EXCHANGE AGREEMENT
Between
LSI COMMUNICATIONS, INC.
and
PEREGRINE CONTROL TECHNOLOGIES, INC.
Dated December 21, 2001
TABLE OF CONTENTS
ARTICLE I REPRESENTATIONS, COVENANTS, AND WARRANTIES OF PEREGRINE CONTROL
TECHNOLOGIES, INC.
1.01 Organization 1
1.02 Capitalization 1
1.03 Subsidiaries and Predecessor Corporations 1
1.04 Financial Statements 1
1.05 Information 2
1.06 Options and Warrants 2
1.07 Absence of Certain Changes or Events 2
1.08 Title and Related Matters 3
1.09 Litigation and Proceedings 3
1.10 Contracts 3
1.11 Material Contract Defaults 4
1.12 No Conflict With Other Instruments 4
1.13 Governmental Authorizations 4
1.14 Compliance With Laws and Regulations 4
1.15 Insurance 4
1.16 Approval of Agreement 4
1.17 Material Transactions or Affiliations 4
1.18 Labor Relations 4
1.19 Grill Concepts Schedules 5
1.20 Bank Accounts; Power of Attorney 5
1.21 Valid Obligation 6
ARTICLE II REPRESENTATIONS,COVENANTS, AND WARRANTIES OF LSI COMMUNICATIONS, INC.
2.01 Organization 6
2.02 Capitalization 6
2.03 Subsidiaries and Predecessor Corporations 6
2.04 Securities Filings; Financial Statements 6
2.05 Information 7
2.06 Options and Warrants 7
2.07 Absence of Certain Changes or Events 7
2.08 Title and Related Matters 8
2.09 Litigation and Proceedings 8
2.10 Contracts 8
2.11 Material Contract Defaults 9
2.12 No Conflict With Other Instruments 9
2.13 Governmental Authorizations 9
2.14 Compliance With Laws and Regulations 9
2.15 Insurance 9
2.16 Approval of Agreement 9
2.17 Continuity of Business Enterprises 9
2.18 Material Transactions or Affiliations 9
2.19 Labor Relations 9
2.20 LSI Schedules 10
2.21 Bank Accounts; Power of Attorney 10
2.22 Valid Obligation 11
ARTICLE III PLAN OF EXCHANGE
3.01 The Exchange 11
3.02 Anti-Dilution 11
3.03 Closing 11
3.04 Closing Events 11
3.05 Termination 11
ARTICLE IV SPECIAL COVENANTS
4.01 Access to Properties and Records 13
4.02 Delivery of Books and Records 13
4.03 Third Party Consents and Certificates 13
4.04 Name Change and Increase in Authorized Capital 13
4.05 LSI Shareholder Meeting 13
4.06 Consent of Peregrine Shareholders 13
4.07 Designation of Directors and Officers 13
4.08 Exclusive Dealing Rights 13
4.09 Actions Prior to Closing 14
4.10 Sales Under Rule 144 or 145, If Applicable 15
4.11 Indemnification 16
ARTICLE V CONDITIONS PRECEDENT TO OBLIGATIONS OF LSI
5.01 Accuracy of Representations and Performance of
Covenants 16
5.02 Officer's Certificates 16
5.03 No Material Adverse Change 16
5.04 Good Standing 16
5.05 Approval by Peregrine Shareholders 16
5.06 No Governmental Prohibitions 16
5.07 Consents 16
5.08 Other Items 17
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF PEREGRINE AND THE PEREGRINE
SHAREHOLDERS
6.01 Accuracy of Representations and Performance of
Covenants 17
6.02 Officer's Certificate 17
6.03 No Material Adverse Change 17
6.04 Good Standing 17
6.05 No Governmental Prohibition 17
6.06 Consents 18
6.07 Other Items 18
ARTICLE VII MISCELLANEOUS
7.01 Brokers 18
7.02 Governing Law 18
7.03 Notices 18
7.04 Attorney's Fees 18
7.05 Confidentiality 18
7.06 Public Announcements and Filings 19
7.07 Schedules; Knowledge 19
7.08 Third Party Beneficiaries 19
7.09 Expenses 19
7.10 Entire Agreement 19
7.11 Survival; Termination 19
7.12 Counterparts 19
7.13 Amendment or Waiver 19
7.14 Best Efforts 19
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (hereinafter referred to as this "Agreement") is
entered into as of this day of December 2001 by and between LSI COMMUNICATIONS,
INC., a Nevada corporation (hereinafter referred to as "LSI")and PEREGRINE
CONTROL TECHNOLOGIES, INC., a Colorado corporation (hereinafter referred to as
"Peregrine"), upon the following premises:
Premises
WHEREAS, LSI is a publicly held corporation organized under the laws of the
State of Nevada;
WHEREAS, Peregrine is a privately held corporation organized under the laws
of the State of Colorado;
