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EXHIBIT 10.37
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXXXXXX.XXX, INC.,
ADVANTIX ACQUISITION CORP.
AND
LASERGATE SYSTEMS, INC
DATED AS OF
JUNE 21, 1999
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.1 Definitions..................................................................1
ARTICLE II
THE MERGER
Section 2.1 Effective Time of the Merger.................................................5
Section 2.2 Closing......................................................................5
Section 2.3 Effects of the Merger........................................................5
Section 2.4 Directors and Officers of the Surviving Corporation..........................5
ARTICLE III
EXCHANGE OF SECURITIES
Section 3.1 Exchange of Capital Stock....................................................5
(a) Exchange of LSi Common Stock.................................................7
(b) LSi Preferred Stock..........................................................7
(c) Cancellation of LSi Common Stock.............................................7
Section 3.2 Stock Options and Warrants...................................................5
Section 3.3 Exchange of Certificates.....................................................5
(a) Exchange Agent...............................................................9
(b) Exchange Procedures..........................................................9
(c) No Further Ownership Rights in LSi Common Stock.............................10
(d) Termination of Exchange Fund................................................10
(e) No Liability................................................................10
(f) Dissenting Shares...........................................................10
Section 3.4 Certain Adjustments..........................................................5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF LSI
Section 4.1 Organization.................................................................5
Section 4.2 Capitalization...............................................................5
Section 4.3 Authority....................................................................5
Section 4.4 Consents and Approvals; No Violations........................................5
Section 4.5 SEC Reports and Financial Statements........................................13
Section 4.6 Absence of Certain Changes...................................................5
Section 4.7 No Undisclosed Liabilities..................................................14
Section 4.8 Employee Benefit Plans......................................................14
Section 4.9 Other Benefit Plans.........................................................17
Section 4.10 litigation..................................................................17
Section 4.11 Compliance with Applicable Law...............................................5
Section 4.12 Opinion of Financial Advisor................................................18
Section 4.13 Board Action, Vote Required.................................................18
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Section 4.14 Tax Returns and Audits......................................................5
Section 4.15 Material Contracts.........................................................19
Section 4.16 Insurance..................................................................19
Section 4.17 Subsidiaries...............................................................20
Section 4.18 Real Property..............................................................20
Section 4.19 Environmental and Employee Safety Matters..................................20
Section 4.20 Intellectual Property......................................................21
Section 4.21 Tangible Personal Property.................................................21
Section 4.22 Employees and Independent Contractors......................................22
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF XXXXXXX.XXX AND THE COMPANY
Section 5.1 Organization...............................................................22
Section 5.2 Authority..................................................................22
Section 5.3 Consents and Approvals; No Violations......................................23
Section 5.4 Financial Statements.......................................................23
ARTICLE VI
COVENANTS
Section 6.1 Covenants of LSi...........................................................23
(a) Ordinary Course............................................................23
(b) Dividends; Changes in Stock................................................24
(c) Issuance of Securities.....................................................24
(d) Governing Documents........................................................24
(e) No Solicitation............................................................24
(f) No Acquisitions............................................................25
(g) No Dispositions............................................................25
(h) Indebtedness and Leases....................................................25
(i) Other Actions..............................................................25
(j) Advise of Changes; Filings.................................................25
(k) Additional Matters.........................................................26
(l) Certain Resignations and Appointments......................................26
(m) Required Filings...........................................................26
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Board Approval, Fairness Opinion, Shareholder Approval and
Proxy Statement............................................................27
Section 7.2 Access to Information......................................................28
Section 7.3 Legal Conditions to Merger.................................................28
Section 7.4 Expenses...................................................................29
Section 7.5 Brokers or Finders.........................................................29
Section 7.6 Additional Agreements; Reasonable Best Efforts.............................29
Section 7.7 Public Announcements.......................................................30
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Section 7.8 Indemnification; Directors' and Officers' Liability Insurance..............30
Section 7.9 Confidentiality/Non-Disclosure; Non-Solicitation...........................30
Section 7.10 Loan to LSi................................................................31
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation To Effect the Merger.................31
(a) Shareholder Approval.......................................................31
(b) Other Approvals............................................................31
(c) No Injunctions or Restraints...............................................32
Section 8.2 Conditions to Obligations of Xxxxxxx.xxx...................................32
(a) Representations and Warranties.............................................32
(b) Performance of Obligations of LSi..........................................32
(c) No Amendments to Resolutions...............................................32
(d) Consents Under LSi Obligations.............................................32
Section 8.3 Conditions to Obligations of LSi...........................................32
(a) Representations and Warranties.............................................33
(b) Performance of Obligations of Xxxxxxx.xxx..................................33
ARTICLE IX
TERMINATION AND AMENDMENT
Section 9.1 Termination................................................................33
Section 9.2 Amendment..................................................................35
Section 9.3 Extension; Waiver..........................................................35
Section 9.4 Fees and Expenses Upon Termination.........................................35
(a) Termination Fees...........................................................35
ARTICLE X
MISCELLANEOUS
Section 10.1 Nonsurvival of Representations, Warranties, and Agreements. ..............36
Section 10.2 Notices....................................................................36
Section 10.3 Interpretation.............................................................37
Section 10.4 Counterparts...............................................................37
Section 10.5 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership................................................................37
Section 10.6 Governing Law..............................................................38
Section 10.7 No Remedy in Certain Circumstances.........................................38
Section 10.8 Assignment.................................................................38
EXHIBITS
Exhibit 4.9 Consulting Agreement
Exhibit 7.10(i) Promissory Note
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Exhibit 7.10(ii) Security Agreement
SCHEDULES
Schedule 4.1 Organization
Schedule 4.5 Outstanding Accounts Receivable, Accounts Payable and
other Liabilities
Schedule 4.6 LSi Certain Changes
Schedule 4.7 LSi Undisclosed Liabilities
Schedule 4.8 LSi Employee Benefit Plans
Schedule 4.9 Other LSi Benefit Plans
Schedule 4.10 LSi Litigation
Schedule 4.14 LSi Tax Returns and Audits
Schedule 4.15 LSi Material Contracts
Schedule 4.16 LSi Insurance
Schedule 4.17 LSi Subsidiaries
Schedule 4.20 LSi Intellectual Property
Schedule 4.21 LSi Tangible Personal Property
Schedule 4.22 LSi Employees and Independent Contractors
Schedule 6.1(a) Ordinary Course of Business
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of June 21,
1999, by and among Xxxxxxx.xxx, Inc., a Delaware corporation ("Xxxxxxx.xxx"),
Advantix Acquisition Corp. (the "Company") and Lasergate Systems, Inc., a
Florida corporation ("LSi").
BACKGROUND
The boards of directors of Xxxxxxx.xxx and LSi deem it advisable and in
the best interests of their respective shareholders to consummate, and have
approved, the business combination transaction provided for in this Agreement,
in which the Company will merge with and into LSi and will become a wholly-owned
subsidiary of Xxxxxxx.xxx (the "Merger"). Accordingly, in consideration of the
mutual representations, warranties, covenants, and agreements set forth below,
the parties to this Agreement agree as follows:
TERMS
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. When used in this Agreement, the following
terms shall have the meanings specified below, which apply to both the singular
and the plural forms of such terms:
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, codes,
amounts paid in settlement, or Liabilities.
"Affiliate" means a Person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common
control with, the Person specified.
"Agreement" has the meaning set forth in the preface of this
Agreement.
"Articles of Merger" has the meaning set forth in Section 2.1.
"Cash Consideration" has the meaning set forth in Section 3.1(a).
"Certificates" has the meaning set forth in Section 3.3(b).
"Closing" has the meaning set forth in Section 2.2.
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"Closing Date" has the meaning set forth in Section 2.2.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preface of this
Agreement.
"Confidential Information" means any information concerning the
operations, businesses and affairs of any of the parties to this Agreement, as
the context may require, that is not already generally available to the public.
Without limiting the foregoing, "Confidential Information" shall include
marketing and sales information, customer and account lists and pricing
information, internal forecasts and projections, employee information and
information relating to any confidential process, technique or procedure, any
trade secrets and the names, addresses, or other information relating to any
customer or supplier.
"Constituent Corporations" has the meaning set forth in Section
2.3.
"Current Policy" has the meaning set forth in Section 7.8.
"Dissenting Shares" has the meaning set forth in Section 3.1(a).
"D & O Insurance" has the meaning set forth in Section 7.8.
"Effective Time" has the meaning set forth in Section 2.1.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Agent" has the meaning set forth in Section 3.3(a).
"Exchange Fund" has the meaning set forth in Section 3.3(a).
"FBCA" means the Florida Business Corporation Act, as amended.
"Finder's Fees" has the meaning set forth in Section 7.5.
"Governmental Entity" has the meaning set forth in Section 4.4.
"Indemnified Property" has the meaning set forth in Section 7.8.
"Intellectual Property" means all (a) patents, patent
applications, patent disclosures, and improvements thereto, (b) trademarks,
service marks,
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trade dress, logos, trade names, and corporate names and registrations and
applications for registration thereof, (c) copyrights, whether or not
registered, copyright registrations and applications for copyright registration,
and works of authorship, including operating manuals, (d) computer software,
data, and documentation, (e) trade secrets and confidential business
information, including ideas, formulae, compositions, inventions (whether
patentable or unpatentable and whether or not reduced to practice), know-how,
research and development information, drawings, specifications, designs, plans,
proposals, technical data, financial, marketing, and business data, pricing and
cost information, business and marketing plans, and customer, employee, and
supplier lists and information, (f) other proprietary rights, and (g) copies and
tangible embodiments thereof (in whatever form or medium).
"IRS" means the United States Internal Revenue Service.
"Knowledge" with respect to an entity means to the knowledge of
its executive officers.
"Liabilities" means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"LSi" has the meaning set forth in the preface of this Agreement.
"LSi Benefit Plans" has the meaning set forth in Section 4.8(a).
"LSi Common Stock" means the shares of common stock, par value
$0.03 per share, of LSi.
"LSi ERISA Affiliate" has the meaning set forth in Section
4.8(a).
"LSi Financial Statements" has the meaning set forth in Section
4.5.
"LSi Permits" has the meaning set forth in Section 4.11.
"LSi Preferred Stock" means the shares of Series G preferred
stock of LSi.
"LSi SEC Documents" has the meaning set forth in Section 4.5.
"LSi Shareholders" means the holders of shares of LSi Common
Stock.
"LSi Stock Option Plan" means the 1994 Stock Option Plan of LSi.
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"LSi Subsidiaries" means all of the Subsidiaries of LSi.
"Material Adverse Effect" means such event, change, or effect is
materially adverse to the properties, assets (including intangible assets),
liabilities (including contingent liabilities), or businesses of such entity and
its Subsidiaries taken as a whole.
"Merger" has the meaning set forth in the background section of
this Agreement.
"Most Recent LSi SEC Documents" means the Form 10-KSB for the
period ending December 31, 1997 the Schedule 14A filed January 30, 1998 and the
Form 10-QSB filed on November 16, 1998.
