirement, profit-sharing, thrift-savings, deferred compensation,
stock bonus, stock option, cash bonus, employee stock ownership (including
investment credit or payroll stock ownership), LTC severance pay, insurance,
medical, welfare, or vacation plan or other Benefit Plan of LTC; and all bonuses
and any other amounts to be paid by LTC at or in connection with the Closing
("Bonuses").
(h) To the knowledge of LTC, no former or current employee,
officer or director of LTC is a party to, or is otherwise bound by, any
confidentiality, non-competition, proprietary rights agreement or similar
agreement that would affect (i) the performance of his or her duties as an
employee, officer or director or (ii) the ability of PLL to conduct the Business
after the Closing Date.
5.21 Finders' Fees. Except as set forth on Schedule 5.21, there is
no investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of LTC who might be entitled to
any fee or other commission in connection with the transactions contemplated by
this Agreement or any of the Ancillary Closing Agreements.
5.22 Millennium Compliance. Schedule 5.22 sets forth the measures
that have been implemented to determine the extent to which the computer systems
used by LTC in its business (the "Computer Systems") are not in Millennium
Compliance, a complete description of the Computer Systems that are not or may
not be in Millennium Compliance and the material details of any program to be
undertaken with a view towards causing any Computer Systems that are not
Millennium Complaint to achieve Millennium Compliance. To the knowledge of LTC,
the cost of achieving Millennium Compliance for the Computer Systems will not
exceed the amounts budgeted therefore as previously disclosed to PLL.
5.23 SEC Filings. The Annual Reports on Form 10-KSB of LTC for the
fiscal years ended (December 31, 1996, 1997 and 1998) filed under the Exchange
Act, and all other reports and proxy statements required to be filed by LTC
under the Exchange Act since January 1, 1997, have been duly and timely filed by
LTC, were in compliance with the requirements of their respective reports forms
and were complete and correct in all material respects, as of the dates at which
the information was furnished, and contained no untrue statement of a material
fact nor omitted to state a material fact required to be included therein or
necessary in light of the circumstances under which it was made in order to make
the statements made therein not misleading. LTC has disclosed to PLL all
material information relating to the transactions contemplated by this Agreement
and the Ancillary Closing Agreements, LTC, its predecessors (including, but not
limited to, Hope Technologies) or LTC's assets and all such disclosed
information is true and accurate.
27
26
5.24 Registration Statement, Other Documents. None of the information
supplied or to be supplied by LTC for inclusion, or included, in (i) the
registration statement to be filed by LTC and PLL with the SEC in connection
with the Merger and the distribution of the Merger Securities (the "Registration
Statement"); (ii) the proxy statements to be mailed to LTC's stockholders and
PLL's shareholders in connection with the meetings (the "Shareholders'
Meetings") to be called to consider the Merger (the "Proxy Statements"); and
(iii) any other documents to be filed with the SEC or any regulatory agency in
connection with the transactions contemplated hereby shall, at the respective
time such documents are filed and, in the case of the Registration Statement,
when it becomes effective and, with respect to the Proxy Statements, when
mailed, be false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements therein not
misleading or, in the case of the Proxy Statements or any amendment thereof or
supplement thereto, at the time of the Shareholders' Meetings, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Shareholders Meetings. All documents which
LTC is responsible for filing with the SEC and any regulatory agency in
connection with the Merger shall comply as to form and substance in all material
respects with the provisions of applicable law.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PLL
PLL represents and warrants to LTC as of the date hereof as follows,
subject to any exceptions set forth in a Schedule hereto referencing the number
of the Section to which it relates:
6.1 Corporate Existence and Power. PLL is a corporation duly organized,
validly existing and in good standing under the laws of New Zealand and prior to
the Closing Date, PLL shall domesticate in the United States and shall be a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. PLL has all corporate or similar power and all
governmental licenses, authorizations, Permits, consents and approvals required
to carry on its business as now conducted. PLL is duly qualified to conduct
business as a foreign corporation and is in good standing in each jurisdiction
where such qualification is necessary, except for those jurisdictions where the
failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. PLL has
heretofore delivered to LTC true and complete copies of its certificate of
incorporation and bylaws or other similar constituent documents, in each case as
amended to date.
6.2 Corporate Authorization; Enforceability. The execution, delivery
and performance by PLL of this Agreement, the Interim Agreements and each of the
Ancillary Closing Agreements to which it will be a party are within PLL's
corporate power and have been duly authorized by the board of directors and,
subject to the approval by the shareholders of PLL, no other corporate action on
the part of PLL is necessary to authorize this Agreement, the Interim Agreements
or any of the Ancillary Closing Agreements to which PLL will be a party at the
Closing. This Agreement has been, and each of the Ancillary Closing Agreements
and Interim Agreements to which PLL will be a party will be duly executed and
delivered by PLL. Assuming the due execution and delivery of this Agreement and
each of the Ancillary Closing Agreements and Interim Agreements to which PLL
will be a party, this Agreement constitutes, and each Ancillary Closing
Agreements and Interim Agreements to which PLL will be a party will constitute
valid and binding agreements of PLL, enforceable against PLL in accordance with
their terms, except to the extent that their enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity.
6.3 Governmental Authorization. The execution, delivery and performance
by PLL of this Agreement, the Interim Agreements and each of the Ancillary
Closing Agreements to which PLL will be a party require no consent, approval,
order, authorization or action by or in respect of, or filing with, any
Governmental Authority
28
27
other than filings pursuant to the Securities Act and applicable state
securities laws and the approval of the shareholders of PLL.
6.4 Non-Contravention; Consents. The execution, delivery and
performance by PLL of this Agreement and each Ancillary Closing Agreement to
which PLL will be a party at the Closing and the consummation of the
transactions contemplated hereby and thereby, do not and will not at the Closing
(a) violate the certificate of incorporation or bylaws or other similar
constituent documents of PLL, (b) violate any applicable Law or Order, (c)
require any filing with or Permit, consent or approval of, or the giving of any
notice to, any Person (including filings, consents or approvals required under
any Permits of PLL or any licenses to which PLL is a party), (d) result in a
violation or breach of, conflict with, constitute (with or without due notice or
lapse of time or both) a default under, or give rise to any right of
termination, cancellation or acceleration of any right or obligation of PLL or
to a loss of any benefit to which PLL is entitled under, any Contract, agreement
or other instrument binding upon PLL or any license, franchise, Permit or other
similar authorization held by PLL, or (e) result in the creation or imposition
of any Lien on any asset of PLL.
6.5 Capitalization. The authorized, issued and outstanding Capital
Stock of PLL as of December 1, 1999 is as follows: PLL has 21,302,934 authorized
shares of which 6,000,000 shares are designated, issued and outstanding as Class
A shares and 15,302,934 shares are designated, issued and outstanding as Class B
shares. All of the outstanding shares of Capital Stock of PLL are duly
authorized, validly issued and fully paid and nonassessable. The shares of PLL
Common to be delivered at Closing, when issued and delivered in accordance with
the terms of this Agreement will be duly authorized, validly issued, fully paid,
nonassessable and free and clear of any Lien or other limitation or restriction.
There are no existing subscriptions, options, warrants, calls, commitments,
agreements, conversion rights or other rights of any character (contingent or
otherwise) to purchase or otherwise acquire from PLL at any time, or upon the
happening of any stated event, any shares of the capital stock of PLL whether or
not presently issued or outstanding, except as set forth on Schedule 6.5. It is
understood that nothing set forth in this Section 6.5 shall restrict PLL from
issuing new Capital Stock or any rights thereto.
6.6 Subsidiaries. (a) Each of PLL's Subsidiaries listed in Schedule 6.6
is a corporation or other legal entity duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization. Each of PLL's
Subsidiaries has all corporate or similar powers and all governmental licenses,
authorizations, Permits, consents and approvals required to carry on its
business as now conducted. Each of PLL's Subsidiaries is duly qualified to
conduct business as a foreign corporation or other legal entity and is in good
standing in each jurisdiction where such qualification is necessary, except for
those jurisdictions where the failure to be so qualified or in good standing
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. PLL has heretofore delivered to LTC true and complete
copies of the certificate of incorporation, bylaws or comparable constituent
documents of each of PLL's Subsidiaries, in each case as amended to date. PLL
does not own, beneficially or of record, any stock or ownership interests in any
entity other than the Subsidiaries listed in Schedule 6.6.
(b) All the outstanding shares of Capital Stock of each such
Subsidiary have been validly issued and are fully paid and nonassessable and are
owned directly or indirectly by PLL, free and clear of all Liens. There are no
outstanding convertible or exchangeable securities or Contracts giving any
Person any right to acquire shares of Capital Stock of such Subsidiaries and no
voting trusts or other Contracts restricting the voting, dividend rights or
disposition of shares of such Subsidiaries.