WHEREAS, management of the constituent corporations have determined that it
is in the best interest of the parties that LSI acquire 100% of the issued and
outstanding securities of Peregrine in exchange for the issuance of certain
shares of LSI (the "Exchange") and Peregrine agreed to use its best efforts to
cause its shareholders (the "Peregrine Shareholders") to exchange their
securities of Peregrine on the terms described herein; and
WHEREAS, LSI and Peregrine desire to set forth the terms of the Exchange,
which is intended to constitute a tax-free reorganization pursuant to the
provisions of Section 368(a)(1)(B) of the Internal Revenue Code of 1986.
Agreement
NOW THEREFORE, on the stated premises and for and in consideration of the
mutual covenants and agreements hereinafter set forth and the mutual benefits to
the parties to be derived herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF Peregrine
As an inducement to, and to obtain the reliance of LSI, except as set forth
on the Peregrine Schedules (as hereinafter defined), Peregrine represents and
warrants as follows:
Section 1.01 Organization. Peregrine is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Colorado
and has the corporate power and is duly authorized, qualified, franchised, and
licensed under all applicable laws, regulations, ordinances, and orders of
public authorities to own all of its properties and assets and to carry on its
business in all material respects as it is now being conducted, including
qualification to do business as a foreign corporation in the states or countries
in which the character and location of the assets owned by it or the nature of
the business transacted by it requires qualification, except where failure to be
so qualified would not have a material adverse effect on its business. Included
in the Peregrine Schedules are complete and correct copies of the articles of
incorporation, and bylaws of Peregrine as in effect on the date hereof. The
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, violate any provision of Peregrine'
articles of incorporation or bylaws. Peregrine has taken all actions required by
law, its articles of incorporation, or otherwise to authorize the execution and
delivery of this Agreement. Peregrine has full power, authority, and legal right
and has taken all action required by law, its articles of incorporation, and
otherwise to consummate the transactions herein contemplated.
Section 1.02 Capitalization. The authorized capitalization of Peregrine
consists of 50,000,000 shares of common stock, $.001 par value, of which up to
16,850,000 shares will be issued and outstanding at Closing and 5,000,000 shares
of preferred stock, $.001 par value of which 103,000 shares are currently issued
and outstanding. All issued and outstanding shares are legally issued, fully
paid, and non-assessable and not issued in violation of the preemptive or other
rights of any person.
Section 1.03 Subsidiaries and Predecessor Corporations. Peregrine does not
have any predecessor corporation(s) or subsidiaries, and does not own,
beneficially or of record, any shares of any other corporation, except as
disclosed in Schedule 1.03. For purposes hereinafter, the term "Peregrine" also
includes those subsidiaries, if any, set forth on Schedule 1.03.
Section 1.04 Financial Statements.
(a) Included in the Peregrine Schedules are (i) the unaudited balance
sheets and the related statements of operations of Peregrine as of and
for the nine months ended September 30, 2001, and (ii) the audited
balance sheets of Peregrine as of December 31, 1999 and 2000, and the
related audited statements of operations, stockholders' equity and cash
flows for the two fiscal years ended December 31, 1999 and 2000
together with the notes to such statements and the opinion of Xxxxxx &
Associates, independent certified public accountants, with respect
thereto.