"Option Consideration" has the meaning set forth in Section
3.2(c).
"Options" means any outstanding option validly issued pursuant to
the LSi Stock Option Plan or otherwise.
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Public Warrants" means any outstanding warrants issued pursuant
to the Warrant Agreement between LSi and American Securities Transfer, Inc.,
dated October 25, 1994.
"RBB" means RBB Bank, AG.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shareholders' Meeting" has the meaning set forth in Section
7.1(b).
"Subsidiary" means, with respect to any party, any corporation,
or other organization, whether incorporated or unincorporated, of which (a) such
party or any other Subsidiary of such party is a general partner (excluding
partnerships whose general partnership interests held by such party or any
Subsidiary of such party do not have a majority of the voting interest in such
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partnership) or (b) at least a majority of the securities or other interests
having by their terms ordinary voting power to elect a majority of the board of
directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such party or by any one or more of its Subsidiaries.
"Surviving Corporation" has the meaning set forth in Section 2.3.
"Takeover Proposal" means any tender or exchange offer, proposal
for a merger, consolidation, or other business combination involving LSi or any
of its Subsidiaries taken as a whole, or any proposal or offer to acquire in any
manner the entire or more than a 20% equity interest in, or all of, or more than
20% of, the assets of LSi, one of the or any of its Subsidiaries taken as a
whole; other than the transactions contemplated by this Agreement or
transactions in the Ordinary Cause of Business of LSi.
"Taxes" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto.
"Terminating Xxxxxxx.xxx Breach" has the meaning set forth in
Section 9.1(f).
"Terminating LSi Breach" has the meaning set forth in Section
9.1(g).
"Termination Fee" has the meaning set forth in Section 9.4(a).
"Xxxxxxx.xxx" has the meaning set forth in the preface of this
Agreement.
"Underwriter's Warrants" means any outstanding warrants issued
pursuant to the Underwriter's Warrant Agreement between LSi and Xxxxxxxx Xxxxxx
& Co. Corporation.
"Voting Debt" has the meaning set forth in Section 4.2.
"Warrant Consideration" has the meaning set forth in Section
3.2(d).
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ARTICLE II
THE MERGER
Section 2.1 Effective Time of the Merger. Subject to the provisions of
this Agreement, articles of merger (the "Articles of Merger") shall be duly
prepared, executed, and acknowledged by the Company and LSi as required and will
be delivered to the Secretary of State of Florida for filing, in accordance with
the FBCA as soon as practicable on or after the Closing. The Merger will become
effective at such time as is provided in the Articles of Merger (the "Effective
Time").
Section 2.2 Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") will take place as soon as practicable after the
satisfaction or waiver of all of the conditions to the Merger (the "Closing
Date"), at the offices of Holland & Knight LLP, 000 Xxxxx Xxxxxx Xxxxx, Xxxxx
0000, Xxxxx, Xxxxxxx 00000, unless another date or place is agreed to in writing
by the parties.
Section 2.3 Effects of the Merger.
(a) At and after the Effective Time (i) LSi will continue as the
surviving corporation of the Merger (the "Surviving Corporation"); (ii) the
separate existence of the Company will cease and the Company will be merged with
and into LSi (the Company and LSi are sometimes referred to in this Agreement as
the "Constituent Corporations"); (iii) the Merger will have all of the effects
provided by the Articles of Merger and applicable law; (iv) the articles of
incorporation of the Company in effect immediately before the Effective Time
shall be the articles of incorporation of the Surviving Corporation, with the
exception that the name of the Surviving Corporation shall become Lasergate
Systems, Inc.; and (v) the bylaws of the Company as in effect immediately before
the Effective Time shall be the bylaws of the Surviving Corporation.
(b) At and after the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, immunities, and franchises, of a
public as well as of a private nature, and be subject to all the restrictions,
disabilities, and duties, of each of the Constituent Corporations; and all the
singular rights, privileges, immunities, and franchises of each of the
Constituent Corporations, and all property, real, personal, and mixed, and all
debts due to either of the Constituent Corporations on whatever account,
including subscriptions to shares and all other choses in action, and all and
every other interest of or belonging to or due to each of the Constituent
Corporations, shall be taken and deemed to be transferred to and vested in the
Surviving Corporation, and all property, rights, privileges, powers, and
franchises, and all and every other
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interest shall be thereafter as effectually the property of the Surviving
Corporation as they were of the Constituent Corporations, and the title to any
real estate vested by deed or otherwise in either of the Constituent
Corporations shall not revert or be in any way impaired; but all rights of
creditors and all liens upon any property of either of the Constituent
Corporations shall be preserved unimpaired, and all debts, Liabilities, and
duties of the Constituent Corporations shall attach to the Surviving
Corporation, and may be enforced against it to the same extent as if such debts
and Liabilities had been incurred by it.
Section 2.4 Directors and Officers of the Surviving Corporation. The
board of directors of the Surviving Corporation shall have three members, all of
whom will be chosen by Xxxxxxx.xxx, until their successors shall have been duly
elected or appointed and qualified or until their earlier death, resignation, or
removal in accordance with the Surviving Corporation's articles of incorporation
and bylaws. The officers of LSi at the Effective Time shall, from and after the
Effective Time, be the officers of the Surviving Corporation until their
successors shall have been duly appointed and qualified or until their earlier
death, resignation, or removal in accordance with the Surviving Corporation's
articles of incorporation and bylaws.
ARTICLE III
EXCHANGE OF SECURITIES
Section 3.1 Exchange of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any further action on the part of the
Constituent Corporations or the holders of any shares of capital stock of the
Constituent Corporations:
(a) Exchange of LSi Common Stock. At the Effective Time, the
holders of each issued and outstanding share of LSi Common Stock (other than
shares to be cancelled pursuant to Section 3.1(c) and excluding shares owned by
holders who have properly exercised their rights of appraisal within the meaning
of the FBCA (the "Dissenting Shares")), shall be entitled to receive $0.10 for
each share of LSi Common Stock (the "Cash Consideration").
(b) LSi Preferred Stock. At the Effective Time, the holders of
each issued and outstanding share of LSi Preferred Stock (other than shares to
be cancelled pursuant to Section 3.1(c) and excluding shares owned by holders
who have properly exercised their rights of appraisal within the meaning of the
FBCA) shall remain outstanding.
(c) Cancellation of LSi Common Stock. Each share of LSi Common
Stock and LSi Preferred Stock that is owned by LSi as treasury stock and each
share of LSi Common Stock and LSi Preferred Stock owned by
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Xxxxxxx.xxx, or any other wholly-owned Subsidiary of Xxxxxxx.xxx, shall be
cancelled and retired and shall cease to exist, and no other consideration shall
be delivered in exchange therefor. All shares of LSi Common Stock, when
converted pursuant to this Section 3.1, shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a certificate representing any such shares shall cease to have any rights
with respect thereto, except the right to receive the Cash Consideration in
consideration therefor upon the surrender of such certificate pursuant to
Section 3.3.
Section 3.2 Stock Options and Warrants.
(a) LSi will (i) terminate the LSi Stock Option Plan and any
other option plan immediately before the Effective Time, without prejudice to
the rights of the holders of the outstanding Options issued pursuant to the LSi
Stock Option Plan, (ii) grant no additional Options after the date of this
Agreement under the LSi Option Plan, and (iii) grant no other Options, warrants,
rights, convertible securities or other agreements or commitments pursuant to
which LSi is required to issue any shares of its capital stock or any securities
convertible into or exchangeable for its capital stock.
(b) LSi will, at or before the Closing, cancel and cause the
surrender of all outstanding Options, regardless of whether the Options are then
exercisable.
(c) In settlement of the surrender and cancellation of each
Option, each holder of an Option that is exercisable at the Effective Time will
be entitled to receive an amount in cash (the "Option Consideration"), without
interest, equal to the product of (i)(A) the Cash Consideration, minus (B) the
exercise price per share of the LSi Common Stock under the Option, multiplied by
(ii) the number of shares of the LSi Common Stock covered by such Option;
provided, however, that LSi shall withhold any applicable federal and state
withholding Taxes. All Options shall be surrendered and cancelled at the Closing
and, upon such surrender and cancellation, Xxxxxxx.xxx will instruct the
Exchange Agent (as defined below) to promptly pay the Option Consideration on
the business day following the Closing. On or prior to the Closing, LSi shall
use its commercially reasonable efforts to take all actions (including, without
limitation, commercially reasonable efforts to obtain the necessary consents
from each holder of an Option) required to effect the matters set forth in this
Section 3.2, and to the surrender and cancellation of all of such holder's
Options and those necessary to effect the surrender, cancellation and settlement
of Options pursuant to this Section 3.2. In the event that the Cash
Consideration is less than or equal to the exercise price of the Option, the
holders will receive no Option Consideration or any other Cash Consideration.
The effect of the Merger shall be to terminate all Options prior to the
Effective Time.
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(d) (i) At the Effective Time, the holders of each issued and
outstanding Public Warrant shall be entitled to receive an amount in cash (the
"Warrant Consideration"), without interest, equal to the product of (i)(A) the
Cash Consideration, minus (B) the exercise price of each Public Warrant,
multiplied by (ii) the number of shares of the LSi Common Stock covered by such
Public Warrant; provided, however LSi shall withhold any applicable federal and
state withholding Taxes. In the event that the Cash Consideration is less than
or equal to the exercise price of the Public Warrant, the holders will receive
no Warrant Consideration or any other Cash Consideration. The effect of the
Merger shall be to terminate all Warrants prior to the Effective Time.
(ii) At the Effective Time, each issued and outstanding
Underwriter's Warrant shall remain outstanding.
Section 3.3 Exchange of Certificates.
(a) Exchange Agent. At the Effective Time, Xxxxxxx.xxx shall
deposit with Imperial Bank or such other bank or trust company designated by
Xxxxxxx.xxx and reasonably acceptable to LSi (the "Exchange Agent"), for the
benefit of the holders of shares of LSi Common Stock, Options and Public
Warrants, to the extent applicable, for exchange in accordance with this Article
III, through the Exchange Agent, cash in exchange for outstanding shares of LSi
Common Stock, Options and Public Warrants payable pursuant to Sections 3.1 and
3.2 (the "Exchange Fund"). On or prior to the Closing, Xxxxxxx.xxx, LSi and the
Exchange Agent shall enter into an exchange agreement in form and substance
reasonably acceptable to each of them reflecting the terms of this Article III.
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, Xxxxxxx.xxx will instruct the Exchange Agent to mail to each
holder of record of a certificate or certificates that immediately before the
Effective Time represented outstanding shares of LSi Common Stock (the
"Certificates") whose shares were converted pursuant to Section 3.1 into the
right to receive the Cash Consideration, (i) a letter of transmittal (which
shall specify that delivery shall be effected and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates or affidavits of
loss in lieu thereof), to the Exchange Agent and shall be in such form and have
such other provisions as Xxxxxxx.xxx and LSi may reasonably specify, and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Cash Consideration. Upon surrender of a Certificate for cancellation to
the Exchange Agent together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive the Cash Consideration
in exchange therefor, and the Certificate so surrendered shall immediately be
cancelled. In the event of a transfer of ownership of LSi Common Stock that is
not registered in the transfer records of LSi, the Cash Consideration may be
issued to a transferee if the Certificate representing such LSi Common Stock is
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presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer Taxes have been paid. Until surrendered as contemplated by this Section
3.3, each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive the Cash Consideration upon such surrender
as contemplated by this Section 3.3.