6.7 PLL Financial Statements; Books and Records. (a) PLL heretofore
furnished LTC with true and complete copies of the PLL Audited Financials and
the PLL Interim Financials which have been prepared in accordance with New
Zealand GAAP consistently applied. The PLL Audited Financials and the PLL
Interim Financials fairly present in all material respects the financial
position of PLL at the respective dates thereto and the results of the
operations and cash flows of PLL for the respective periods then ended.
29
28
(b) Since September 30, 1999, there have been no changes in PLL's
reserve, accrual or other material accounting policies.
(c) The books of account, minute books, stock record books and
other records of PLL, all of which have been made available to LTC, are complete
and correct in all material respects and have been maintained in accordance with
sound business practices and under an adequate system of internal controls. The
minute books of PLL contain accurate and complete records of all meetings held
of, and corporate and stockholder action taken by, the stockholders, Board of
Directors and committees of the Board of Directors of PLL and no meeting of any
such stockholders, Board of Directors or committee of the Board of Directors has
been held for which minutes have not been prepared and are not contained in such
minute books.
6.8 No Undisclosed Liabilities. There are no liabilities or any
facts or circumstances which could give rise to liabilities, whether accrued,
contingent, absolute, determined, determinable or otherwise, of PLL other than
(a) liabilities fully disclosed in PLL's Audited Financials and Interim
Financials in accordance with New Zealand GAAP, (b) liabilities specifically
disclosed in Schedule 6.8, and (c) other undisclosed liabilities incurred since
March 31, 1999 in the Ordinary Course of Business which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
6.9 Tax Matters. (a)(i) All Returns have, to the extent required
to be filed on or before the date hereof, been filed and, to the extent required
to be filed between the date hereof and the Closing Date, will have been filed
before the Closing, when due in accordance with all applicable Laws and all
Taxes owed by PLL or any of PLL's Subsidiaries (whether or not shown as due and
payable on the Returns that have been filed) have been timely paid or will have
been timely paid prior to the Closing Date, or withheld (including withholding
for independent contractors, consultants and other employees) and remitted to
the appropriate Taxing Authority, or will have been timely withheld and remitted
to the appropriate Taxing Authority prior to the Closing Date;
(ii) The Returns correctly reflect in all material
respects, the facts regarding the income, business, assets, operations,
and activities and status of PLL and any of PLL's Subsidiaries;
(iii) Any reserves established for Taxes with respect to
PLL or any of PLL's Subsidiaries for any Pre-Closing Tax Period
(including any Pre-Closing Tax Period for which no Return has yet bee
filed) reflected on the books of PLL or any of PLL's Subsidiaries are
adequate in accordance with New Zealand GAAP;
(iv) Neither PLL nor any of PLL's Subsidiaries is
delinquent in the payment of any Tax or has requested any extension of
time within which to file any Return except for extensions granted as a
matter of right;
(v) Neither PLL nor any of PLL's Subsidiaries (or any
member of any affiliated, consolidated, combined or unitary group of
which PLL or any of PLL's Subsidiaries is or has been a member) has
granted any extension or waiver of the statute of limitations period
applicable to any Return, which period (after giving effect to such
extension or waiver) has not yet expired;
(vi) There is no action, suit, proceeding, audit or
investigation pending or, to the knowledge of PLL, threatened against
or with respect to PLL or any of PLL's Subsidiaries in respect of any
Tax. Since January 1, 1997, no claim has been made by any Taxing
Authority in any jurisdiction in which PLL or any of its Subsidiaries
does not file a Tax Return that it is or may be subject to taxation by
that jurisdiction and no such claim exists which has not been resolved
by a determination by such Taxing Authority that PLL or any of PLL's
Subsidiaries is not so subject to taxation;
(vii) There are no Liens for Taxes upon the assets of PLL
or any of PLL's Subsidiaries, except Liens for current Taxes not yet
due;
30
29
(b) Schedule 6.9 contains a list of all jurisdictions (whether foreign
or domestic) to which any tax imposed is properly payable by PLL or any of PLL's
Subsidiaries in connection with PLL's conduct or the business of PLL.
6.10 Absence of Certain Changes. Since September 30, 1999, there has
not been any event, occurrence, development, circumstance or state of facts
which (a) has had or which could reasonably be expected to have a Material
Adverse Effect or (b) would have constituted a violation of any covenant of PLL
hereunder (including Section 7.1) had such covenant applied to PLL since
September 30, 1999. Since September 30, 1999, there has not occurred any damage,
destruction or casualty loss (whether or not covered by insurance) with respect
to the business of PLL. PLL has not sold, transferred, disposed of, or incurred
a Lien upon, any Intellectual Property Right or PLL asset since September 30,
1999.
6.11 Contracts. (a) Each material lease, agreement, contract,
commitment or other legally binding contractual right or obligation to which PLL
is a party (whether written or oral) (collectively, the "PLL Contracts") is a
valid and binding agreement of PLL and, to the knowledge of PLL, each other
party thereto, enforceable in accordance with their respective terms, except to
the extent that their enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles.
Neither PLL nor, to the knowledge of PLL, any other party to any PLL Contract is
in default or breach (with or without due notice or lapse of time or both) in
any material respect under the terms of any such PLL Contract. To the knowledge
of PLL, there is no event occurrence, condition or act which, with the giving of
notice or the passage of time or both, or the happening of any other event or
condition, could reasonably be expected to become a material default or event of
default under any such PLL Contract. PLL has delivered or made available to PLL
true and complete originals or copies of all PLL Contracts.
6.12 Insurance Coverage. PLL has adequate insurance policies and
fidelity bonds covering the assets, business and operations of PLL. There is no
material claim by PLL pending under any of such policies or bonds as to which
coverage has been questioned, denied or disputed by the underwriters of such
policies or bonds. All premiums due and payable under all such policies and
bonds have been paid and PLL has complied in all material respects with the
terms and conditions of all such policies and bonds. Such policies of insurance
and bonds (or other policies and bonds providing substantially similar insurance
coverage) are in full force and effect and are of the type and in amounts deemed
by the management of PLL to be sufficient in light of the business of PLL.
6.13 Litigation. There is no action, suit, investigation, arbitration
or administrative or other proceeding pending or, to the knowledge of PLL,
threatened against or affecting PLL or any of PLL's properties before any court
or arbitrator or any Governmental Authority which in any manner challenges or
seeks to prevent, enjoin, alter or materially delay the transactions
contemplated by this Agreement, the Interim Agreements and the Ancillary Closing
Agreements to which PLL will be a party at Closing. PLL does not know of any
valid basis for any such action, proceeding or investigation.
6.14 Compliance with Laws; Permits. (a) PLL is not in violation of, has
not been given notice of or been charged by any Governmental Authority with, or,
to PLL's knowledge, under investigation with respect to, any applicable Law or
Order that could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(b) Schedule 6.14(b) sets forth a list of each government or
regulatory license, authorization, permit, franchise, consent and approval (the
"Permits") issued and held by or on behalf of PLL or required to be so issued
and held to carry on the PLL's business as currently conducted. Except as
disclosed in Schedule 6.14(b), each Permit is valid and in full force and effect
and will not be terminated or impaired (or become terminated or impaired) as a
result of the transactions contemplated hereby. PLL is not in default under, and
no condition
31
30
exists that with notice or lapse of time or both could constitute a default or
could give rise to a right of termination, cancellation or acceleration under,
any material Permit held by PLL.
6.15 Properties; Sufficiency of Assets. (a) Except for inventory
disposed of in the Ordinary Course of Business of PLL, PLL has good title to or
in the case of leased property has valid leasehold interests in the property and
assets (whether real or personal, tangible or intangible) reflected in the PLL
Audited Financials or acquired after the date thereof, free and clear of all
Liens, except for Permitted Liens and Liens disclosed in Schedule 6.15(a).
(b) Schedule 6.15(b) sets forth a list of all Real Property owned
or leased by PLL. All such leases of PLL Real Property are valid and binding
agreements of PLL and, to the knowledge of PLL, each other party thereto,
enforceable in accordance with their respective terms, except to the extent that
their enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles. PLL is a tenant
or possessor in good standing thereunder and all rents due under such leases
have been paid. Neither PLL nor, to the knowledge of PLL, any other party to any
such lease is in default or breach (with or without due notice or lapse of time
or both) in any material respect under the terms of any such lease. To the
knowledge of PLL, there is no event, occurrence, condition or act which, with
the giving of notice or the passage of time or both, or the happening of any
other event or condition, could reasonably be expected to become a material
default or event of default under any such lease. PLL is in peaceful and
undisturbed possession of the space and/or estate under each lease of which it
is a tenant and has good and valid rights of ingress and egress to and from all
the Real Property from and to the public street systems for all usual street,
road and utility purposes. PLL has not received any notice of any appropriation,
condemnation or like proceeding, or of any violation of any applicable zoning
Law or Order relating to or affecting the Real Property, and to PLL's knowledge,
no such proceeding has been threatened or commenced.