(b) All such financial statements have been prepared in accordance with
generally accepted accounting principles. The Peregrine balance sheets
present a true and fair view as of the dates of such balance sheets of
the financial condition of Peregrine. Peregrine did not have, as of the
dates of such balance sheets, except as and to the extent reflected or
reserved against therein, any liabilities or obligations (absolute or
contingent) which should be reflected in the balance sheets or the
notes thereto, prepared in accordance with generally accepted
accounting principles, and all assets reflected therein are properly
reported and present fairly the value of the assets of Peregrine in
accordance with generally accepted accounting principles.
(c) Peregrine has no liabilities with respect to the payment of any
federal, state, county, local or other taxes (including any
deficiencies, interest or penalties), except for taxes accrued but not
yet due and payable.
(d) Peregrine has filed all state, federal or local income and/or
franchise tax returns required to be filed by it from inception to the
date hereof. Each of such income tax returns reflects the taxes due for
the period covered thereby, except for amounts which, in the aggregate,
are immaterial.
(e) The books and records, financial and otherwise, of Peregrine are in
all material respects complete and correct and have been maintained in
accordance with good business and accounting practices.
(f) All of Peregrine' assets are reflected on its financial statements,
and, except as set forth in the Peregrine Schedules or the financial
statements of Peregrine or the notes thereto, Peregrine has no material
liabilities, direct or indirect, matured or unmatured, contingent or
otherwise.
Section 1.05 Information. The information concerning Peregrine set forth in
this Agreement and in the Peregrine Schedules is complete and accurate in all
material respects and does not contain any untrue statement of a material fact
or omit to state a material fact required to make the statements made, in light
of the circumstances under which they were made, not misleading. In addition,
Peregrine has fully disclosed in writing to LSI (through this Agreement or the
Peregrine Schedules) all information relating to matters involving Peregrine or
its assets or its present or past operations or activities which (i) indicated
or may indicate, in the aggregate, the existence of a greater than $25,000
liability or diminution in value, (ii) have led or may lead to a competitive
disadvantage on the part of Peregrine or (iii) either alone or in aggregation
with other information covered by this Section, otherwise have led or may lead
to a material adverse effect on the transactions contemplated herein or on
Peregrine, its assets, or its operations or activities as presently conducted or
as contemplated to be conducted after the Closing Date, including, but not
limited to, information relating to governmental, employee, environmental,
litigation and securities matters and transactions with affiliates.
Section 1.06 Options or Warrants. There are no existing options, warrants,
calls, or commitments of any character relating to the authorized and unissued
Peregrine common stock, except options, warrants, calls or commitments, if any,
to which Peregrine is not a party and by which it is not bound.