(c) No Further Ownership Rights in LSi Common Stock. The Cash
Consideration issued upon the surrender for exchange of shares of LSi Common
Stock in accordance with the terms of this Agreement shall be deemed to have
been issued in full satisfaction of all rights pertaining to such shares of LSi
Common Stock, and there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the shares of LSi Common
Stock that were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be cancelled and exchanged as provided in this Article
III. All rights of holders of Options and Public Warrants shall be terminated at
the Effective Time, subject to the rights, if any, of the holders thereof to
receive only the Cash Consideration set forth in Section 3.2 of this Agreement,
if any.
(d) Termination of Exchange Fund. Any part of the Exchange Fund
that remains undistributed to the holders of LSi Common Stock, Options or Public
Warrants for one year after the Effective Time shall be delivered to
Xxxxxxx.xxx, upon demand, and any holders of LSi Common Stock, Options or Public
Warrants who by such time have not complied with this Article III shall
thereafter look only to Xxxxxxx.xxx for payment of the Cash Consideration,
Option Consideration and Warrant Consideration.
(e) No Liability. Neither Xxxxxxx.xxx, the Company nor LSi shall
be liable to any holder of shares of LSi Common Stock, Options or Public
Warrants for the Cash Consideration delivered to a public official pursuant to
any applicable abandoned property, escheat, or similar law.
(f) Dissenting Shares. Any Dissenting Shares shall be converted
into the right to receive from the Surviving Corporation such cash consideration
as may be determined to be due with respect to each such Dissenting Share
pursuant to Section 607.1302 of the FBCA; provided, however, that shares of LSi
Common Stock or LSi Preferred Stock that are Dissenting Shares at the Effective
Time of the Merger and are held by a holder who shall, after the Effective Time
of the Merger, withdraw his demand for appraisal or lose his right of appraisal
as provided in the Section 607.1302 of the FBCA, shall be deemed to be
converted, as of the Effective Time of the Merger, into the right to receive the
Cash Consideration (or retain the LSi Preferred Stock, as the case may be) in
accordance with the procedures specified in the other provisions of this Article
III. LSi will give Xxxxxxx.xxx (i)
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prompt notice of any written demands for appraisal, withdrawals of demands for
appraisal and any other instruments served pursuant to Section 607.1302 of the
FBCA received by LSi and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under Section 607.1302 of the
FBCA. LSi will not voluntarily make any payment with respect to any demands for
appraisal and will not, except with the prior written consent of Xxxxxxx.xxx,
settle or offer to settle any such demands. It is understood and agreed that the
obligation to make any payment under Section 607.1302 of the FBCA shall be a
joint obligation of Xxxxxxx.xxx and the Surviving Corporation.
Section 3.4 Certain Adjustments. If between the date of this Agreement
and the Effective Time, the outstanding shares of LSi Common Stock are changed
into a different number of shares by reason of any reorganization,
reclassification, recapitalization, split-up, combination, or exchange of
shares, or any dividend payable in stock or other securities shall be declared
thereon with a record date within such period, the Cash Consideration shall be
adjusted accordingly to provide to the holders of LSi Common Stock, Options or
Public Warrants the same economic effect as contemplated by this Agreement prior
to such reclassification, reorganization, recapitalization, split-up,
combination, exchange, or dividend.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF LSI
LSi represents and warrants to Xxxxxxx.xxx and the Company as follows:
Section 4.1 Organization. Except as set forth in Schedule 4.1, each of
LSi and the LSi Subsidiaries is: (a) a corporation duly organized, validly
existing and with active status or in good standing under the laws of their
respective jurisdictions of incorporation and (b) has all the requisite
corporate power and authority and all necessary governmental approvals to own,
lease, and operate its properties and to carry on its businesses as now being
conducted, except where the failure to be so organized, existing, and in good
standing or to have such power, authority, and governmental approvals would not
have a Material Adverse Effect on LSi. Each of LSi and the LSi Subsidiaries is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased, or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and be
in good standing would not in the aggregate have a Material Adverse Effect on
LSi. Schedule 4.1 lists the dates of all board and shareholder resolutions since
January 1, 1998 and LSi has provided to Xxxxxxx.xxx copies of all resolutions
listed in Schedule 4.1. There are no other resolutions other than those listed
on Schedule 4.1.
Section 4.2 Capitalization. As of the date of this Agreement, the
authorized capital stock of LSi consists of (a) 20,000,000 shares of LSi
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Common Stock of which, as of May 31, 1998, 15,299,393 shares were issued and
outstanding, and (b) 2,000,000 shares of LSi Preferred Stock, of which, as of
May 31, 1998, 5,700 shares were issued and outstanding. As of the date of this
Agreement, 58,333 shares of LSi Common Stock were reserved for issuance upon
exercise of outstanding Options pursuant to the LSi Stock Option Plan, and
1,800,000 shares were reserved for issuance in connection with outstanding
Public Warrants and Underwriter's Warrants. The exercise price of all
outstanding Public Warrants is $5.50 per share and the exercise prices of
outstanding Options range from $.10 to $5.50 per share. All of the outstanding
shares of LSi capital stock are, duly authorized, validly issued, fully paid and
nonassessable, and free of any preemptive rights. No bonds, debentures, notes,
or other indebtedness having the right to vote (or convertible into securities
having the right to vote) ("Voting Debt") of LSi are issued or outstanding.
Except as described above, there are no existing options, warrants, calls,
subscriptions, or other rights, agreements, or commitments of any character
relating to the issued or unissued capital stock or Voting Debt of LSi, or
obligating LSi to issue, transfer, or sell or cause to be issued, transferred,
or sold any shares of capital stock or Voting Debt of, or other equity interests
in, LSi, or securities convertible into or exchangeable for such shares or
equity interests or obligating LSi to grant, extend, or enter into any such
option, warrant, call, subscription or other right, agreement, or commitment. As
of the date of this Agreement, there are no outstanding contractual obligations
of LSi to repurchase, redeem, or otherwise acquire any shares of capital stock
of LSi.
Section 4.3 Authority. LSi has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated by this Agreement (other than, with respect to the
Merger, the approval and adoption of this Agreement by the holders of a majority
of the outstanding shares of LSi Common Stock). The execution, delivery, and
performance of this Agreement and the consummation of the Merger and of the
other transactions contemplated by this Agreement have been duly authorized by
all necessary corporate action on the part of LSi and no other corporate
proceedings on the part of LSi are necessary to authorize this Agreement or to
consummate the transactions so contemplated (other than, with respect to the
Merger, the approval and adoption of this Agreement by the holders of a majority
of the outstanding shares of LSi Common Stock). This Agreement has been duly
executed and delivered by LSi and, assuming this Agreement constitutes a valid
and binding obligation of Xxxxxxx.xxx, constitutes a valid and binding
obligation of LSi enforceable against LSi in accordance with its terms, subject
to bankruptcy, solvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
or relating to general equity principles.
Section 4.4 Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents, and approvals as may be required under,
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and other applicable requirements of the Exchange Act, the Securities Act, the
FBCA, the laws of other states in which LSi is qualified to do or is doing
business and state takeover laws, and foreign laws, neither the execution,
delivery, or performance of this Agreement by LSi nor the consummation by LSi of
the transactions contemplated by this Agreement, nor compliance by LSi with any
of the provisions of this Agreement will (a) conflict with or result in any
breach of any provision of the articles of incorporation or the bylaws of LSi;
(b) require any filing with, or authorization, consent, permit, or approval of,
any court, arbitral tribunal, administrative agency or commission, or other
governmental or other regulatory authority or agency (a "Governmental Entity"),
except where the failure to obtain such authorizations, consents, permits, or
approvals or to make such filings, would not have a Material Adverse Effect on
LSi; (c) result in a violation or breach of, or constitute (with or without
notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation, or acceleration) under, any of the terms,
conditions, or provisions of any note, bond, mortgage, indenture, lease,
license, contract, option, warrant, agreement, or other instrument or obligation
to which LSi is a party or by which it or its properties or assets may be bound;
or (d) violate any order, writ, injunction, decree, statute, rule, or regulation
applicable to LSi, or its properties or assets, except as they relate to (c) or
(d), for violations, breaches, or defaults that would not, individually or in
the aggregate, have a Material Adverse Effect on LSi.
Section 4.5 SEC Reports and Financial Statements. LSi has filed with the
SEC, and has made available to Xxxxxxx.xxx true and complete copies of, all
forms, reports, schedules, statements, and other documents required to be filed
by it since October, 1994, under the Exchange Act or the Securities Act (as such
documents have been amended since the time of their filing, and including any
such documents filed subsequent to the date of this Agreement, collectively, the
"LSi SEC Documents"). The LSi SEC Documents, including without limitation any
financial statements and schedules included in such documents, at the time filed
(the "LSi Financial Statements") (subject to and taking into account any and all
amendments filed thereto, as of, or prior to, the date of this Agreement), (a)
did not 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 in such documents, in light of the circumstances under which they
were made, not misleading; and (b) complied in all material respects with the
applicable requirements of the Exchange Act and the Securities Act, as the case
may be, and the applicable rules and regulations of the SEC. The LSi Financial
Statements included in the LSi SEC Documents (subject to and taking into account
any and all amendments filed as of or prior to the date of this Agreement)
comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect to such documents, have been prepared from and in accordance with the
books and records of LSi in accordance with generally accepted accounting
principles applied on a consistent basis during
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the periods involved (except as may be indicated in the notes to the LSi
Financial Statements or, in the case of the unaudited statements, as permitted
by the accounting rules applicable to reports on Form 10-Q or Form 10-QSB under
the Exchange Act) and fairly present (subject, in the case of the unaudited
statements, to normal, recurring audit adjustments) the consolidated financial
position of LSi as of the dates of the LSi Financial Statements and the
consolidated results of their operations and cash flows for the periods then
ended. Additionally, the December 31, 1998 unaudited balance sheet of LSi
provided to Xxxxxxx.xxx is true and correct in all material respects as of such
date and LSi has set forth in Schedule 4.5 a list of all outstanding accounts
receivable, accounts payable and other liabilities (including accrued expenses)
as of May 31, 1999. In addition, Schedule 4.5 lists all monies owed to each of
Xxxxxxxxxx X. Xxxxxxxx, Xxxxx Xxxxxxxx, Xxxxx X. Xxxxxxx and Xxxx X. Xxxxxxx.
Section 4.6 Absence of Certain Changes. Except as disclosed in the Most
Recent LSi SEC Documents or in Schedule 4.6, there have been no events, changes,
or effects having, individually or in the aggregate, a Material Adverse Effect
on LSi (including, without limitation, any threatened or actual loss of
customers), which would have a Material Adverse Effect on LSi.