(c) The assets of PLL are adequate to conduct the business of PLL
as currently conducted.
6.16 Intellectual Property. (a) Schedule 6.16(a) sets forth a list of
all Intellectual Property Rights which are owned by PLL or any of PLL's
Subsidiaries or to which PLL or any of PLL's Subsidiaries is a licensor or
licensee, and all material licenses, sublicenses and other written agreements as
to which PLL or any of its Affiliates is a party and pursuant to which any
Person is authorized to use such Intellectual Property Right, including the
identity of all parties thereto.
(a) (i) All of the Intellectual Property Rights necessary for
or used in the conduct of the Business are set forth in Schedule 6.16(a).
(ii) The conduct of the Business by PLL as currently
conducted does not infringe upon any Intellectual Property Right of any
third party. There is no claim, suit, action or proceeding that is
either pending or, to the knowledge of PLL, threatened, that, in either
case, involves a claim of infringement by PLL of any Intellectual
Property Right of any third party, or challenging PLL's ownership,
right to use, or the validity of any Intellectual Property Right listed
or required to be listed in Schedule 6.16(a). PLL has no knowledge of
any basis for any such claim of infringement and no knowledge of any
continuing infringement by any other Person of any of the Intellectual
Property Rights listed or required to be listed in Schedule 6.16(a);
(iii) No Intellectual Property Right listed or required to
be listed in Schedule 6.16(a) is subject to any outstanding order,
judgment, decree, stipulation or agreement restricting the use thereof
by PLL or restricting the licensing thereof by PLL to any Person;
(iv) PLL has not entered into any agreement to indemnify
any other Person against any charge of infringement of any Intellectual
Property Right;
32
31
(v) PLL has duly maintained all registrations for any
Intellectual Property Rights listed or required to be listed in
Schedule 6.16(a); and
(vi) PLL has obtained all assignments of any rights, title
and interest in the Intellectual Property Rights held by any Person
other than PLL.
6.17 Environmental Matters. (a) (i) Constituents of Concern have
not been generated, recycled, used, neared or stored on, transported to or from,
or Released or disposed on, PLL Property or, to the knowledge of PLL, any
property adjoining or adjacent to any PLL Property, except in compliance with
Environmental Laws;
(ii) PLL has not disposed of Constituents of Concern from
PLL Property at any off-site facility except in compliance with
Environmental Laws;
(iii) PLL is in compliance in all material respects with
Environmental Laws and the requirements of Permits issued under such
Environmental Laws with respect to the PLL Property;
(iv) There are no pending or, to the knowledge of PLL,
threatened Environmental Claims against PLL or any PLL Property;
(v) PLL has no knowledge of any facts, circumstances,
conditions or occurrences regarding PLL's past or present business or
operations or with respect to any PLL Property or any property
adjoining any PLL Property that could reasonably be expected (i) to
form the basis of an Environmental Claim against PLL or any of the PLL
Property or assets or (ii) to cause any PLL Property or assets to be
subject to any restrictions on its ownership, occupancy, use or
transferability under any Environmental Law;
(vi) To the knowledge of PLL, there are no underground
storage tanks or sumps located on any PLL Property or on any property
that adjoins or is adjacent to any PLL Property;
(vii) PLL has obtained all required Environmental Permits
and is in compliance with the terms of each Environmental Permit in all
material respects; and
(viii) PLL has no liability under any Environmental Law
(including an obligation to remediate any Environmental Condition
whether caused by PLL or any other Person).
(b) PLL has delivered or made available to PLL true and complete
copies of all environmental investigations, studies, audits, tests, reviews or
other analyses commenced or conducted by or on behalf of PLL (or by a third
party of which PLL has knowledge) in relation to the current or prior business
of PLL or any PLL Property,
(c) For purposes of this Section 6.17, the term "PLL" (including
the use of such term in the term "PLL Property") will include any entity which
is, in whole or in part, a predecessor of PLL.
6.18 Plans and Material Documents. Schedule 6.18 sets forth a list
of all PLL Benefit Plans. Each PLL Benefit Plan is in compliance in all material
respects with, and has always been operated in all material respects in
accordance with, its terms and the requirements of all applicable Laws, and PLL
has satisfied in all material respects all of its statutory, regulatory and
contractual obligations with respect to each such Benefit Plan. No legal action,
suit or claim is pending or, to the knowledge of PLL, threatened with respect to
any Benefit Plan (other than claims for benefits in the ordinary course) and no
fact or event exists that could reasonably be expected to give rise to any such
action, suit or claim.
33
32
6.19 Affiliate Transactions. (a) There are no outstanding payables,
receivables, loans, advances and other similar accounts between PLL, on the one
hand, and any of its Affiliates, on the other hand, relating to the business of
PLL.
(b) To the knowledge of PLL, no director, officer or employee of LTC
possesses, directly or indirectly, any ownership interest in, or is a director,
officer or employee of, any Person which is a supplier, customer, lessor,
lessee, licensor, developer, competitor or potential competitor of PLL.
Ownership of 5% or less of any class of securities of a Person will not be
deemed to be an ownership interest for purposes of this Section 6.19.
6.20 Employee Matters. (a) The relationships of PLL with the employees
of PLL are good working relationships and PLL has no reason to believe that
there will be any such change as a result of the transactions contemplated by
this Agreement.
(b) PLL is not a party to any labor or collective bargaining
agreement.
(c) There are no (i) strikes, work stoppages, slow-downs, lockouts or
arbitrations or (ii) grievances or other labor disputes pending or, to the
knowledge of PLL, threatened against or involving PLL.
(d) PLL is in material compliance with all Laws and Orders in respect
of employment and employment practices and the terms and conditions of
employment and wages and hours, and has not and is not, engaged in any unfair
labor practice.
6.21 Finders' Fees. Except for US Capital Consultants Pty Ltd. (whose
fees and expenses will be paid by PLL), there is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf of PLL who might be entitled to any fee or other commission in
connection with the transactions contemplated by this Agreement or any of the
Ancillary Closing Agreements.
6.22 Millennium Compliance. Schedule 6.22 sets forth the measures that
have been implemented to determine the extent to which the computer systems used
by PPL in its business (the "Computer Systems") are not in Millennium
Compliance, a complete description of the Computer Systems that are not or may
not be in Millennium Compliance and the material details of any program to be
undertaken with a view towards causing any Computer Systems that are not
Millennium Complaint to achieve Millennium Compliance.
6.23 New Zealand Filings. All information filed with the District
Registrar of Companies in Auckland, New Zealand by PLL pursuant to the Companies
Xxx 0000 or the Securities Xxx 0000 of New Zealand during 1998 and 1999 has been
filed in compliance with the requirements thereof and was accurate in all
material respects as of the dates at which the information was so furnished.
6.24 Registration Statement, Other Documents. None of the information
supplied or to be supplied by PLL for inclusion, or included, in the
Registration Statement; (ii) the Proxy Statements; and (iii) any other documents
to be filed with the SEC or any regulatory agency in connection with the
transactions contemplated hereby shall, at the respective times such documents
are filed and, in the case of the Registration Statement, when it becomes
effective and, with respect to the Proxy Statements, when mailed, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein not misleading or, in the case
of the Proxy Statements or any amendment thereof or supplement thereto, at the
time of the Shareholders' Meetings, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for the Shareholders Meetings. All documents which PLL is responsible for
filing with the SEC and any regulatory agency in connection with the Merger
shall comply as to form and substance in all material respects with the
provisions of applicable law.
34
33
6.25 Available Funds. On the date hereof PLL has sufficient funds to
satisfy the obligations of PLL under the Bridge Loan Financing Agreements.
ARTICLE VII
CERTAIN COVENANTS
7.1 Conduct of Business of LTC. During the period from the date of this
Agreement to the Closing Date, LTC will conduct its operations only in the
Ordinary Course of Business (including managing its working capital in
accordance with its past practice and custom) and in accordance with the
management provisions set forth in Section 7.17 hereto use its best efforts to:
(i) preserve intact its business organizations, (ii) keep available the services
of its officers and employees, and (iii) maintain its relationships and goodwill
with licensors, suppliers, distributors, customers, landlords, employees, agents
and others having business relationships with LTC or the Business. LTC will
confer with PLL concerning operational matters of a material nature and report
periodically to PLL concerning the Business, operations and finances of LTC.