Section 1.07 Absence of Certain Changes or Events. Except as set forth in
this Agreement or the Peregrine Schedules, since September 30, 2001:
(a) there has not been (i) any material adverse change in the business,
operations, properties, assets, or condition of Peregrine or (ii) any
damage, destruction, or loss to Peregrine (whether or not covered by
insurance) materially and adversely affecting the business, operations,
properties, assets, or condition of Peregrine;
(b) Peregrine has not (i) amended its articles of incorporation or
bylaws; (ii) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any assets of any kind
whatsoever to stockholders or purchased or redeemed, or agreed to
purchase or redeem, any of its capital stock; (iii) waived any rights
of value which in the aggregate are outside of the ordinary course of
business or material considering the business of Peregrine; (iv) made
any material change in its method of management, operation or
accounting; (v) entered into any other material transaction other than
sales in the ordinary course of its business; (vi) made any accrual or
arrangement for payment of bonuses or special compensation of any kind
or any severance or termination pay to any present or former officer or
employee; (vii) increased the rate of compensation payable or to become
payable by it to any of its officers or directors or any of its
salaried employees whose monthly compensation exceeds $1,000; or (viii)
made any increase in any profit sharing, bonus, deferred compensation,
insurance, pension, retirement, or other employee benefit plan,
payment, or arrangement made to, for, or with its officers, directors,
or employees;
(c) Peregrine has not (i) borrowed or agreed to borrow any funds or
incurred, or become subject to, any material obligation or liability
(absolute or contingent) except as disclosed herein and except
liabilities incurred in the ordinary course of business; (ii) paid or
agreed to pay any material obligations or liability (absolute or
contingent) other than current liabilities reflected in or shown on the
most recent Peregrine balance sheet, and current liabilities incurred
since that date in the ordinary course of business and professional and
other fees and expenses in connection with the preparation of this
Agreement and the consummation of the transactions contemplated hereby;
(iii) sold or transferred, or agreed to sell or transfer, any of its
assets, properties, or rights (except assets, properties, or rights not
used or useful in its business which, in the aggregate have a value of
less than $1,000), or canceled, or agreed to cancel, any debts or
claims (except debts or claims which in the aggregate are of a value of
less than $1,000); (iv) made or permitted any amendment or termination
of any contract, agreement, or license to which it is a party if such
amendment or termination is material, considering the business of
Peregrine; or (v) issued, delivered, or agreed to issue or deliver any
stock, bonds or other corporate securities including debentures
(whether authorized and unissued or held as treasury stock); and
(d) to the best knowledge of Peregrine, Peregrine has not become
subject to any law or regulation which materially and adversely
affects, or in the future may adversely affect the business,
operations, properties, assets, or condition of Peregrine.
Section 1.08 Title and Related Matters. Peregrine has good and marketable
title to all of its properties, inventory, interests in properties, and assets,
real and personal, which are reflected in the most recent Peregrine balance
sheet or acquired after that date (except properties, inventory, interests in
properties, and assets sold or otherwise disposed of since such date in the
ordinary course of business) free and clear of all liens, pledges, charges, or
encumbrances except (a) statutory liens or claims not yet delinquent; (b) such
imperfections of title and easements as do not and will not materially detract
from or interfere with the present or proposed use of the properties subject
thereto or affected thereby or otherwise materially impair present business
operations on such properties; and (c) as described in the Peregrine Schedules.
Except as set forth in the Peregrine Schedules, Peregrine owns, free and clear
of any liens, claims, encumbrances, royalty interests, or other restrictions or
limitations of any nature whatsoever, any and all products it is currently
manufacturing, including the underlying technology and data, and all procedures,
techniques, marketing plans, business plans, methods of management, or other
information utilized in connection with Peregrine' business. Except as set forth
in the Peregrine Schedules, no third party has any right to, and Peregrine has
not received any notice of infringement of or conflict with asserted rights of
others with respect to any product, technology, data, trade secrets, know-how,
propriety techniques, trademarks, service marks, trade names, or copyrights
which, individually or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a materially adverse effect on the
business, operations, financial condition, income, or business prospects of
Peregrine or any material portion of its properties, assets, or rights.
Section 1.09 Litigation and Proceedings. Except as set forth in the
Peregrine Schedules, there are no actions, suits, proceedings, or investigations
pending or, to the knowledge of Peregrine after reasonable investigation,
threatened by or against Peregrine or affecting Peregrine or its properties, at
law or in equity, before any court or other governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind.
Peregrine does not have any knowledge of any material default on its part with
respect to any judgment, order, injunction, decree, award, rule, or regulation
of any court, arbitrator, or governmental agency or instrumentality or of any
circumstances which, after reasonable investigation, would result in the
discovery of such a default.
Section 1.10 Contracts.