Section 4.7 No Undisclosed Liabilities. Except as and to the extent set
forth in the Most Recent LSi SEC Documents and except as set forth in Schedule
4.7, LSi has no material Liabilities that were not reflected on the LSi
Financial Statements (including the notes thereto), except for Liabilities that
arose in the Ordinary Course of Business since December 31, 1998.
Section 4.8 Employee Benefit Plans.
(a) Schedule 4.8 sets forth a complete and accurate list of each
pension, retirement, profit sharing, deferred compensation, stock option, stock
purchase, bonus, medical, welfare, disability, severance or termination pay,
insurance or incentive plan, and each other employee benefit plan, program,
agreement or arrangement, whether funded or unfunded, sponsored, maintained or
contributed to or required to be contributed to by LSi or any of the LSi
Subsidiaries or by any trade or business, whether or not incorporated, that
together with LSi would be deemed a "single employer" within the meaning of
Section 4001 of ERISA (an "LSi ERISA Affiliate"), for the benefit of any
employee or terminated employee of LSi or any LSi ERISA Affiliate (the "LSi
Benefit Plans").
(b) Neither LSi nor any LSi ERISA Affiliate participates
currently or has ever participated in, or is required currently or has ever been
required to contribute to or otherwise participate in any "multi-employer plan,"
as defined in Sections 3(37)(A) and 4001(a)(3) of ERISA and Section 414(f) of
the Code.
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(c) Complete and accurate copies of each of the LSi Benefit Plans
and related trusts have been furnished to Xxxxxxx.xxx. To the extent not yet
furnished to Xxxxxxx.xxx, there shall be furnished to Xxxxxxx.xxx within five
days of the date of this Agreement, with respect to each of the LSi Benefit
Plans, the most recent financial statement and the most recent actuarial report
prepared with respect to any of such LSi Benefit Plans that is funded, the most
recent IRS determination letter, the most recent Summary Plan Description and
the most recent Annual Report together with a statement setting forth any such
material documents which cannot be furnished, and any such documents furnished
and the nature of the documents which cannot be furnished shall be reasonably
satisfactory to Xxxxxxx.xxx.
(d) With respect to each LSi Benefit Plan intended to be
"qualified" within the meaning of Section 401(a) of the Code, a determination
letter from the IRS has been received to the effect that LSi Benefit Plan is
qualified under Section 401 of the Code and any trust maintained pursuant to
such plan is exempt from federal income taxation under Section 501 of the Code,
and nothing has occurred or will occur through the Effective Time (including,
without limitation, the transactions contemplated by this Agreement) which would
cause the loss of such qualification or exemption or the imposition of any
material penalty or tax liability.
(e) All contributions required by each LSi Benefit Plan or by law
with respect to all periods through the Effective Time shall have been made by
such date (or provided for by LSi by adequate reserves on the LSi Financial
Statements) and no excise or other taxes have been incurred or are due and owing
with respect to LSi Benefit Plan because of any failure to comply with the
minimum funding standards of ERISA and the Code.
(f) No "accumulated funding deficiency", as defined in Section
302 of ERISA, has been incurred with respect to any LSi Benefit Plan, whether or
not waived.
(g) No "reportable event" of the type set forth in Section 4043
of ERISA has occurred and is continuing with respect to any LSi Benefit Plan.
(h) There are no material violations of ERISA or the Code with
respect to the filing of applicable reports, documents, and notices regarding
any LSi Benefit Plan with the Secretary of Labor, Secretary of the Treasury, or
the Pension Benefit Guaranty Corporation or furnishing such documents to
participants or beneficiaries, as the case may be.
(i) No claim, lawsuit, arbitration, or other action has been
threatened, asserted, or instituted against any LSi Benefit Plan, any trustee or
fiduciaries of such plan, LSi, or any of the assets of any trust maintained
under any LSi Benefit Plan, which would have a Material Adverse Effect on LSi.
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(j) All amendments required to bring any LSi Benefit Plan into
conformity in all material aspects with any of the applicable provisions of
ERISA and the Code have been duly adopted and filed with the appropriate agency
as required.
(k) Any bonding required with respect to any LSi ERISA Plan in
accordance with applicable provisions of ERISA has been obtained and is in full
force and effect.
(l) Each LSi Benefit Plan has been operated and administered in
accordance with its terms in all material respects and the material terms and
the provisions of ERISA and the Code (including rules and regulations
thereunder) applicable thereto and in practice is tax qualified under Sections
401(a) and 501 of the Code.
(m) All required material information filings for each LSi
Benefit Plan have been timely filed, including, without limitation, all Form
5500 filings.
(n) LSi has not incurred nor reasonably expects to incur, any
material liability to the Pension Benefit Guaranty Corporation.
(o) No "prohibited transaction," as such term is defined in
Section 4975 of the Code and Section 406 of ERISA, has occurred with respect to
any LSi Benefit Plan (and the transactions contemplated by this Agreement will
not constitute or directly or indirectly result in such a "prohibited
transaction") which could subject LSi or its successors, or any officer,
director or employee of any of the foregoing, or any trustee, administrator or
other fiduciary, to a material tax or penalty on prohibited transactions imposed
by either Section 502 of ERISA or Section 4975 of the Code.
(p) No LSi Benefit Plan is under audit by the IRS or the
Department of Labor.
(q) The present value, determined on a termination basis, of all
accrued benefits, vested and unvested, under each LSi Benefit Plan, determined
using the actuarial valuation assumptions and methods (including interest rates)
contained in the most recent actuarial report for such LSi Benefit Plan, does
not exceed the assets thereof allocable to such benefits.
(r) No welfare benefit plan (within the meaning of Section 3(1)
of ERISA) provides for continuing benefits or coverage for any participant or
beneficiary of a participant after such participant's termination of employment,
except as may be required by the Consolidated Omnibus Budget Reconciliation Act
of 1985 or by Sections 601 through 608 of ERISA, or Sections 162 and 4980B of
the Code at the expense of the participant or the beneficiary of the
participant.
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(s) LSi does not currently maintain or contribute to any
severance pay plan.
(t) No individual shall accrue or receive any additional
benefits, service, or accelerated rights to payment of benefits under any LSi
Benefit Plan as a result of the actions contemplated by this Agreement.
(u) LSi has complied with all of the requirements of the
Consolidated Omnibus Budget Reconciliation Act of 1985, Sections 601 through 608
of ERISA, and Sections 162 and 4980B of the Code.
Section 4.9 Other Benefit Plans. Except as: (a) disclosed in the Most
Recent LSi SEC Documents or in Schedule 4.9, and (b) provided for in this
Agreement, as of the date of this Agreement, LSi is not a party to any oral or
written (i) consulting agreement not terminable on 60 days or less notice; (ii)
union or collective bargaining agreement; (iii) agreement with any executive
officer or other key employee of LSi providing for contingent benefits or the
alteration of terms, based upon the occurrence of a transaction involving LSi of
the nature contemplated by this Agreement, or agreement concerning any executive
officer of LSi providing any term of employment or compensation guarantee
extending for a period longer than one year and for the payment of in excess of
$50,000 per year (except for an Employment Agreement with Xxxxxxxxxx X.
Xxxxxxxx, dated March 7, 1995 and consulting agreements with Xxxxx X. Xxxxxxx
and Xxxx X. Xxxxxxx in the form attached to this Agreement as Exhibit 4.9); or
(iv) agreement or plan, including any stock option plan, stock appreciation
right plan, restricted stock plan, or stock purchase plan, providing for
increased benefits or the accelerated vesting of the benefits by the occurrence
of any of the transactions contemplated by this Agreement, or the calculation of
the value of any of the benefits on the basis of any of the transactions
contemplated by this Agreement.
Section 4.10 Litigation. Except as disclosed in the Most Recent LSi SEC
Documents or Schedule 4.10, there is no suit, claim, action, proceeding, or
investigation pending or, to the Knowledge of LSi, threatened against LSi before
any Governmental Entity that, individually or in the aggregate, is likely to
have a Material Adverse Effect on LSi or would prevent LSi from consummating the
transactions contemplated by the Agreement. Except as disclosed in the Most
Recent LSi SEC Documents, LSi is not subject to any outstanding order, writ,
injunction, or decree that, insofar as can be reasonably foreseen, individually
or in the aggregate, in the future would have a Material Adverse Effect on LSi
or would prevent LSi from consummating the transactions contemplated by this
Agreement.
Section 4.11 Compliance with Applicable Law. Each of LSi and the LSi
Subsidiaries hold all permits, licenses, variances, exemptions, orders, and
approvals of all Governmental Entities necessary for the lawful conduct of their
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respective businesses (the "LSi Permits"), except where the failure to hold such
permits, licenses, variances, exemptions, orders, and approvals would not,
individually or in the aggregate, have a Material Adverse Effect on LSi. Each of
LSi and the LSi Subsidiaries is in material compliance with the terms of LSi
Permits except where the failure to hold such permits, licenses, variances,
exemptions, orders, and approvals would not, individually or in the aggregate,
have a Material Adverse Effect on LSi. Except as disclosed in the LSi SEC
Documents filed prior to the date of this Agreement, the businesses of each of
LSi and the LSi Subsidiaries is in material compliance with all laws,
ordinances, and regulations of any Governmental Entity, except where a failure
to comply would not have a Material Adverse Effect on LSi. No investigation or
review by any Governmental Entity with respect to LSi or any of the LSi
Subsidiaries is pending or, to the Knowledge of LSi, threatened, nor has any
Governmental Entity indicated in writing an intention to conduct any
investigation or review, which investigation or review could have a Material
Adverse Effect on LSi.
Section 4.12 Opinion of Financial Advisor. LSi has received the opinion
of Xxxxxxx Xxxxx & Associates, Inc., to the effect that, as of such date, the
consideration to be received in the Merger by the LSi Shareholders is fair to
such shareholders from a financial point of view. Subject to approval by Xxxxxxx
Xxxxx & Associates, Inc., a copy of the opinion will be delivered to Xxxxxxx.xxx
within five days of the date of this Agreement.
Section 4.13 Board Action, Vote Required.
(a) As of the date of this Agreement and subject to the last
sentence of Section 6.1(e), the board of directors of LSi has determined that
the transactions contemplated by this Agreement are in the best interests of LSi
and the LSi Shareholders and has resolved to recommend to such shareholders that
they vote in favor of such transactions.
(b) The affirmative vote of a majority of the LSi Shareholders is
the only vote of the holders of any class or series of LSi's securities
necessary to approve this Agreement and the transactions contemplated by this
Agreement.