Without limiting the generality or effect of the foregoing, prior to the Closing
Date, except with the prior written consent of PLL, LTC will not:
(a) Amend or modify its certificate of incorporation or bylaws or
other similar constituent documents from its form on the date of this Agreement
except to increase the number of authorized shares of common stock up to 200
million shares;
(b) Change any salaries or other compensation of, or pay any
bonuses to, any current or former director, officer, employee or stockholder of
LTC, or enter into any employment, severance or similar agreement with any
current or former director, officer, stockholder or employee of LTC;
(c) Adopt or increase any benefits under any profit sharing,
bonus, deferred compensation, savings, insurance, pension, retirement or other
Benefit Plan for or with any of its employees;
(d) Incur or commit to make any capital expenditures in excess of
the remaining balance of the planned capital expenditures under the LTC's
current capital expenditure budget to the extent approved by PLL;
(e) Enter into any contract or commitment, except for contracts
and commitments entered into by LTC in the Ordinary Course of Business;
(f) Modify or amend in any material respect or terminate any
Contract listed or required to be listed in Schedule 5.11(a);
(g) Incur, assume or guarantee any Indebtedness;
(h) Enter into any transaction or commitment relating to the
assets or the Business of LTC which, individually or in the aggregate, could be
material to LTC, or cancel or waive any claim or right which, individually or in
the aggregate, could be material to LTC;
(i) Make any change in accounting methods or practices (including
changes in reserve or accrual amounts or policies);
(j) Issue or sell any Capital Stock, or make any other changes in
its capital structure, other than the grant in the Ordinary Course of Business
of stock options or other rights to purchase shares of Capital Stock of LTC
pursuant to any existing Benefit Plan of LTC or the repricing of existing
warrants or options to induce their exercise by the holders thereof in a manner
satisfactory to PLL, or with the prior written approval of PLL, in connection
with the settlement of existing indebtedness of LTC;
35
34
(k) Sell, lease or otherwise dispose of any material asset or
property of LTC;
(l) Write-off as uncollectible any notes or Accounts Receivable,
except write-offs in the Ordinary Course of Business charged to applicable
reserves, none of which individually or in the aggregate is material; write-off,
write-up or write-down any other material asset of LTC; or alter LTC's customary
time periods for collection of Accounts Receivable or payments of accounts
payable;
(m) Create or assume any Lien, other than a Permitted Lien;
(n) Make any loan, advance or capital contributions to or
investment in any Person;
(o) Terminate or close any material facility, business or
operation of LTC;
(p) Cause or permit to occur any event, occurrence, development or
state of circumstances or facts which, individually or together with other
matters, has had or could reasonably be expected to have a Material Adverse
Effect;
(q) Take any action that would cause any of the representations
and warranties made by LTC in this Agreement not to remain true and correct or
any of the conditions set forth in any subsection of Section 8.1 from being
satisfied;
(r) Enter into any discussions or negotiations with any Person
regarding the sale, transfer, disposition or licensing of any Intellectual
Property Rights;
(s) Settle, release or forgive any claim or litigation or waive
any right thereto that relates to LTC or the Business; or
(t) Agree to do any of the foregoing.
7.2 Exclusive Dealing. During the period from the date of this
Agreement to the earlier of the Closing Date and the termination of this
Agreement in accordance with its terms, subject to the fiduciary duties of their
respective officers and directors, each of LTC and PLL will not, and will not
authorize or permit any of their stockholders or any of their respective
Affiliates, or any of their officers or directors or any of their respective
Affiliates, or any representative of any of the foregoing (including financial
advisors, investment bankers, agents, attorneys, employees or consultants) to,
take any action to, directly or indirectly, encourage, initiate, solicit or
engage in discussions or negotiations with, or provide any information to any
Person, or enter into any agreement with any Person, other than LTC or PLL (as
the case may be) and its Affiliates and representatives, concerning any purchase
of any Capital Stock, the Business or Intellectual Property Rights of LTC or any
merger, asset sale or similar transaction involving LTC or any transaction
involving a competing thin film technology or any transaction that would
frustrate the purposes of this Agreement, without the prior written consent of
the other party. Each party will disclose to the other party the existence or
occurrence of any proposal or contact which it or any of its Affiliates or
representatives described above may receive in respect of any such transaction
and the identity of the Person from whom such a proposal or contact is received.
7.3 Review of LTC; Confidentiality. (a) PLL may, prior to the Closing
Date, directly or through its representatives, review the properties, books and
records of LTC and its financial and legal condition to the extent it deems
necessary or advisable to familiarize itself with such properties and other
matters. LTC will permit PLL and its representatives to have, after the date of
execution of this Agreement, reasonable access to the premises and to all the
books and records of LTC and to cause the officers, accountants and other
representatives of LTC to furnish PLL with such financial and operating data and
other information with respect to the Business and properties of LTC as PLL may
from time to time reasonably request. LTC will deliver or
36
35
cause to be delivered to PLL such additional instruments, documents,
certificates and opinions as PLL may reasonably request for the purpose of (i)
verifying the information set forth in this Agreement or on any Schedule
attached hereto and (ii) consummating or evidencing the transactions
contemplated by this Agreement.
(b) LTC may, prior to the Closing Date, directly or through its
representatives, review the properties, books and records of PLL and its
financial and legal condition to the extent necessary to prepare the
Registration Statement and Proxy Statement. PLL will cause the officers
accountants and other representatives to furnish LTC with such financial and
operating data and other information with respect to the business and properties
of PLL as may be necessary to prepare the Registration Statement and Proxy
Statement.
(c) Prior to the Closing, neither LTC nor PLL will, or will permit
any of its Affiliates to, without the prior written consent of the other,
disclose to any other Person (other than such Person's financing sources,
existing stockholders and such Person's directors, officers, employees, advisors
and other representatives that need to know) any proprietary, non-public
information of another party previously delivered or made available to such
other party in connection with the transactions contemplated hereby (including
the existence of and terms of this Agreement, the Interim Agreements and the
Ancillary Closing Agreements), other than to the extent required by applicable
Law and upon the advice of counsel. Each of LTC and PLL will direct its
financing sources, stockholders, directors, officers, employees and
representatives to keep all such information in strict confidence; provided,
however, that each such Person may disclose such information to the extent
required by Law and upon the advice of counsel.
7.4 Reasonable Best Efforts. (a) Subject to the fiduciary duties of
their respective officers and directors, LTC and PLL will cooperate and use
their respective reasonable best efforts to take, or cause to be taken, all
appropriate actions, and to make, or cause to be made, all filings necessary,
proper or advisable under applicable Laws to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
their respective reasonable best efforts to obtain, prior to the Closing Date,
all licenses, Permits, consents, approvals, authorizations, qualifications and
orders of Governmental Authorities and parties to Contracts with LTC as are
necessary to consummate the transactions contemplated by the Agreement and to
fulfill the conditions to the sale contemplated hereby. The parties will pay or
cause to be paid all of their own fees and expenses contemplated by this
Section, including but not limited to the fees and expenses of any broker,
finder, financial advisor, legal advisor or similar person engaged by such
party. Notwithstanding any other provision hereof, in no event will PLL or any
of its Affiliates be required to (a) enter into or offer to enter into any
divestiture hold-separate, business limitation or similar agreement or
undertaking in connection with this Agreement or the transactions contemplated
hereby, (b) institute or defend any litigation or other legal proceeding,
whether judicial or administrative, including, without limitation, seeking to
have any stay or temporary restraining order vacated or reversed, or (c) incur
any liability or make any payment in connection with any consent or approval or
condition to Closing set forth in any subsection of Section 8.1 in order to
consummate the transactions contemplated by this Agreement. Each of the parties
will notify and keep the other advised in reasonable detail as to such party's
efforts in complying with its obligations under this Section 7.4.
(b) LTC will, within 10 days after the end of the applicable
calendar month, deliver to PLL the Monthly Financial Statements prepared in
accordance with U.S. GAAP consistently applied and which fairly present in all
material respects the financial position of LTC at the date thereof and the
results of operations and cash flows for the month then ended.
(c) Prior to the Closing Date, LTC agrees to obtain a consent to
the transactions contemplated herein from the Ben Franklin Technology Center of
Southeastern Pennsylvania ("Ben Franklin") pursuant to that certain Applied
Research and Development Fund Funding Agreement, dated as of February 1, 1998,
between Ben Franklin and LTC. In addition, prior to the Closing Date LTC agrees
to obtain a subordination of Xxx Xxxxxxxx'x security interest in the assets of
LTC to PLL's security interest in such assets.