(a) Except as included or described in the Peregrine Schedules, there
are no "material" contracts, agreements, franchises, license
agreements, debt instruments or other commitments to which Peregrine is
a party or by which it or any of its assets, products, technology, or
properties are bound other than those incurred in the ordinary course
of business (as used in this Agreement, a "material" contract,
agreement, franchise, license agreement, debt instrument or commitment
is one which (i) will remain in effect for more than six (6) months
after the date of this Agreement or (ii) involves aggregate obligations
of at least fifty thousand dollars ($50,000));
(b) All contracts, agreements, franchises, license agreements, and
other commitments to which Peregrine is a party or by which its
properties are bound and which are material to the operations of
Peregrine taken as a whole are valid and enforceable by Peregrine in
all respects, except as limited by bankruptcy and insolvency laws and
by other laws affecting the rights of creditors generally;
(c) Peregrine is not a party to or bound by, and the properties of
Peregrine are not subject to any contract, agreement, other commitment
or instrument; any charter or other corporate restriction; or any
judgment, order, writ, injunction, decree, or award which materially
and adversely affects, the business operations, properties, assets, or
condition of Peregrine; and
(d) Except as included or described in the Peregrine Schedules or
reflected in the most recent Peregrine balance sheet, Peregrine is not
a party to any oral or written (i) contract for the employment of any
officer or employee which is not terminable on 30 days, or less notice;
(ii) profit sharing, bonus, deferred compensation, stock option,
severance pay, pension benefit or retirement plan, (iii) agreement,
contract, or indenture relating to the borrowing of money, (iv)
guaranty of any obligation, other than one on which Peregrine is a
primary obligor, for the borrowing of money or otherwise, excluding
endorsements made for collection and other guaranties of obligations
which, in the aggregate do not exceed more than one year or providing
for payments in excess of $25,000 in the aggregate; (vi) collective
bargaining agreement; or (vii) agreement with any present or former
officer or director of Peregrine.
Section 1.11 Material Contract Defaults. Peregrine is not in default in any
material respect under the terms of any outstanding contract, agreement, lease,
or other commitment which is material to the business, operations, properties,
assets or condition of Peregrine and there is no event of default in any
material respect under any such contract, agreement, lease, or other commitment
in respect of which Peregrine has not taken adequate steps to prevent such a
default from occurring.
Section 1.12 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, constitute
an event of default under, or terminate, accelerate or modify the terms of any
material indenture, mortgage, deed of trust, or other material contract,
agreement, or instrument to which Peregrine is a party or to which any of its
properties or operations are subject.
Section 1.13 Governmental Authorizations. Except as set forth in the
Peregrine Schedules, Peregrine has all licenses, franchises, permits, and other
governmental authorizations that are legally required to enable it to conduct
its business in all material respects as conducted on the date hereof. Except
for compliance with federal and state securities and corporation laws, as
hereinafter provided, no authorization, approval, consent, or order of, or
registration, declaration, or filing with, any court or other governmental body
is required in connection with the execution and delivery by Peregrine of this
Agreement and the consummation by Peregrine of the transactions contemplated
hereby.
Section 1.14 Compliance With Laws and Regulations. Except as set forth in
the Peregrine Schedules, to the best of its knowledge Peregrine has complied
with all applicable statutes and regulations of any federal, state, or other
governmental entity or agency thereof, except to the extent that noncompliance
would not materially and adversely affect the business, operations, properties,
assets, or condition of Peregrine or except to the extent that noncompliance
would not result in the occurrence of any material liability for Peregrine.
Section 1.15 Insurance. All of the properties of Peregrine are fully
insured for their full replacement cost.
Section 1.16 Approval of Agreement. The board of directors of Peregrine has
authorized the execution and delivery of this Agreement by Peregrine and has
approved this Agreement and the transactions contemplated hereby, and will
recommend to the Peregrine Shareholders that the Exchange be accepted by them.