Section 4.14 Tax Returns and Audits. Except as set forth in Schedule
4.14, each of LSi and the LSi Subsidiaries has duly filed all federal, state,
local, and foreign Tax returns required to be filed by it, has correctly and
fully reflected the taxable income required to be shown thereon, and to the
Knowledge of LSi has duly paid or made adequate provision for the payment of all
Taxes, including state income and payroll and sales Taxes, that have been
incurred or are due and payable pursuant to such returns or pursuant to any
assessment with respect to Taxes in such jurisdictions, whether or not in
connection with such returns. There are no circumstances or pending
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questions relating to potential Tax Liabilities or claims asserted for Taxes or
assessments of LSi or any of the LSi Subsidiaries that, if adversely determined,
could result in a Tax Liability that would have a Material Adverse Effect on LSi
for any period prior to, including, or beginning after the Closing or on LSi's
present practices in computing or reporting Taxes excluding any claims that
might arise from the transactions contemplated by this Agreement. LSi is not
subject to, and has no Knowledge of, a pending or a threatened (in writing)
local, state or federal Tax audit or inquiry.
Section 4.15 Material Contracts. Schedule 4.15 lists all material
contracts, agreements, licenses and written arrangements to which LSi or any of
the LSi Subsidiaries is a party or by which any of their assets are bound,
required to be filed with the SEC. To the Knowledge of LSi and the LSi
Subsidiaries, no party to any contract listed on the LSi's SEC Documents plans
to terminate any such contract with either entity or the Surviving Corporation,
the termination of which would have a Material Adverse Effect on LSi and the LSi
Subsidiaries taken as a whole or the Surviving Corporation and its Subsidiaries
taken as a whole. With respect to each such written arrangement: (i) the written
arrangement is legal, valid, binding, enforceable against LSi, and in full force
and effect, assuming the other parties thereto have duly executed and delivered
such arrangements and had the necessary power and authority to enter into such
written arrangements when executed and delivered; (ii) the written arrangement
will continue to be legal, valid, binding, and enforceable and in full force and
effect on identical terms following the Closing, subject to bankruptcy,
solvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights or to general
equity principles, and in full force and effect, assuming, if applicable, that
required consents to assignment are obtained; (iii) to LSi's Knowledge, no party
is in material breach or default, and no event has occurred that with notice or
lapse of time or both would constitute a material breach or default, or permit
termination, modification, or acceleration under the written arrangement; and
(iv) to LSi's Knowledge, no party has repudiated any provision of the written
arrangement.
Section 4.16 Insurance. Except as set forth in Schedule 4.16, LSi has
customary insurance coverages for companies of its size in its industry
(including liability, property, business risk, employee health, group life,
director/officer liability, and bond insurance and surety arrangements),
currently in effect, to which LSi is a party, a named insured, or otherwise the
beneficiary of coverage. With respect to each insurance policy currently in
effect: (a) the policy is legal, valid, binding, and enforceable and in full
force and effect, assuming the other parties thereto have duly executed and
delivered such policy and had the necessary power and authority to enter into
such policy when executed and delivered; (b) the policy will continue to be
legal, valid, binding, and enforceable and in full force and effect on identical
terms until the Closing, except to the extent terminated in the Ordinary Course
of
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Business; (c) LSi is not in material breach or default (including with respect
to the payment of premiums or the giving of notices), and no event has occurred
that, with notice or the lapse of time or both, would constitute such a material
breach or default or permit termination, modification, or acceleration under the
policy; and (d) to LSi's Knowledge, no party to the policy has repudiated any
provision thereof. LSi has not received any notification of a reservation of
rights from any of its insurers regarding any open material claim.
Section 4.17 Subsidiaries. Except as set forth in the LSi SEC Documents
or in Schedule 4.17, LSi has no Subsidiaries. LSi owns all of the outstanding
securities of all of its Subsidiaries.
Section 4.18 Real Property. LSi owns no real property. The LSi SEC
Documents list all parcels of real property leased by LSi. With respect to each
parcel of leased real property, the lease or sublease is legal, valid, binding,
and enforceable, subject to bankruptcy, solvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights or to general equity principles, and in full
force and effect. To LSi's knowledge, all leased facilities have received all
approvals of Governmental Entities (including licenses and permits) required in
connection with the occupancy or operation thereof, except for any approval, the
failure of which to obtain, individually or in the aggregate, would not have a
Material Adverse Effect on LSi.
Section 4.19 Environmental and Employee Safety Matters. Except for such
matters that, individually or in the aggregate, are not reasonably likely to
have a Material Adverse Effect on LSi or the LSi Subsidiaries, to the Knowledge
of LSi, each of LSi and the LSi Subsidiaries has complied with all laws
(including rules and regulations thereunder) of all federal, state, local, and
foreign governments (and all agencies thereof) concerning the environment,
public health and safety, and employee health and safety, and no charge,
complaint, action, suit, proceeding, hearing, investigation, claim, demand, or
notice has been filed or commenced against any of them alleging any failure to
comply with any such law or regulation. To the Knowledge of LSi, LSi and the LSi
Subsidiaries have no Liability, and there is no basis for such Liability, under
any law (or rule or regulation thereunder) of any federal, state, local, or
foreign government (or agencies thereof), concerning release or threatened
release of hazardous substances or pollution or protection of the environment.
Section 4.20 Intellectual Property
(a) Except as set forth in Schedule 4.20, to the Knowledge of
LSi, LSi owns or has the right to use all Intellectual Property necessary for
the operation of its business and those of the LSi Subsidiaries as presently
conducted. All such Intellectual Property will be owned or available for use by
the Surviving Corporation on identical terms and conditions immediately on
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and after the Closing, subject to the filing of customary assignments with the
United States Patent and Trademark Office. LSi has taken all reasonable actions
to protect each such item of Intellectual Property.
(b) Except as set forth in Schedule 4.20, to the Knowledge of
LSi, neither LSi nor any of the LSi Subsidiaries has interfered with, infringed
upon, misappropriated, or otherwise violated in any material respect any
Intellectual Property rights of third parties, and, there is no pending charge,
complaint, claim, or notice alleging any such material interference,
infringement, misappropriation, or violation. To the Knowledge of LSi, no third
party has interfered with, infringed upon, misappropriated, or otherwise come
into conflict with any of its Intellectual Property rights.
Section 4.21 Tangible Personal Property
(a) LSi or one of the LSi Subsidiaries owns or leases all
tangible personal property (including, without limitation, furniture, fixtures,
equipment, and supplies) necessary for the conduct in all material respects of
the business of LSi and the LSi Subsidiaries as presently conducted.
(b) Except as set forth in the LSi Financial Statements or in
Schedule 4.21, LSi is the sole lawful and beneficial owner of its tangible
personal property set forth in the LSi Financial Statements as of December 31,
1997 to the date of this Agreement, free and clear of all liens and
encumbrances, except for (i) liens for current Taxes not yet due or payable;
(ii) liens imposed by law and incurred in the Ordinary Course of Business for
obligations not yet due to landlords carriers, warehousemen, laborers and
materialmen; and (iii) liens in respect of pledges or deposits under worker's
compensation laws, and LSi or one of the LSi Subsidiaries has good and
marketable title to all such property subject to such liens and encumbrances.
(c) The tangible personal property of LSi is in serviceable
condition, reasonable wear and tear excepted, and the value attributed to it in
the LSi Financial Statements represents an amount not in excess of the purchase
price, less reasonable depreciation, of such property.
Section 4.22 Employees and Independent Contractors Except as set forth
in Schedule 4.22, to the Knowledge of LSi, no employee or group of employees or
independent contractors plans to terminate employment with either entity or the
Surviving Corporation, which termination would have a Material Adverse Effect on
LSi.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF XXXXXXX.XXX AND THE COMPANY
Xxxxxxx.xxx and the Company represent and warrant to LSi as follows:
Section 5.1 Organization. Each of Xxxxxxx.xxx and the Company is a
corporation duly organized, validly existing, and in good standing under the
laws of its jurisdiction and has all requisite corporate power and authority and
all necessary governmental approvals to own, lease, and operate its properties
and to carry on its business as now being conducted except where the failure to
be so organized, existing, and in good standing or to have such power,
authority, and governmental approvals would not have a Material Adverse Effect
on Xxxxxxx.xxx. Each of Xxxxxxx.xxx and the Company is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the property owned, leased, or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except where
the failure to be so duly qualified or licensed and be in good standing would
not in the aggregate have a Material Adverse Effect on Xxxxxxx.xxx.
Section 5.2 Authority. Each of Xxxxxxx.xxx and the Company has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated by this Agreement. In addition,
Xxxxxxx.xxx currently has the financial resources to consummate the Merger. The
execution, delivery, and performance of this Agreement, and the consummation of
the Merger and the other transactions contemplated by this Agreement, have been
duly authorized by all necessary corporate action on the part of Xxxxxxx.xxx and
the Company and no other corporate proceedings on the part of Xxxxxxx.xxx or the
Company are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly executed and
delivered by Xxxxxxx.xxx and the Company, and, assuming this Agreement
constitutes a valid and binding obligation of LSi, constitutes a valid and
binding obligation of each of Xxxxxxx.xxx and the Company, enforceable against
it in accordance with its terms.
Section 5.3 Consents and Approvals; No Violations. Except for filings,
authorizations, consents, permits, and approvals as may be required under, and
other applicable requirements of the Exchange Act, the Securities Act and the
FBCA, the laws of other states in which Xxxxxxx.xxx or the Company is qualified
to do or is doing business and state takeover laws, neither the execution,
delivery, or performance of this Agreement by Xxxxxxx.xxx or the Company, nor
the consummation by Xxxxxxx.xxx or the Company of the transactions contemplated
by this Agreement, nor compliance by Xxxxxxx.xxx or the Company with any of the
provisions of this Agreement, will (a) conflict with or result in any breach of
any provision of the respective certificates of
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incorporation, or bylaws of Xxxxxxx.xxx or the Company; (b) require any filing
with, or authorization, consent, permit, or approval of, any Governmental Entity
(except where the failure to obtain such permits, authorizations, consents, or
approvals or to make such filings would not have a Material Adverse Effect on
Xxxxxxx.xxx); (c) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation, or acceleration) under, any of the terms, conditions,
or provisions of any note, bond, mortgage, indenture, license, lease, contract,
agreement, or other instrument or obligation to which Xxxxxxx.xxx or the Company
is a party or by which any of them or any of their properties or assets may be
bound; or (d) violate any order, writ, injunction, decree, statute, rule, or
regulation applicable to Xxxxxxx.xxx or the Company, or any of its properties or
assets, except as they relate to (c) and (d), for violations, breaches, or
defaults that would not, individually or in the aggregate, have a Material
Adverse Effect on Xxxxxxx.xxx.
Section 5.4 Financial Statements. Xxxxxxx.xxx has delivered to LSi its
unaudited balance sheet dated December 31, 1998. This balance sheet complies
with generally accepted accounting principles for the period covered thereby and
(a) presents fairly the financial condition of Xxxxxxx.xxx as of such date, and
(b) is correct and complete, and is consistent with the books and records of
Xxxxxxx.xxx.