37
36
7.5 Transfer of Employees and Benefit Plans. As of the Closing
Date:
(a) PLL will offer to each full-time employee of LTC who is not on
leave of absence (whether on disability or otherwise) immediately prior to the
Closing Date (the "Transferred Employees") employment with PLL or an Affiliate
of PLL with each such offer to include a substantially equivalent title, level
of responsibility and compensation and benefits as each such employee had as an
employee of LTC on the date hereof. Any such employment will be subject to the
terms and conditions of PLL's standard Employment Agreement;
(b) Upon the Closing, PLL will offer employment to Xxxxx Xxxx and
Xxxxxx Ferment in accordance with the terms and conditions of the Employment
Agreements; and
(d) PLL will grant a minimum of three hundred thousand (300,000)
options (the "Options") to the Transferred Employees for the purchase of PLL
Stock at an exercise price of $2.25 per share. The Options will be distributed
to the Transferred Employees on the Closing Date in the amounts set forth in
Schedule 7.5(c). The Options shall vest on the Closing Date. The Options will be
issued by PLL (Delaware) in the form of the Employee Share Option Deed attached
hereto as Exhibit D and shall be registered on a Form S-8 (or equivalent form).
Nothing contained in this Agreement will confer upon any Transferred Employee
any rights or remedies, including, without limitation, any right to employment,
of any nature or kind whatsoever, from any specified period or at any level of
compensation or benefits under or by reason of this Agreement. Notwithstanding
anything to the contrary contained in this Agreement, neither PLL nor any
Affiliate of PLL will be required to continue any particular Benefit Plan after
the Closing Date for the Transferred Employees, and any such Benefit Plan may be
amended or terminated in accordance with its terms and any applicable Law.
Transferred Employees will be eligible to participate in any benefit program
maintained by PLL for similarly-situated employees of PLL and will receive full
credit for their service with LTC and PLL for eligibility and vesting purposes
with respect to such benefit program, provided that such crediting of service
does not result in duplication of benefits and provided further, that such
crediting of service will not be given for benefit accrual. Transferred
Employees will also be given credit for any deductible or co-payment amounts
paid in respect of the plan year in which they became eligible to participate in
any plan of PLL for which deductibles or co-payments are required. PLL will also
cause each plan of PLL to waive (i) any preexisting condition restriction which
was waived under the terms of any analogous plan of LTC immediately prior to the
Closing or (ii) any waiting period limitation which would otherwise be
applicable to any Transferred Employee on or after the Closing to the extent
such Transferred Employee had satisfied any similar waiting period limitation
under an analogous plan of LTC prior to the Closing. LTC and PLL will coordinate
all communications with the employees of LTC regarding the transactions
contemplated by this Agreement.
7.6 Proxy and Registration Statements. In connection with the
transactions contemplated by this Agreement:
(a) Promptly after the date hereof, LTC shall prepare and file
with the Securities and Exchange Commission a proxy statement to be mailed to
LTC's shareholders in connection with the meeting to be called to consider the
Merger and shall provide PLL with such copies thereof as it may request.
Contemporaneously with the IPO process described in Section 7.16, PLL shall file
with the Securities and Exchange Commission the Registration Statement to
register under the Securities Act the Merger Securities to be issued to the
holders of the LTC Common and shall provide LTC with the necessary copies of the
prospectus included as a part of the Registration Statement (the "Prospectus")
for the shareholders of LTC at the earliest practicable date after the effective
date of the Registration Statement and prior to the Closing. PLL shall file all
such amendments to the Registration Statement as shall be necessary to keep it
current and effective until the Merger Securities have been distributed.
38
37
(b) In connection with the preparation of the Registration
Statement and the Proxy Statement (i) LTC shall also provide to PLL in writing
all information relating to LTC or its Subsidiaries and the management,
operations and finances of any of them which may be advisable or necessary to
include in the Registration Statement or any amendment thereto as may be
necessary to keep it current and effective until the distribution of the Merger
Securities, none of which information, with respect to the subject matter
thereof shall contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (ii) PLL shall provide LTC in writing with all information
relating to PLL or its Subsidiaries and the management, operations and finances
of any of them which may be advisable or necessary to include in the
Registration Statement or any amendment thereto as may be necessary to keep it
current and effective until the distribution of the Merger Securities, none of
which information, with respect to the subject matter thereof shall contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(c) Contemporaneously with the IPO process described in Section
7.16, PLL and LTC shall file all applicable state securities or "blue sky"
applications and use its reasonable efforts to qualify the Merger Securities
issuable pursuant to this Agreement under such applicable state securities or
"blue sky" laws prior to the Closing Date.
(d) Information which is obtained by either party pursuant to this
Section 7.6 will be kept confidential by such party; provided, however that in
the event the party or any of its representatives is requested or required
pursuant to applicable Law by any Governmental Authority to disclose any such
information, the party may do so after providing the other party with notice of
the request or requirement so that the other party may attempt, at its own
expense, to obtain a protective order. Each party will use reasonable efforts to
limit access to such information on a "need to know" basis. Neither party may
use information obtained from the other party pursuant to this subsection to
compete with the other party.
7.7 LTC SEC Filings; Disclosure of Material Information. LTC will file
with the Securities and Exchange Commission its Annual Report on Form 10-K SB
for the fiscal year ended December 31, 1999, in a timely manner and in
compliance with the requirements of such form. LTC agrees to disclose to PLL all
material information and any new developments arising after the date hereof
regarding the Business. PLL agrees to disclose to LTC all material information
and any new developments arising after the date hereof regarding the business of
PLL.
7.8 Transfer Taxes. LTC will pay all transfer, documentary, sales, use,
stamp, registration and value added Taxes incurred in connection with this
Agreement.
7.9 Further Assurances. From time to time, as and when requested by
either party hereto, the other party will execute and deliver, or cause to be
executed and delivered, all such documents and instruments and will take, or
cause to be taken, all such further actions, as the requesting party may
reasonably deem necessary or desirable to consummate the transactions
contemplated by this Agreement.
7.10 Insurance. LTC will continue to carry and maintain in full force
and effect the insurance policies listed on Schedule 5.12, or policies with
comparable coverage, to the Closing Date. LTC will cause PLL to be included as
an additional insured on all such policies designated on Schedule 5.12 as
"Occurrence Form" from and after the Closing Date with respect to claims
occurring on or prior to the Closing Date and, with respect to policies
designated on Schedule 5.12 as "Claims Made", cause PLL to be included as an
additional insured with respect to claims made and reported to LTC on or prior
to the Closing Date. PLL acknowledges and agrees that effective on the Closing
Date, all insurance policies and coverages provided or made available by LTC to
or for the benefit of the Business will terminate and PLL will, at PLL's sole
cost and expense, be responsible for
39
38
making any and all necessary or appropriate arrangements for the provision of
insurance coverage and similar matters for or relating to the Business.
7.11 Transfer of Intellectual Property Rights. Prior to the Closing
Date, if PLL deems it necessary, LTC agrees to take all actions necessary to
Transfer all of its Intellectual Property Rights to an entity organized under
the laws of the Netherlands Antilles or a similar jurisdiction, for tax
purposes.
7.12 Board of Directors. Effective at the Closing, PLL will allow LTC
to appoint one member to the Board of Directors of PLL and to use its reasonable
best efforts to cause such appointee to be elected to the Board of Directors.
7.13 Repricing of Options and Warranties; Purchase of Additional Stock.
(a) Prior to the Closing Date, LTC shall use its best efforts to cause all
outstanding warrants and options issued by LTC to be exercised by the holders
thereof, including to re-price and accelerate the vesting of such outstanding
warrants and options as an inducement to their exercise by the holders thereof.
The repricing of the warrants and options will be conditioned upon the holders
of such warrants and options consenting to the termination of the warrant and
option owned by such holder as of a date not later than immediately prior to the
Effective Time of the Merger. LTC will terminate all LTC Stock Plans and
outstanding and unexercised stock options as of a date not later than
immediately prior to the Effective Time. Any LTC warrants outstanding at the
Effective Time that are not terminated other than warrants held by PLL will be
converted and adjusted at the Effective Time into warrants to purchase shares of
PLL (or its successor) in accordance with their terms.
(b) In the event that any holder of warrants or options issued by
LTC exercises such warrants or options prior to the Closing Date, LTC agrees to
use the proceeds from the exercise of the warrants and options (the "Exercise
Funds") as follows: (1) the first three hundred fifty thousand dollars
($350,000) shall be used by LTC to finance the operations of LTC in lieu of
obtaining financing under the Bridge Loan Financing Agreements and (2) the
second two hundred thousand dollars ($200,000) shall be used by LTC to pay a
portion of the accrued salary due and owing to Xx. Xxxxxxx.