Section 1.17 Material Transactions or Affiliations. Set forth in the
Peregrine Schedules is a description of every contract, agreement, or
arrangement between Peregrine and any predecessor and any person who was at the
time of such contract, agreement, or arrangement an officer, director, or person
owning of record, or known by Peregrine to own beneficially, 5% or more of the
issued and outstanding common stock of Peregrine and which is to be performed in
whole or in part after the date hereof or which was entered into not more than
three years prior to the date hereof. Except as disclosed in the Peregrine
Schedules or otherwise disclosed herein, no officer, director, or 5% shareholder
of Peregrine has, or has had since inception of Peregrine, any known interest,
direct or indirect, in any transaction with Peregrine which was material to the
business of Peregrine. There are no commitments by Peregrine, whether written or
oral, to lend any funds, or to borrow any money from, or enter into any other
transaction with, any such affiliated person.
Section 1.18 Labor Relations. Peregrine has not had work stoppage resulting
from labor problems. To the knowledge of Peregrine, no union or other collective
bargaining organization is organizing or attempting to organize any employee of
Peregrine.
Section 1.19 Peregrine Schedules. Peregrine has delivered to LSI the
following schedules, which are collectively referred to as the "Peregrine
Schedules" and which consist of separate schedules dated as of the date of
execution of this Agreement, all certified by the chief executive officer of
Peregrine as complete, true, and correct as of the date of this Agreement in all
material respects:
(a) a schedule containing complete and correct copies of the articles of
incorporation, and bylaws of Peregrine in effect as of the date of this
Agreement;
(b) a schedule containing the financial statements of Peregrine identified in
paragraph 1.04(a);
(c) a Schedule 1.19(c) containing a list indicating the name and address of
each shareholder of Peregrine together with the number of shares owned by
him, her or it;
(d) a schedule containing a description of all real property owned by
Peregrine, together with a description of every mortgage, deed of trust,
pledge, lien, agreement, encumbrance, claim, or equity interest of any
nature whatsoever in such real property;
(e) copies of all licenses, permits, and other governmental authorizations (or
requests or applications therefor) pursuant to which Peregrine carries on
or proposes to carry on its business (except those which, in the aggregate,
are immaterial to the present or proposed business of Peregrine);
(f) a schedule listing the accounts receivable and notes and other obligations
receivable of Peregrine as of September 30, 2001, or thereafter other than
in the ordinary course of business of Peregrine, indicating the debtor and
amount, and classifying the accounts to show in reasonable detail the
length of time, if any, overdue, and stating the nature and amount of any
refunds, set offs, reimbursements, discounts, or other adjustments, which
are in the aggregate material and due to or claimed by such debtor;
(g) a schedule listing the accounts payable and notes and other obligations
payable of Peregrine as of September 30, 2001, or that arose thereafter
other than in the ordinary course of the business of Peregrine, indicating
the creditor and amount, classifying the accounts to show in reasonable
detail the length of time, if any, overdue, and stating the nature and
amount of any refunds, set offs, reimbursements, discounts, or other
adjustments, which in the aggregate are material and due to or claimed by
Peregrine respecting such obligations;
(h) a schedule setting forth a description of any material adverse change in
the business, operations, property, inventory, assets, or condition of
Peregrine since September 30, 2001, required to be provided pursuant to
section 1.07 hereof; and
(i) a schedule setting forth any other information, together with any required
copies of documents, required to be disclosed in the Peregrine Schedules by
Sections 1.01 through 1.18.
Peregrine shall cause the Peregrine Schedules and the instruments and
data delivered to LSI hereunder to be promptly updated after the date hereof up
to and including the Closing Date.
It is understood and agreed that not all of the schedules referred to
above have been completed or are available to be furnished by Peregrine.
Peregrine shall have until January 31, 2002 to provide such schedules. If
Peregrine cannot or fails to do so, or if LSI acting reasonably finds any such
schedules or updates provided after the date hereof to be unacceptable according
to the criteria set forth below, LSI may terminate this Agreement by giving
written notice to Peregrine within five (5) days after the schedules or updates
were due to be produced or were provided. For purposes of the foregoing, LSI may
consider a disclosure in the Peregrine Schedules to be "unacceptable" only if
that item would have a material adverse impact on the financial statements
listed in Section 1.04(a), taken as a whole.