ARTICLE VI
COVENANTS
Section 6.1 Covenants of LSi. During the period from the date of this
Agreement and continuing until the Effective Time (except as expressly
contemplated or permitted by this Agreement, or to the extent that Xxxxxxx.xxx
shall otherwise consent in writing):
(a) Ordinary Course. Except as set forth in Schedule 6.1(a), each
of LSi and the LSi Subsidiaries shall carry on its business in the usual,
regular, and ordinary course in substantially the same manner as conducted prior
to the date of this Agreement and shall use all commercially reasonable efforts
to preserve intact its present business organizations, keep available the
services of its present officers and employees, and preserve its relationships
with customers and others having business dealings with them to the end that
their goodwill and ongoing business shall not be impaired in any material
respect at the Effective Time. Provided, however, all payments or commitments
requiring future payments in excess of an aggregate of $5,000 in any week shall
be approved in writing by the President of LSi. LSi shall not commence any
proceedings under any federal or state bankruptcy, insolvency, or related law.
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(b) Dividends; Changes in Stock. LSi shall not, nor shall LSi
propose to, (i) declare or pay any dividends on or make other distributions in
respect of any of its capital stock except for dividends by a wholly-owned
Subsidiary; (ii) split, combine, or reclassify any of its capital stock; or
issue or authorize or propose the issuance of any other securities in respect
of, in lieu of, or in substitution for shares of its capital stock; or (iii)
repurchase, redeem, or otherwise acquire any shares of its capital stock.
(c) Issuance of Securities. LSi shall not, issue, deliver, or
sell, or authorize or propose the issuance, delivery, or sale of, any shares of
its capital stock of any class, any Voting Debt, or any securities convertible
into, or any rights, warrants, calls, subscriptions, or options to acquire, any
such shares, Voting Debt or convertible securities, other than the issuance of
shares of LSi Common Stock, upon the exercise of Options issued, awarded, or
granted or made prior to the date of this Agreement pursuant to the LSi Stock
Option Plan, except for the conversion of the LSi Preferred Stock.
(d) Governing Documents. LSi shall not amend or propose to amend
its articles of incorporation or its bylaws, except as contemplated by this
Agreement. LSi shall deliver to Xxxxxxx.xxx complete and accurate copies of
resolutions of the board of directors of LSi approving the consummation of the
Merger and the transactions contemplated by this Agreement prior to the
execution of this Agreement.
(e) No Solicitation. LSi shall not, nor shall it authorize or
permit any of its officers, directors, or employees or any investment banker,
financial advisor, attorney, accountant, or other representative retained by it
or any of the LSi Subsidiaries to, solicit, initiate, or encourage (including by
way of furnishing information), or take any other action to facilitate, any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Takeover Proposal, or agree to or endorse any Takeover
Proposal. LSi shall immediately advise Xxxxxxx.xxx orally and as soon as
practicable in writing of any such inquiries or proposals, including all
relevant details. Notwithstanding the foregoing, LSi shall not be obligated to
take any of the actions set forth in this Section 6.1(e) or otherwise in this
Agreement (other than as set forth in the immediately preceding sentence or
otherwise in this Agreement), or refrain from taking any of the actions set
forth in this Section 6.1(e) or otherwise in this Agreement, if the board of
directors of LSi, acting upon advice of counsel determines that such actions or
inactions would be contrary to their legal or fiduciary obligations as directors
of LSi and Xxxxxxx.xxx is notified promptly of such action.
(f) No Acquisitions. LSi shall not, acquire or agree to acquire
by merging or consolidating with, or by purchasing any equity interest in or
substantial portion of the assets of, or by any manner, any business or any
corporation, partnership, association, or other business organization or
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division thereof, or otherwise acquire or agree to acquire any assets not in the
Ordinary Course of Business. Without limiting the generality of the foregoing,
LSi shall not, nor shall it permit any of its Subsidiaries to (i) make any
capital expenditures in excess of $5,000 unless such expenditure shall have been
approved by the President of LSi; (ii) make any venture capital investment; or
(iii) open any additional facilities.
(g) No Dispositions. Other than (i) as may be required by law to
consummate the transactions contemplated by this Agreement or (ii) in the
Ordinary Course of Business, neither LSi nor any of the LSi Subsidiaries shall
sell, lease, license, encumber, or otherwise dispose of, or agree to sell,
lease, license, encumber, or otherwise dispose of, any of its material assets.
(h) Indebtedness and Leases. Except in the Ordinary Course of
Business, neither LSi nor any of the LSi Subsidiaries shall incur any material
indebtedness for borrowed money, guarantee any such indebtedness, issue or sell
any debt securities, warrants, or rights to acquire any debt securities of
itself or any of its Subsidiaries, guarantee any debt securities of others, or
prepay any material indebtedness. LSi shall not, nor shall it permit any of the
LSi Subsidiaries to, enter into any leases other than in the Ordinary Course of
Business.
(i) Other Actions. Except in the Ordinary Course of Business,
notwithstanding the fact that such action might otherwise be permitted pursuant
to this Section 6.1, but subject to the last sentence of Section 6.1(e), LSi
shall not, nor shall LSi permit any of the LSi Subsidiaries to, take any action
that would result in any of its representations and warranties set forth in this
Agreement being untrue in any material respect, or in any of the conditions to
the Merger set forth in Article VII not being satisfied.
(j) Advise of Changes; Filings. Subject to applicable law, LSi
shall confer with reasonable frequency with Xxxxxxx.xxx, report on operational
matters, and promptly advise Xxxxxxx.xxx orally and in writing of any change or
event having, or which, insofar as can reasonably be foreseen, would have, a
Material Adverse Effect on LSi. Each party shall promptly provide the other (or
its counsel) copies of all filings made by such party with any federal, state,
or foreign Governmental Entity in connection with this Agreement and the
transactions contemplated by this Agreement and all SEC and other material
filings made by such party under any federal, state or foreign governmental
entity.
(k) Additional Matters. The period from the date of this
Agreement and continuing until the Effective Time, LSi agrees that it will not,
without the prior written consent of Xxxxxxx.xxx which will not be unreasonably
withheld or delayed, (i) enter into, adopt, amend (except as may be required by
law), or terminate any LSi Benefit Plan, or any agreement,
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arrangement, plan, or policy between LSi and one or more of its directors or
officers; (ii) increase in any manner the compensation or fringe benefits of any
director, officer, or employee; (iii) pay any benefit not required by any plan
or arrangement as in effect as of the date of this Agreement (including, without
limitation, the granting of stock options, stock appreciation rights, restricted
stock, or performance units); or (iv) enter into any contract, agreement,
commitment, or arrangement to do any of the foregoing other than any amendments
required to be made to any LSi Benefit Plan in order to maintain LSi's qualified
status under applicable law.
(l) Certain Resignations and Appointments. Immediately after the
execution of this Agreement, (i) individuals designated by RBB shall be
appointed to fill vacancies on the board of directors of LSi, and immediately
thereafter, Xxxxxxxxxx X. Xxxxxxxx, Xxxxx X. Xxxxxxx and Xxxx X. Xxxxxxx shall
resign from the board of directors; (ii) LSi shall accept the election of
Xxxxxxxxxx X. Xxxxxxxx to terminate her employment pursuant to her Employment
Agreement; (iii) LSi shall receive and accept the resignations of Xxxxxx X.
Xxxxx as Secretary of LSi, Xxxxx X. Xxxxx, Xx. as Assistant Secretary of LSi and
Xxxxx Xxxxxxxx as an employee and officer of LSi; and (iv) the LSi board of
directors shall appoint Xxxxx X. Xxxxx as President, Chief Executive Officer and
Secretary of LSi.
(m) Required Filings. LSi shall make all required periodic
filings with the SEC as soon as practicable but no later than the Closing Date,
including without limitation the Form 10-KSB for the period ending December 31,
1998, the Form 10-QSB for the period ending March 31, 1999 and all other
required filings. None of these filings will contain any untrue statement of a
material fact or omit any material fact required to be stated therein or
necessary in order to make the statements in such documents, in light of the
circumstances under which they were made, not misleading and shall comply in all
material respects with the applicable requirements of the Exchange Act and the
Securities Act, as the case may be, and the applicable rules and regulations of
the SEC.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Board Approval, Fairness Opinion, Shareholder Approval and
Proxy Statement.
(a) LSi approves of and consents to the Merger and represents
that the board of directors of LSi, at a meeting duly called and held, duly
adopted resolutions approving this Agreement and the Merger, determining that
the terms of the Merger are fair to, and in the best interest of the LSi
Shareholders and recommending that the LSi Shareholders accept the Merger
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and approve and adopt this Agreement and the Merger. LSi represents that its
board of directors has received the opinion of Xxxxxxx Xxxxx & Associates, Inc.
dated as of June 21, 1999, that the proposed Cash Consideration to be received
by the LSi Shareholders pursuant to the Merger is fair to such holders from a
financial point of view, and a complete and correct signed copy of such opinion
will be delivered by LSi to Xxxxxxx.xxx within five days of the date of this
Agreement.
(b) LSi will, at Xxxxxxx.xxx's request, as soon as practicable
following execution of this Agreement, duly call, give notice of, and convene
and hold a meeting of the LSi Shareholders (the "Shareholders' Meeting") for the
purpose of obtaining the requisite approval of the LSi Shareholders with respect
to the Merger. LSi will, through its board of directors, recommend to the LSi
Shareholders that they vote in favor of, or otherwise consent to, the approval
of this Agreement, the Merger and the transactions contemplated by this
Agreement subject to Section 6.1(e). Without limiting the generality of the
foregoing, LSi agrees that its obligations pursuant to the first sentence of
this Section 7.1(b) shall not be affected by (i) the commencement, public
proposal, public disclosure or communication to LSi of any Takeover Proposal or
(ii) the withdrawal or modification by the board of directors of LSi of its
approval or recommendation of this Agreement or the Merger.
(c) LSi will, at Xxxxxxx.xxx's request, as soon as reasonably
practicable following execution of this Agreement prepare and file a preliminary
proxy statement with the SEC and will use its commercially reasonable efforts to
respond to any comments of the SEC or its staff and to cause the proxy statement
to be mailed to the LSi Shareholders as promptly as practicable after responding
to all such comments to the satisfaction of the staff of the SEC. Xxxxxxx.xxx
and its counsel shall be given reasonable opportunity to review and comment upon
the proxy statement prior to its filing with the SEC or dissemination to the LSi
Shareholders. LSi will notify Xxxxxxx.xxx promptly of the receipt of any written
comments from the SEC or its staff and of any requests by the SEC or its staff
for amendments or supplements to the proxy statement or for additional
information and will supply Xxxxxxx.xxx with copies of all correspondence
between LSi or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the proxy statement or the Merger.
Each of LSi and Xxxxxxx.xxx agrees promptly to correct any information provided
by it for use in the proxy statement if and to the extent that such information
shall have become false or misleading in any material respect, and LSi further
agrees to take all steps necessary to amend or supplement the proxy statement
and to cause the proxy statement as so amended or supplemented to be filed with
the SEC and disseminated to the LSi Shareholders, in each case as and to the
extent required by applicable federal securities laws. If at any time prior to
the Shareholders' Meeting there shall occur any event that should be set forth
in an amendment or supplement to the proxy statement, LSi will promptly prepare
and mail to the LSi
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Shareholders such an amendment or supplement. LSi will not mail any proxy
statement, or any amendment or supplement thereto, to which Xxxxxxx.xxx
reasonably objects.