Any Exercise Funds in excess of the foregoing five hundred fifty
thousand dollars ($550,000) (the "Excess Exercise Funds") shall be used by LTC
to pay LTC's Continuing Costs directly by LTC. To the extent LTC pays its
Continuing Costs through the Excess Exercise Funds rather than through Bridge
Loan Financing funds the Merger Securities to be distributed to the LTC
stockholders in the Merger shall be increased on the following basis: one share
of PLL Common Stock shall be added to the 3,500,000 Merger Securities set forth
in Section 3.3 of the Merger Agreement for every $2.25 of Excess Exercise Funds
received by LTC (the "Additional Merger Securities"). The Additional Merger
Securities shall be distributed to the LTC stockholders on the same basis as the
Merger Securities set forth in Section 3.3 of the Merger Agreement. (By way of
example, if LTC receives $1,450,000 in Exercise Funds, (1) LTC shall first use
$350,000 to finance the operations of LTC in lieu of using Bridge Loan Financing
funds, (2) LTC shall use $200,000 to pay accrued salary due and owing Xxxxxx
Xxxxxxx, (3) LTC shall use the remaining $900,000 to pay LTC's Continuing Costs
and (4) the LTC stockholders shall receive in the Merger 400,000 additional
Merger Securities.)
7.14 Bridge Financing; Additional Security. PLL shall advance an amount
up to $1,100,000, subject to adjustment pursuant to Section 7.13, and the
additional amounts necessary during the term of this Agreement to fund LTC's
expenses pursuant to Section 2(d) of the Bridge Financing Agreement. Promptly
after a vote of the LTC stockholders approving the Merger, the parties will
enter into the Security Agreement and Assignment of Lease (and, upon the request
of PLL, LTC shall use its best efforts (subject to market, economic and business
conditions) to obtain the express written consent thereto of the lessor
thereunder) to provide additional security to PLL under the Bridge Loan
Financing Agreements.
7.15 Line of Business; Non-Compete. Until the earlier of (i) an IPO or
(ii) two years from the date hereof, each of PLL and LTC agrees that it shall
not engage in any business other than its business as currently
40
39
conducted and as contemplated on the date hereof in accordance with PLL's
business plans, except to the extent as would not be material to PLL and its
Subsidiaries, taken as a whole. In addition, LTC agrees not to compete directly
or indirectly with PLL.
7.16 IPO; Reincorporation. As soon as practicable after a vote of LTC
stockholders approving the Merger, PLL will use all reasonable efforts (subject
to market, economic and business conditions) to consummate an IPO and prior to
Closing, PLL will change its name to "Ilion Technology Corporation" and its
jurisdiction of incorporation to Delaware by means of a domestication in
Delaware pursuant to Section 388 of the Delaware General Corporation Law or
otherwise. Contemporaneously with the consummation of the Merger and the IPO,
PLL shall distribute the Merger Securities to the shareholders of LTC pursuant
to an effective Registration Statement. The LTC shareholders may elect to
include the Merger Securities owned by such shareholders in the IPO and PLL
shall use its best efforts to include such Merger Securities in the IPO. If the
managing underwriter of the IPO advises PLL in writing that in their opinion,
the number of Merger Securities together with the other PLL shares proposed to
be offered, exceeds the number of securities which can be sold in such offering
without having a material adverse effect on the price of such securities (the
"Maximum Primary Number"), PLL shall include in such registration, up to the
Maximum Primary Number, (i) first, the securities that PLL proposes to sell and
(ii) second the Merger Securities and other PLL shares requested to be included
in such registration pro rata among the holders thereof on the basis of the
number of shares of PLL in good faith requested to be registered by such
holders.
7.17 Consulting Services. Upon the approval of this Agreement by the
shareholders of LTC (the "Approval Date") the following provisions shall become
effective from the Approval Date until the Effective Time of the Merger or the
termination of this Agreement pursuant to Section 9.1 (the "Bridge Period"):
(a) PLL shall retain LTC as a consultant during the Bridge Period
and LTC shall provide management and technical services to PLL. Management
services shall include, without limitation: general management services
including executive functions, supervisory support, capital raising support,
corporate strategy development, strategic alliance development and negotiations,
financial planning services; strategic planning services; sales, marketing and
business development services. Technical services shall include, without
limitation, research and development services, engineering, and other technical
assistance and advice related to the development and manufacturing of lithium
polymer rechargeable cells (the "Services"). PLL shall request such Services in
writing and specify:
(i) Nature of work to be performed;
(ii) Date on which assignment is to begin;
(iii) Length of assignment; and
(iv) Individual who will coordinate for PLL.
(b) Each work assignment shall be governed by the terms and
conditions of this Agreement, the terms and conditions of the work assignment,
and by such supplementary written amendments of this Agreement or the work
assignment as may be from time to time executed between the parties.
(c) In the event of a conflict between the terms and conditions of
this Agreement and the terms and conditions of any work assignment, the terms
and conditions of the work assignment shall govern.
(d) The Services shall be performed both at the LTC facilities and
the facilities of PLL as designated by PLL.
41
40
(e) LTC's staff are not nor shall they be deemed to be at any time
during the term of this Agreement to be employees of PLL.
(f) PLL shall have the right to interview any prospective new hire
of LTC and may in its sole discretion reject any such person upon written notice
to LTC
(g) PLL shall be responsible for the technical direction of the
Services performed by LTC's staff. LTC shall be responsible for supervision and
general control of its staff and shall provide only personnel who are and remain
acceptable to PLL to carry out this responsibility.
(h) LTC shall instruct its employees to use the same care and
discretion with respect to PLL's confidential information that they use with
respect to LTC's confidential information.
(i) The work product and New Technology resulting from LTC's
services to PLL hereunder is hereby deemed assigned and shall belong exclusively
to PLL. PLL shall have the exclusive right to obtain copyrights, registrations
and such other proprietary protections on the New Technology as it wishes. LTC
will provide PLL with all assistance reasonably required to protect said rights,
at PLL's expense. "New Technology" means all inventions, patents, know-how,
trade secrets, information, data, manufacturing processes, designs, ideas, and
the like and any new or improved process, method or design change to LTC
technology existing prior to the date of this Agreement and developed by LTC or
PLL on or after the date of this Agreement.
(j) The parties agree to promptly disclose to each other all New
Technology.
(k) Services will include provision by LTC of, and PLL's right to
use, premises at Plymouth Meeting, with the right for PLL to erect additional
signs subject to landlord consent and existing signage.
(l) LTC shall not, directly or indirectly, engage in any conduct
competitive to PLL during the term of the consultancy.
(m) All business opportunities introduced to LTC by PLL (including
opportunities introduced prior to the Approval Date in anticipation of this
consultancy agreement) shall be owned solely by PLL.
(n) If this Agreement shall be terminated other than pursuant to
Section 9.1(a)(iii), PLL shall have the right and option to purchase LTC's pilot
plant and equipment at book value as of the date of this Agreement, by giving
notice of exercise of this option to LTC within 60 days after such termination.
The parties shall use all reasonable efforts to cause the closing of such
purchase to occur as soon as practicable after such notice shall have been
given.
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 Conditions to Obligations of PLL. The obligations of PLL to
consummate the Closing are subject to the satisfaction (or waiver by PLL) of the
following conditions:
8.1.1 Representations, Warranties and Covenants of LTC (a) The
representations and warranties of LTC made in this Agreement shall be true and
correct in all respects (or, if any such representation is not expressly
qualified by "materiality," "Material Adverse Effect" or words of similar
import, then in all material respects) as of the date hereof and as of the
Closing Date, as though made as of the Closing and (b) LTC shall have performed
and complied in all material respects with all terms, agreements and covenants
contained in this Agreement required to be performed or complied with by LTC on
or before the Closing Date.
42
41
8.1.2 No Injunction, etc. No provision of any applicable Law and no
judgment, injunction, order or decree of any Governmental Authority shall be in
effect which shall prohibit the consummation of the Closing.
8.1.3 No Proceedings. No action, suit or proceeding challenging this
Agreement, the Interim Agreements, the Ancillary Closing Agreements or the
transactions contemplated hereby or thereby or seeking to prohibit, alter,
prevent or materially delay the Closing or seeking material damages shall have
been instituted or threatened by any Person.
8.1.4 Ancillary Closing Agreements. Each of the Ancillary Closing
Agreements shall have been executed and delivered by LTC where LTC is a party
thereto.