Section 1.20 Bank Accounts; Power of Attorney. Set forth in Schedule
1.20 is a true and complete list of (a) all accounts with banks, money market
mutual funds or securities or other financial institutions maintained by
Peregrine within the past twelve (12) months, the account numbers thereof, and
all persons authorized to sign or act on behalf of Peregrine, (b) all safe
deposit boxes and other similar custodial arrangements maintained by Peregrine
within the past twelve (12) months, and (c) the names of all persons holding
powers of attorney from Peregrine or who are otherwise authorized to act on
behalf of Peregrine with respect to any matter, other than its officers and
directors, and a summary of the terms of such powers or authorizations.
Section 1.21 Valid Obligation. This Agreement and all agreements and
other documents executed by Peregrine in connection herewith constitute the
valid and binding obligation of Peregrine, enforceable in accordance with its or
their terms, except as may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
subject to the qualification that the availability of equitable remedies is
subject to the discretion of the court before which any proceeding therefor may
be brought.
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF LSI
As an inducement to, and to obtain the reliance of Peregrine and the
Peregrine Shareholders, except as set forth in the LSI Schedules (as hereinafter
defined), LSI represents and warrants as follows:
Section 2.01 Organization. LSI is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Nevada and has the
corporate power and is duly authorized, qualified, franchised, and licensed
under all applicable laws, regulations, ordinances, and orders of public
authorities to own all of its properties and assets, to carry on its business in
all material respects as it is now being conducted, and except where failure to
be so qualified would not have a material adverse effect on its business, there
is no jurisdiction in which it is not qualified in which the character and
location of the assets owned by it or the nature of the business transacted by
it requires qualification. Included in the LSI Schedules are complete and
correct copies of the certificate of incorporation and bylaws of LSI as in
effect on the date hereof. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby will not,
violate any provision of LSI's certificate of incorporation or bylaws. LSI has
taken all action required by law, its certificate of incorporation, its bylaws,
or otherwise to authorize the execution and delivery of this Agreement, and LSI
has full power, authority, and legal right and has taken all action required by
law, its certificate of incorporation, bylaws, or otherwise to consummate the
transactions herein contemplated.
Section 2.02 Capitalization. LSI's authorized capitalization consists
of 50,000,000 shares of common stock, par value $.001 of which 3,915,111 shares
are issued and outstanding following the 1:100 reverse split. All issued and
outstanding shares are legally issued, fully paid, and non-assessable and not
issued in violation of the preemptive or other rights of any person.
Section 2.03 Subsidiaries and Predecessor Corporations. LSI does not
have any predecessor corporation(s) or subsidiaries, and does not own,
beneficially or of record, any shares of any other corporation, except as
disclosed in Schedule 2.03. For purposes hereinafter, the term "LSI" also
includes those subsidiaries, if any, set forth on Schedule 2.03.
Section 2.04 Securities Filings; Financial Statements.
(a) For at least the past twelve months LSI has timely filed all forms,
reports and documents required to be filed with the Securities and
Exchange Commission, and has heretofore delivered to Peregrine, in the
form filed with the Commission, (i) all quarterly and annual reports on
Forms 10-QSB and 10-KSB filed since September 30, 1999, (ii) all other
reports filed by LSI with the Securities and Exchange Commission since
September 30, 1999 (collectively, the "SEC Reports") and (iii) all
comment letters from the Securities and Exchange Commission with
respect to the SEC Reports. The SEC Reports (i) were prepared in
accordance with the requirements of the Securities Exchange Act of 1934
or the Securities Act of 1933, as appropriate, and (ii) 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 therein, in the light of the circumstances under which they
were made, not misleading.
(b) Included in the LSI Schedules are (i) the unaudited
balance sheets of LSI and the related statements of operations and cash
flows as of and for the nine months ended September 30, 2001 and (ii)
the audited balance sheets of LSI as of December 31, 1999 and 2000, and
the related audited statements of operations, stockholders' equity and
cash flows for the two fiscal years ended December 31, 1999 and
December 31, 2000, together with the notes to such statements and the
opinion of Xxxxxxxx & Associates independent certified public
accountants, with respect thereto, all as set forth in the SEC Reports.