(d) Xxxxxxx.xxx agrees to cause all shares of LSi Common Stock
owned by Xxxxxxx.xxx or any Subsidiary of Xxxxxxx.xxx to be voted in favor of
the approval of the Merger. Xxxxxxx.xxx has a contract with RBB whereby RBB has
agreed to vote all of its shares of LSi Common Stock in favor of the Merger.
Section 7.2 Access to Information. Subject to Section 7.9, upon
reasonable notice and during normal business hours and applicable law, LSi shall
afford to the officers, employees, accountants, counsel, and all other
authorized representatives of Xxxxxxx.xxx, reasonable access during the period
before the Effective Time, to all its properties, books, contracts, commitments,
records, management employees, accountants, and counsel. During the period
before the Effective Time, each of LSi and Xxxxxxx.xxx shall (and shall cause
each of the LSi Subsidiaries to) furnish promptly to Xxxxxxx.xxx a copy of each
report, schedule, registration statement, and other document filed or received
by it during such period pursuant to the requirements of federal securities
laws. LSi shall furnish promptly to Xxxxxxx.xxx all other information concerning
its business, properties, and personnel, and access for discussions with such of
its management and other personnel, as Xxxxxxx.xxx may reasonably request.
Section 7.3 Legal Conditions to Merger. LSi, Xxxxxxx.xxx and the Company
each will take all reasonable actions necessary to comply promptly with all
legal requirements that may be imposed on itself with respect to the Merger
(which actions shall include furnishing all information required in connection
with approvals of or filings with any other Governmental Entity), and will
promptly cooperate with and furnish information to each other in connection with
any such requirements imposed upon any of them or any of their Subsidiaries in
connection with the Merger. LSi, Xxxxxxx.xxx and the Company will each cause
their Subsidiaries to, take all reasonable actions necessary to obtain (and will
cooperate with each other in obtaining) any consent, authorization, order, or
approval of, or any exemption by, any Governmental Entity or other public or
private third party, required to be obtained or made by Xxxxxxx.xxx, the Company
LSi, or any of their Subsidiaries in connection with the Merger or the taking of
any action contemplated thereby or by this Agreement.
Section 7.4 Expenses. Except as set forth in Section 9.4, whether or not
the Merger is consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated by this Agreement shall be paid
by the party incurring such expenses, and, in connection therewith, each of
Xxxxxxx.xxx and LSi shall pay, with its own funds and not
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with funds provided by the other party, any and all property or transfer taxes
imposed on such party.
Section 7.5 Brokers or Finders. Each of Xxxxxxx.xxx and LSi represents,
as to itself, its Subsidiaries, and its Affiliates, that no agent, broker,
investment bankers, financial advisor, or other firm or Person is or will be
entitled to any brokers' or finder's fee or any other commission or similar fee
("Finder's Fees") in connection with any of the transactions contemplated by
this Agreement, except Xxxxxxx Xxxxx & Associates, Inc., whose fees and expenses
will be paid by LSi at the Closing in accordance with LSi's agreement with such
firm (copies of which have been delivered by LSi to Xxxxxxx.xxx prior to the
date of this Agreement) subject to the provisions of Section 9.4 of this
Agreement, and each of Xxxxxxx.xxx and LSi agree to indemnify and hold the other
harmless from and against any and all claims, Liabilities, or obligations with
respect to any other Finder's Fees asserted by any Person on the basis of any
act or statement alleged to have been made by such party or its Affiliate.
Section 7.6 Additional Agreements; Reasonable Best Efforts. Subject to
the terms and conditions of this Agreement, including, without limitation, the
last sentence of Section 6.1(e) each of the parties agrees to use its reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause to
be done, all things necessary, proper, or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, subject to the appropriate vote of the LSi Shareholders
described in Section 7.1(a), including cooperating fully with the other parties.
Without limiting the generality of the foregoing sentence, the parties shall
provide all information and shall use their reasonable best efforts to obtain
regulatory approvals or clearances to consummate the transactions contemplated
by this Agreement. If at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement or to vest
the Surviving Corporation with full title to all properties, assets, rights,
approvals, immunities, and franchises of either of the Constituent Corporations,
the proper officers and directors of each party to this Agreement, in such
capacity, shall use reasonable best efforts to take all such necessary action.
Section 7.7 Public Announcements. Subject to applicable federal and
state law, rules and regulations or on the advice of counsel, each of LSi and
Xxxxxxx.xxx shall use its reasonable best efforts to develop a joint
communications plan and each party shall use its reasonable best efforts to
ensure that all press releases and other public statements with respect to the
transactions contemplated by this Agreement shall be consistent with such joint
communications plan or, to the extent inconsistent therewith, shall have
received the prior written approval of the other.
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Section 7.8 Indemnification; Directors' and Officers' Liability
Insurance. All rights to indemnification and/or reimbursement existing in favor
of any present or former director, officer, or employee of LSi (an "Indemnified
Party") as provided in (a) LSi's articles of incorporation or bylaws; (b) the
certificate of incorporation, bylaws, or similar organizational documents of any
of the LSi Subsidiaries; and (c) such related contracts as each is in effect
prior to the date of this Agreement, shall survive the Merger with respect to
matters occurring at or prior to the Effective Time including without
limitation, those with respect to this Agreement. Xxxxxxx.xxx agrees that
pursuant to the terms of the Merger such obligations and Liabilities with
respect to indemnification and reimbursement of the Indemnified Parties shall
become joint and several obligations and Liabilities of the Surviving
Corporation and Xxxxxxx.xxx, and the Surviving Corporation shall as of the
Effective Time assume entirely those obligations and Liabilities. For a period
of six years after the Closing, the Surviving Corporation and Xxxxxxx.xxx shall
cause to be maintained in effect, at no expense to the insured thereunder, the
current policy or policies (hereinafter, the "Current Policy") of directors' and
officers' liability insurance ("D&O Insurance") maintained by LSi for the
benefit of the Indemnified Parties; however, (i) the Surviving Corporation shall
have the right to substitute therefor a policy or policies that provide the same
or greater limits of liability as the Current Policy and that provide, the same
or greater coverage in all material respects (including, without limitation,
extent and scope) as the Current Policy; and (ii) the D&O Insurance to be
maintained during such six-year period shall cover only acts of the insured that
occur on or prior to the Effective Time. In addition, the Surviving Corporation
and Xxxxxxx.xxx specifically agree to indemnify the current directors of LSi
from and against the entirety of any Adverse Consequences that the LSi directors
may suffer that directly relate to claims made by or relating to Xxxxxxx
International LLC if this Merger is consummated.
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Section 7.9 Confidentiality/Non-Disclosure; Non-Solicitation. Except for
such disclosure to the parties' professional advisors as may be necessary or
appropriate and such disclosure as may be required by court order or by any law
or regulation to which a party is subject, the parties to this Agreement agree
that they shall maintain in confidence the existence and terms of this Agreement
and any of the terms and conditions of any of the transactions contemplated by
this Agreement and shall refrain from using any Confidential Information, except
in connection with their own (without disclosure to others) evaluation whether
to enter into this Agreement, and no party will issue any press release or
public statement concerning this Agreement or any of the transactions
contemplated by this Agreement without the prior written consent of the other
parties; provided, however, that LSi may make such disclosure as is required by
law or on the advice of counsel. Upon the termination of this Agreement, each of
the parties shall promptly deliver to the other parties all tangible embodiments
(and all copies) of the Confidential Information which are in its possession.
Section 7.10 Loan to LSi. Promptly after the execution of this
Agreement, LSi will execute and deliver to Xxxxxxx.xxx a secured promissory note
and security agreement in the respective forms attached to this Agreement as
Exhibit 7.10(i) and 7.10(ii), respectively, whereupon Xxxxxxx.xxx will loan
$600,000 to LSi, such funds to be applied by LSi as follows: (a) $325,000 to the
payment of certain outstanding accounts payable which by their terms are due and
payable; (b) up to $100,000 (plus accrued interest) to the repayment of loans
made by RBB during June 1999 to LSi; and (c) the remainder to the immediate
working capital needs of LSi. Thereafter and from time to time until the
Closing, Xxxxxxx.xxx will loan LSi an aggregate of approximately $400,000 in
installments as needed (which may or may not be equal in amount) to be used to
fund the ongoing working capital needs of LSi (consistent with past practices);
provided, however, that if the ongoing capital needs of LSi exceed $400,000
Xxxxxxx.xxx shall consider but shall have no obligation to make any additional
loans to LSi.
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation To Effect the Merger.
The respective obligation of each party to effect the Merger shall be subject to
the satisfaction prior to the Closing of the following conditions:
(a) Shareholder Approval. This Agreement shall have been approved
and adopted by the affirmative vote of the LSi Shareholders at the Shareholders'
Meeting or by written consent.
(b) Other Approvals. Other than the filing provided for by
Section 2.1 and any filing pursuant to state takeover laws permitted to be filed
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after the Effective Time, all authorizations, consents, orders, or approvals of,
or declarations or filings with, or expirations of waiting periods imposed by,
any Governmental Entity, the failure to obtain of which would have a Material
Adverse Effect on Xxxxxxx.xxx and its Subsidiaries or the Surviving Corporation,
in each case taken as a whole, shall have been filed, occurred, or been
obtained.
(c) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction, or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect.
Section 8.2 Conditions to Obligations of Xxxxxxx.xxx. The obligations of
Xxxxxxx.xxx to effect the Merger are subject to the satisfaction of the
following conditions, unless waived by Xxxxxxx.xxx:
(a) Representations and Warranties. The representations and
warranties of LSi set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing as though made on and as of the Closing, except as otherwise
contemplated by this Agreement; provided, however, if any such representation or
warranty is already qualified by materiality, for purposes of determining
whether this condition has been satisfied, such representation or warranty must
be true and correct in all respects without regard to materiality. Xxxxxxx.xxx
shall have received a certificate signed on behalf of LSi by an executive
officer of LSi to such effect.
(b) Performance of Obligations of LSi. LSi shall have performed
in all material respects all obligations, agreements and covenants required to
be performed by it under this Agreement at or prior to the Closing, and
Xxxxxxx.xxx shall have received a certificate signed on behalf of LSi by an
executive officer of LSi to such effect.
(c) No Amendments to Resolutions. Neither the board of directors
of LSi nor any committee thereof shall have amended, modified, rescinded, or
repealed the resolutions adopted by such board on June 18, 1999 and shall not
have adopted any other resolutions in connection with this Agreement and the
transactions contemplated by this Agreement inconsistent with such resolutions.
(d) Consents Under LSi Obligations. LSi shall have obtained the
consent or approval of any Person whose consent or approval shall be required
under any agreement or instrument in order to permit the consummation of the
transactions contemplated by this Agreement except those which the failure to
obtain would not, individually or in the aggregate, have a Material
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Adverse Effect on Xxxxxxx.xxx and its Subsidiaries taken as a whole, with or
without including its ownership of LSi after the Merger, or LSi.