8.1.5 Third-Party Consents; Governmental Approvals. The Registration
Statement shall have been declared effective by the SEC, the information
contained therein shall be true and correct in all material respects as of the
Closing Date, no stop order shall have been issued or proceedings instituted or
threatened to suspend the effectiveness of the Registration Statement and all
consents, approvals, waivers, subordinations and Permits, if any, disclosed or
required to be disclosed on any Schedule attached hereto or otherwise required
in connection with the consummation of the transactions contemplated by this
Agreement shall have been received including, but not limited to, any consents
from Ben Franklin or relating to the Mitsubishi Materials and the approval by
LTC's and PLL's shareholders of the transactions contemplated by this Agreement
and the Ancillary Closing Agreements.
8.1.6 No Material Adverse Change. Prior to the Closing Date, no event
shall have occurred which, individually or when considered together with all
other matters, has had, or could reasonably be expected to have, a Material
Adverse Effect on LTC, and PLL shall not have discovered any fact or
circumstance (previously unknown to PLL) which, individually or when considered
together with all other matters, has, or could reasonably be expected to have, a
Material Adverse Effect on LTC
8.1.7 Transfer of Intellectual Property Rights. If PLL deems it
necessary, LTC shall have Transferred all of its Intellectual Property Rights to
an entity organized under the laws of the Netherland Antilles or a similar
jurisdiction, for tax purposes.
8.1.8 SEC Filings. LTC's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1999, containing audited financial statements shall have
been filed with the SEC.
8.1.9 Due Diligence. PLL shall have completed to its satisfaction its
due diligence review of LTC and its subsidiaries in connection with the
transactions contemplated by this Agreement, the Interim Agreements and the
Ancillary Closing Agreements.
8.1.10 IPO Closing. The IPO shall have closed contemporaneously with
the Closing of the Merger.
8.1.11 Termination of Options and Employment Agreements. All option
plans, option agreements and employment agreements between LTC or its
subsidiaries and its employees, directors or any other Person (whether oral or
written) shall have been terminated prior to the Closing Date with no further
obligation or liability to LTC or PLL.
8.2 Conditions to Obligations of LTC The obligations of LTC to
consummate the Closing are subject to the satisfaction (or waiver by LTC) of the
following conditions:
8.2.1 Representations, Warranties and Covenants of PLL. The
representations and warranties of PLL made in this Agreement shall be true and
correct in all respects (or, if any such representation is not expressly
qualified by "materiality," "Material Adverse Effect" or words of similar
import, then in all material respects) as of the date hereof and as of Closing,
as though made as of the Closing and (b) PLL shall have performed and
43
42
complied in all material respects with all terms, agreements and covenants
contained in this Agreement required to be performed or complied with by PLL on
or before the Closing Date.
8.2.2 No Injunction, etc. No provision of any applicable Law and no
judgment, injunction, order or decree of any Governmental Authority shall be in
effect which shall prohibit the consummation of the Closing.
8.2.3 No Proceedings. No action, suit or proceeding challenging this
Agreement, the Interim Agreements, the Ancillary Closing Agreements or the
transactions contemplated hereby or thereby or seeking to prohibit, alter,
prevent or materially delay the Closing or seeking material damages shall have
been instituted or threatened by any Person.
8.2.4 Ancillary Closing Agreements. Each of the Ancillary Closing
Agreements shall have been executed and delivered by PLL where PLL is a party
thereto.
8.2.5 Third-Party Consents; Governmental Approvals. The Registration
Statement shall have been declared effective by the SEC, the information
contained therein shall be true and correct in all material respects as of the
Closing Date, no stop order shall have been issued or proceedings instituted or
threatened suspending the effectiveness of the Registration Statement and all
consents, approvals, waivers and Permits, if any, disclosed or required to be
disclosed on any Schedule attached hereto or otherwise required in connection
with the consummation of the transactions contemplated by this Agreement shall
have been received including, but not limited to, any consents relating to the
Mitsubishi Materials and the approval by LTC's and PLL's shareholders of the
transactions contemplated by this Agreement and the Ancillary Closing
Agreements.
8.2.6 No Material Adverse Change. Prior to the Closing Date, no event
shall have occurred which, individually or when considered together with all
other matters, has had, or could reasonably be expected to have, a Material
Adverse Effect on PLL and LTC shall not have discovered any fact or circumstance
(previously unknown to LTC) which, individually or when considered together with
all other matter has, or could reasonably be expected to have, a Material
Adverse Effect on PLL.
8.2.7 IPO Closing. The IPO shall have closed contemporaneously with the
Closing of the Merger.
8.2.8 Fairness Opinion. LTC shall have received from its financial
adviser, Xxxxxxx Associates, an opinion, dated the date of the execution of the
Merger Agreement and the mailing of the Proxy Statement, that the proposed
Merger is fair from a financial point of view to the LTC shareholders, and such
opinion shall not have been withdrawn prior to the Closing Date.
8.2.9 Tax Opinion. LTC shall have received an opinion from Xxxxx
Xxxxxxxx in form and substance reasonably satisfactory to LTC and its counsel to
the effect that the Merger will qualify as a tax free reorganization under the
Code.
ARTICLE IX
TERMINATION; REMEDIES
9.1 Termination.
(a) This Agreement may be terminated and the Merger abandoned at
any time prior to the Closing:
(i) By the mutual written consent of PLL and LTC;
44
43
(ii) By PLL, if there has been a material violation or breach
by LTC of any covenant, representation or warranty contained in this
Agreement and such violation or breach has not been waived by PLL or
cured by LTC within 60 days after written notice thereof from PLL;
(iii) By LTC, if there has been a material violation or breach
by PLL of any covenant, representation or warranty contained in this
Agreement and such violation or breach has not been waived by LTC or
cured by PLL within 60 days after written notice thereof from LTC (a
"PLL Default");
(iv) By PLL or LTC if the transactions contemplated hereby
have not been consummated by February 28, 2002; provided, however, that
(i) neither PLL nor LTC will be entitled to terminate this Agreement
pursuant to this Section 9.1(a)(iv) if such Person's breach of this
Agreement has prevented the consummation of the transactions
contemplated hereby;
(v) By PLL if LTC's shareholders fail to approve the
transactions contemplated herein on or before July 31, 2000, or, in
such circumstances, by LTC if LTC has met its obligations under Section
7.4 with respect to such approval;
(vi) By LTC, if PLL's shareholders fail to approve the
transactions contemplated herein or, in such circumstances, by PLL if
PLL has met its obligations under Section 7.4 with respect to such
approval;
(vii) By PLL, if the condition to Closing set forth in Section
8.1.6 has not been satisfied; or
(viii) By LTC, if the condition to Closing set forth in 8.2.6
has not been satisfied.
(b) In the event that this Agreement is terminated pursuant to Section
9.1(a), all further obligations of each party hereto under this Agreement (other
than pursuant to Sections 7.3(c), 7.17(n) and 10.6 and the Interim Agreements,
which will continue in full force and effect) will terminate without further
liability or obligation of any party to the other party hereunder; provided,
however, that no party will be released from liability hereunder if this
Agreement is terminated and the transactions abandoned by reason of (i) the
failure of such party to have performed its obligations hereunder or (ii) any
misrepresentation made by such party of any matter set forth herein.
9.2 Remedies. Subject to Section 10.1, nothing contained in this
Agreement shall be construed to restrict or limit in any manner the remedies
which the parties might have at law or in equity for any breach of the
covenants, representations or warranties contained in this Agreement. In
addition to such remedies, upon termination of this Agreement, the parties shall
have the remedies set forth in the Interim Agreements.
ARTICLE X
MISCELLANEOUS
10.1 Non-Survival of Representations and Warranties. None of the
representations and warranties in Articles V or VI of this Agreement shall
survive the Effective Time.
10.2 Notices. All notices, requests, claims, demands and other
communications to any party hereunder must be in writing (including facsimile
transmission, which must be confirmed) and will be given to such party at its
address and facsimile number set forth in Schedule 10.2 (which may be changed by
such party upon notice in accordance with this Section 10.2). All such notices,
requests and other communications will be deemed received on the date of receipt
by the recipient thereof if received prior to 5:00 p.m. in the place of receipt
and such day is a Business Day in the place of receipt. Otherwise, any such
notice, request or communication will
45
44
be deemed not to have been received until the next succeeding Business Day in
the place of receipt following the date of receipt.
10.3 Waiver. Any party hereto may, by written notice to the other
parties hereto, (i) extend the time for the performance of any of the
obligations or other actions of the other parties under this Agreement; (ii)
waive any inaccuracies in the representations or warranties of the other parties
contained in this Agreement or in any document delivered pursuant to this
Agreement; (iii) waive compliance with any of the conditions or covenants of the
other parties contained in this Agreement; or (iv) waive or modify performance
of any of the obligations of the other parties under this Agreement. Except as
provided in the preceding sentence, no action taken pursuant to this Agreement,
including, without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any of the representations, warranties, covenants, conditions or
agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach.
10.4 Amendments, Supplements, Etc. At any time before or after the
adoption of the Plan of Merger by the shareholders of PLL or the stockholders of
LTC, this Agreement or the Plan of Merger may be amended or supplemented by
additional agreements, article or certificates, as may be determined by the
parties to be necessary, appropriate or desirable to further the purpose of this
Agreement or the Plan of Merger, to clarify the intention of the parties, or to
add to or to modify the covenants, terms or conditions hereof or thereof. The
parties hereto shall make such technical changes to this Agreement or the Plan
of Merger, not inconsistent with the purpose hereof or thereof, as may be
required to effect or facilitate any governmental approval or acceptance of the
Merger or of this Agreement or of the Plan of Merger or to effect or facilitate
any filing or recording required for the consummation of any of the transactions
contemplated hereby or thereby. This Agreement or the Plan of Merger may not be
amended except by an instrument in writing signed by both of the parties.
10.5 Delegation. To the extent permitted by law and the charters or the
by-laws or others similar constituent documents of the respective parties
hereto, the powers of the Board of Directors of any party under and with respect
to this Agreement may be delegated by such Board of Directors to a Committee of
such Board or by such Board (or by such Committee to the extent any matter has
been delegated to such Committee by the Board) to any officer or officers of
such party, and any notices, consents or other actions referred to in this
Agreement to be given or taken by any party may be given or taken on its behalf
by any officer so authorized, and the other parties hereto may rely thereon.
10.6 Expenses. Subject to the provisions set forth in the Bridge Loan
Financing Agreements, whether or not the transactions contemplated by this
Agreement are consummated, except as otherwise expressly provided for herein,
the parties will pay or cause to be paid all of their own fees and expenses
incident to this Agreement and in preparing to consummate and in consummating
the transactions contemplated hereby, including the fees and expenses of any
broker, finder, financial advisor, investment banker, legal advisor or similar
person engaged by such party.
10.7 Successors and Assigns. The provisions of this Agreement will be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. No party may assign, delegate or otherwise transfer any
of its rights or obligations under this Agreement (including any transfer by way
of merger or operation of law) without the consent of each other party hereto;
provided that PLL may assign its rights and obligations under this Agreement to
a wholly-owned Affiliate of PLL, it being understood that such assignment will
not relieve PLL from its obligations hereunder. Any assignment in violation of
the preceding sentence will be void ab initio.
10.8 No Third-Party Beneficiaries. This Agreement is for the sole
benefit of the parties hereto and their permitted successors and assigns, and
nothing herein expressed or implied will give or be construed to give to
46
45
any Person, other than the parties hereto and such permitted successors and
assigns, any legal or equitable rights hereunder.
10.9 Governing Law. This Agreement will be governed by, and construed
in accordance with, the laws of the State of Delaware, regardless of the Laws
that might otherwise govern under principles of conflict of laws thereof.
10.10 Jurisdiction. Any suit, action or proceeding seeking to enforce
any provision of, or based on any matter arising out of or in connection with,
this Agreement or the transactions contemplated hereby may be brought in the
courts of the State of New York located in the County of New York and the
federal courts of the United States of America located in such State and County.
Each of the parties (i) consents to the exclusive jurisdiction of such courts
(and of the appropriate appellate courts therefrom) in any such suit, action or
proceeding, (ii) irrevocably waives, to the fullest extent permitted by Law, any
objection which it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding which is brought in any such court has been brought in an
inconvenient forum, (iii) will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, and (iv)
will not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any other court. Process in any such suit,
action or proceeding may be served on any party anywhere in the world, whether
within or without the jurisdiction of any such court. Without limiting the
foregoing, each party agrees that service of process on such party as provided
in Section 10.2 will be deemed effective service of process on such party.
10.11 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING,
CLAIM OR COUNTERCLAIM, WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING
OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
10.12 Public Announcements. From the date hereof until the Closing
Date, LTC and PLL will consult with each other before issuing, or permitting any
agent or Affiliate to issue, any press releases or otherwise making or
permitting any agent or Affiliate to make any public statements with respect to
this Agreement and the transactions contemplated hereby.
10.13 Counterparts. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement and
will become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.
10.14 Table of Contents; Headings. The table of contents and headings
in this Agreement are for convenience of reference only and will not control or
affect the meaning or construction of any provisions hereof.
10.15 Entire Agreement. This Agreement (including the Schedules and
Exhibits hereto), the Interim Agreements, the Ancillary Closing Agreements and
the Confidentiality Disclosure Agreement, dated as of August 27, 1999, between
PLL and LTC constitute the entire agreement among the parties with respect to
the subject matter of this Agreement. This Agreement (including the Schedules
and Exhibits hereto), the Interim Agreements and the Ancillary Closing
Agreements supersede all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter hereof of this
Agreement, including but not limited to the Memorandum of Agreement dated
September 29, 1999 between the parties hereto.
10.16 Severability; Injunctive Relief. (a) If any provision of this
Agreement or the application of any such provision to any Person or circumstance
is held invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, the remainder of the provisions of this Agreement (or the
application of such
47
46
provision in other jurisdictions or to Persons or circumstances other than those
to which it was held invalid, illegal or unenforceable) will in no way be
affected, impaired or invalidated, and to the extent permitted by applicable
Law, any such provision will be restricted in applicability or reformed to the
minimum extent required for such provision to be enforceable. This provision
will be interpreted and enforced to give effect to the original written intent
of the parties prior to the determination of such invalidity or
unenforceability.
(b) The parties acknowledge and agree that the provisions of Sections
7.2 and 7.3(c) are reasonably necessary to protect the legitimate interests of
PLL, LTC, their Affiliates and their businesses and that any violation of
Sections 7.2 or 7.3(c) will result in irreparable injury to PLL, LTC and their
Affiliates, the exact amount of which will be difficult to ascertain and the
remedies at Law for which will not be reasonable or adequate compensation to
PLL, LTC and their Affiliates for such a violation. Accordingly, each party
agrees that if it violates any of the provisions of Section 7.2 or 7.3(c), in
addition to any other remedy available at Law or in equity, the other party will
be entitled to seek specific performance or injunctive relief without posting a
bond, or other security, and without the necessity of proving actual damages.
10.17 Certain Interpretive Matters. (a) When a reference is made in
this Agreement to an Article, Section, Exhibit or Schedule, such reference will
be to an Article or Section of, or an Exhibit or Schedule to, this Agreement
unless otherwise indicated. Whenever the words, "include," "includes" or
"including" are used in this Agreement, they will be deemed to be followed by
the words "without limitation." The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. All terms defined
in this Agreement have the defined meanings when used in any certificate or
other document made or delivered pursuant hereto unless otherwise defined
therein. The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such term. All references to "$" or
dollar amounts will be to lawful currency of the United States of America. Any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a Person are also to its permitted successors and assigns. Each of
the Schedules will apply only to the corresponding Section or subsection of this
Agreement. Each accounting term not otherwise defined in this Agreement has the
meaning assigned to it in accordance with GAAP. To the extent the term "day" or
"days" is used, it will mean calendar days unless referred to as a "Business
Day".
(b) No provision of this Agreement will be interpreted in favor of, or
against, any of the parties hereto by reason of the extent to which any such
party or its counsel participated in the drafting thereof or by reason of the
extent to which any such provision is inconsistent with any prior draft hereof
or thereof.
(c) (i) All references to the "knowledge of LTC" or to words of similar
import will be deemed to be references to the actual knowledge of one or more of
the officers or directors of LTC whose names are listed on Schedule 10.17(c)(i),
and will include such knowledge as such officers or directors would have had
after due inquiry of the responsible employees of LTC and its counsel and
accountants.
(ii) All references to the "knowledge of PLL" or to words of
similar import will be deemed to be references to the actual knowledge
of one or more of the officers or directors of PLL whose names are
listed on Schedule 10.17(c)(ii) and, will include such knowledge as
such officers or directors would have had after due inquiry of the
responsible employees of PLL and its counsel and accountants.
[Remainder of page intentionally left blank.]
48
47
The parties hereto have caused this Agreement to be duly executed by
their respective authorized officers as of the day and year first above written.
PACIFIC LITHIUM LIMITED
By: /s/ Xxxxx X. Xxxxxxxxx
Name: Xxxxx X. Xxxxxxxxx
Title: Managing Director
LITHIUM TECHNOLOGY CORPORATION
By: /s/ Xxxxx X. Xxxx
Name: Xxxxx X. Xxxx
Title: Chairman and CEO
49