Section 8.3 Conditions to Obligations of LSi. The obligation of LSi to
effect the Merger is subject to the satisfaction of the following conditions,
unless waived by LSi:
(a) Representations and Warranties. The representations and
warranties of Xxxxxxx.xxx set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date as of the
Closing as though made on and as of the Closing and except as otherwise
contemplated by this Agreement); provided, however, if any such representation
or warranty is already qualified by materiality, for purposes of determining
whether this condition has been satisfied, such representation or warranty must
be true and correct in all respects without regard to materiality. LSi shall
have received a certificate signed on behalf of Xxxxxxx.xxx by an executive
officer of Xxxxxxx.xxx to such effect.
(b) Performance of Obligations of Xxxxxxx.xxx. Xxxxxxx.xxx shall
have performed in all material respects all obligations, agreements and
covenants required to be performed by them under this Agreement, including its
funding commitments, at or prior to the Closing, and LSi shall have received a
certificate signed on behalf of Xxxxxxx.xxx by an executive officer of
Xxxxxxx.xxx to such effect.
ARTICLE IX
TERMINATION AND AMENDMENT
Section 9.1 Termination. This Agreement may be terminated and the Merger
may be abandoned at any time before the Effective Time, notwithstanding any
requisite approval and adoption of this Agreement and the transactions
contemplated by this Agreement by the LSi Shareholders:
(a) by written consent duly authorized by the boards of directors
of both of Xxxxxxx.xxx and LSi:
(b) by Xxxxxxx.xxx or LSi if either (i) the Effective Time shall
not have occurred on or before October 31, 1999; however, the right to terminate
this Agreement under this Section 9.1(b)(i) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the cause
of, or resulted in, the failure of the Effective Time to occur on or before such
date unless such failure has been outside the control of such party using its
reasonable efforts; or (ii) there shall be any statute, law, ordinance, rule, or
regulation that makes consummation of the Merger illegal or otherwise
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prohibited or if any court of competent jurisdiction or Governmental Entity
shall have issued an order, decree, or ruling or taken any other action
restraining, enjoining, or otherwise prohibiting the Merger and such order,
decree, ruling, or other action shall have become final and nonappealable,
except such as have been sought by or on behalf of Xxxxxxx.xxx;
(c) by Xxxxxxx.xxx, if (i) the board of directors of LSi
withdraws, modifies, or changes its recommendation of this Agreement or the
Merger, or shall have resolved to do any of the foregoing or the board of
directors of LSi shall have recommended to the LSi Shareholders any Takeover
Proposal or resolved to do so; or (ii) a tender offer or exchange offer for 20%
or more of the outstanding shares of capital stock of LSi is commenced, and the
board of directors of LSi, within ten business days after such tender offer or
exchange offer is so commenced, either fails to recommend against acceptance of
such tender offer or exchange offer by the LSi Shareholders or takes no position
with respect to the acceptance of such tender offer or exchange offer by the LSi
Shareholders;
(d) by LSi in order to accept an offer for, or to enter into a
definitive agreement for a Takeover Proposal, upon one business day's prior
written notice to Xxxxxxx.xxx setting forth, in reasonable detail, the identity
of the Person proposing the Takeover Proposal and the terms and conditions of
such Takeover Proposal, if, as a result of an unsolicited proposal for such
Takeover Proposal, the board of directors of LSi, after advice of LSi's
independent counsel (who may be LSi's regularly engaged independent legal
counsel), determines in good faith that their legal or fiduciary duties under
applicable law require that such Takeover Proposal be accepted; provided,
however, that any termination of this Agreement by LSi pursuant to this Section
9.1(d) shall not be effective until LSi has made payment of the full fee
required by Section 9.4(a) of this Agreement;
(e) by either Xxxxxxx.xxx or LSi, if the Shareholders' Meeting of
LSi shall have been held and the LSi Shareholders shall have failed to adopt
this Agreement at such meeting (including any adjournment or postponement
thereof);
(f) by LSi, upon a breach of any representation, warranty, or
agreement set forth in this Agreement such that the condition set forth in
Section 8.3(a) would not be satisfied (a "Terminating Xxxxxxx.xxx Breach");
however, if such Terminating Xxxxxxx.xxx Breach is curable by Xxxxxxx.xxx
through the exercise of its commercially reasonable efforts and Xxxxxxx.xxx
continues to exercise its commercially reasonable efforts, LSi may not terminate
this Agreement under this Section 9.1(f) for a period of 30 days after LSi's
delivery to Xxxxxxx.xxx of written notice setting forth in reasonable detail the
circumstances giving rise to such Terminating Xxxxxxx.xxx Breach; or
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(g) by Xxxxxxx.xxx, upon a breach of any representation,
warranty, or agreement set forth in this Agreement such that the condition set
forth in Section 8.2(a) would not be satisfied (a "Terminating LSi Breach");
however, if such Terminating LSi Breach is curable by LSi through the exercise
of its commercially reasonable efforts and LSi continues to exercise such
commercially reasonable efforts, Xxxxxxx.xxx may not terminate this Agreement
under this Section 9.1(g) for a period of 30 days from the date on which
Xxxxxxx.xxx delivers to LSi written notice setting forth in reasonable detail
the circumstances giving rise to such Terminating LSi Breach.
Section 9.2 Amendment. This Agreement may be amended by the mutual
agreement of the parties, by action taken or authorized by their respective
boards of directors, at any time before or after approval of the matters
presented in connection with the Merger by the LSi Shareholders, but, after any
such approval, no amendment shall be made that by law requires further approval
by such shareholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties to this Agreement.
Section 9.3 Extension; Waiver. At any time prior to the Effective Time,
the parties to this Agreement, by action taken or authorized by their respective
boards of directors may, to the extent legally allowed, (a) extend the time for
the performance of any of the obligations or other acts of the other parties to
this Agreement; (b) waive any inaccuracies in the representations and warranties
contained in this Agreement or in any document delivered pursuant to this
Agreement; and (c) waive compliance with any of the covenants, agreements,
obligations or conditions contained in this Agreement. Any agreement on the part
of a party of this Agreement to any such extension or waiver shall be valid only
if set forth in a written instrument signed on behalf of such party.
Section 9.4 Fees and Expenses Upon Termination.
(a) Termination Fee. LSi shall pay Xxxxxxx.xxx a fee of $250,000,
which amount includes fees and expenses (the "Termination Fee"), if this
Agreement is terminated:
(i) by LSi pursuant to Section 9.1(b)(i) and a Takeover
Proposal, having a value per share of LSi Common Stock exceeding the value per
share of LSi Common Stock as determined based on the Cash Consideration on the
date of termination, shall have been consummated within 12 months of the date of
this Agreement;
(ii) pursuant to Section 9.1(c);
(iii) pursuant to Section 9.1(d);
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(iv) pursuant to Section 9.1(g) and a Takeover Proposal
shall have been consummated within 12 months of the date of this Agreement.
(b) Any payment required to be made pursuant to Section 9.4(a)
shall be made as promptly as practicable but in any event not later than five
business days after Xxxxxxx.xxx delivers a written request for such payment and
shall be made by wire transfer of immediately available funds to an account
designated by the recipient of such payment.
(c) If the party obligated to make a payment pursuant to Section
9.4(a) or 9.4(b) fails to pay the entire amount of such payment when due,
interest shall be paid on such unpaid amount, commencing on the date that the
Termination Fee became due, at a daily rate equal to the rate of interest
publicly announced by Citibank, N.A., from time to time, in the City of New
York, as such bank's Base Rate plus 2%, divided by 360.
ARTICLE X
MISCELLANEOUS
Section 10.1 Nonsurvival of Representations, Warranties, and Agreements.
None of the representations, warranties, and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in Sections 3.1, 3.2, 3.3, 7.4, 7.8
and 7.9.
Section 10.2 Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally or by overnight courier, telecopied (if confirmed), or, three
business days after having mailed, by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) If to Xxxxxxx.xxx or the Company:
Xxxxxxx.xxx, Inc.
0000 XxxXxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxxxxxx,
Executive Vice President
Telecopy No.: (000) 000-0000
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with a copy to:
Xxxxxx X. Xxxxxxx, Esquire
Holland & Knight LLP
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Telecopy No.: (000) 000-0000
(b) if to LSi:
Lasergate Systems, Inc.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Telecopy No.: (000) 000-0000
with a copy to:
Xxxx X. Xxxxxx, Esquire
Parker, Chapin, Flattau & Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopy No.: (000) 000-0000
Section 10.3 Interpretation. When a reference is made in this Agreement
to sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes," or "including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation." The phrase "made available" in
this Agreement shall mean that the information referred to has been made
available if requested by the party to whom such information is to be made
available. The parties acknowledge that they have each participated in the
negotiation and drafting of this Agreement and this Agreement shall not be
construed against either party as being the drafter of the Agreement.
Section 10.4 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 10.5 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement (including the documents and instruments referred to
herein) (a) constitutes the entire agreement and supersedes all prior
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agreements and understandings, both written and oral, among the parties with
respect to the subject matter of this Agreement; and (b) except as otherwise
contemplated in the covenants and agreements listed in Articles 6 and 7 (which
covenants and agreements shall be enforceable by the Persons affected thereby
following the Effective Time), are not intended to confer upon any Person other
than the parties hereto any rights or remedies under this Agreement.
Section 10.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of Florida without regard to any
applicable conflicts of law.
Section 10.7 No Remedy in Certain Circumstances. Each party agrees that,
should any court or other competent authority hold any provision of this
Agreement or part of this Agreement to be null, void, or unenforceable, or order
any party to take any action inconsistent with this Agreement or not to take any
action required herein, the other party shall not be entitled to specific
performance of such provision or part of this Agreement or to any other remedy,
including money damages for breach of this Agreement or of any other provision
of this Agreement or part of this Agreement as a result of such holding or
order.
Section 10.8 Assignment. Neither this Agreement nor any of the rights,
interests, or obligations under this Agreement shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties which consent cannot be arbitrarily
withheld, except that the Company may assign, in its sole discretion, any or all
of its rights, interests, and obligations under this Agreement to Xxxxxxx.xxx or
to any direct or indirect wholly-owned Subsidiary of Xxxxxxx.xxx. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by the parties and their respective successors and
permitted assigns.
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IN WITNESS WHEREOF, Xxxxxxx.xxx, the Company, and LSi have caused this
Agreement to be executed on the date first written above.
LASERGATE SYSTEMS, INC. XXXXXXX.XXX, INC.
By: /s/ Xxxxxxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxxxx
------------------------------- -------------------------------
Xxxxxxxxxx X. Xxxxxxxx, Xxxx X. Xxxxxxxxx,
Chairman and Chief Executive Executive Vice President
Officer
ADVANTIX ACQUISITION CORP.
By: /s/ Xxxx X. Xxxxxxxxx
-------------------------------
Xxxx X. Xxxxxxxxx,
Executive Vice President
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