(c) All such financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied
throughout the periods involved. The LSI balance sheets present fairly
as of their respective dates the financial condition of LSI. As of the
date of such balance sheets, except as and to the extent reflected or
reserved against therein, LSI had no liabilities or obligations
(absolute or contingent) which should be reflected in the balance
sheets or the notes thereto prepared in accordance with generally
accepted accounting principles, and all assets reflected therein are
properly reported and present fairly the value of the assets of LSI, in
accordance with generally accepted accounting principles. The
statements of operations, stockholders' equity and cash flows reflect
fairly the information required to be set forth therein by generally
accepted accounting principles.
(d) LSI has no liabilities with respect to the payment of any federal,
state, county, local or other taxes (including any deficiencies,
interest or penalties), except for taxes accrued but not yet due and
payable.
(e) LSI has timely filed all state, federal or local income and/or
franchise tax returns required to be filed by it from inception to the
date hereof. Each of such income tax returns reflects the taxes due for
the period covered thereby, except for amounts which, in the aggregate,
are immaterial.
(f) The books and records, financial and otherwise, of LSI are in all
material aspects complete and correct and have been maintained in
accordance with good business and accounting practices.
(g) All of LSI's assets are reflected on its financial statements, and,
except as set forth in the LSI Schedules or the financial statements of
LSI or the notes thereto, LSI has no material liabilities, direct or
indirect, matured or unmatured, contingent or otherwise.
Section 2.05 Information. The information concerning LSI set forth in this
Agreement and the LSI Schedules is complete and accurate in all material
respects and does not contain any untrue statements of a material fact or omit
to state a material fact required to make the statements made, in light of the
circumstances under which they were made, not misleading. In addition, LSI has
fully disclosed in writing to Peregrine (through this Agreement or the LSI
Schedules) all information relating to matters involving LSI or its assets or
its present or past operations or activities which (i) indicated or may
indicate, in the aggregate, the existence of a greater than $25,000 liability or
diminution in value, (ii) have led or may lead to a competitive disadvantage on
the part of LSI or (iii) either alone or in aggregation with other information
covered by this Section, otherwise have led or may lead to a material adverse
effect on the transactions contemplated herein or on LSI, its assets, or its
operations or activities as presently conducted or as contemplated to be
conducted after the Closing Date, including, but not limited to, information
relating to governmental, employee, environmental, litigation and securities
matters and transactions with affiliates.
Section 2.06 Options or Warrants. There are no existing options, warrants,
calls, or commitments of any character relating to the authorized and unissued
stock of LSI.
Section 2.07 Absence of Certain Changes or Events. Except as disclosed in
Exhibit 2.07, or permitted in writing by Peregrine, since the date of the most
recent LSI balance sheet:
(a) there has not been (i) any material adverse change in the business,
operations, properties, assets or condition of LSI or (ii) any damage,
destruction or loss to LSI (whether or not covered by insurance)
materially and adversely affecting the business, operations,
properties, assets or condition of LSI;
(b) LSI has not (i) amended its certificate of incorporation or bylaws;
(ii) declared or made, or agreed to declare or make any payment of
dividends or distributions of any assets of any kind whatsoever to
stockholders or purchased or redeemed, or agreed to purchase or redeem,
any of its capital stock; (iii) waived any rights of value which in the
aggregate are outside of the ordinary course of business or material
considering the business of LSI; (iv) made any material change in its
method of management, operation, or accounting; (v) entered into any
transactions or agreements other than in the ordinary course of
business; (vi) made any accrual or arrangement for or payment of
bonuses or special compensation of any kind or any severance or
termination pay to any present or former officer or employee; (vii)
increased the rate of compensation payable or to become payable by it
to any of its officers or directors or any of its salaried employees
whose monthly compensation exceed $1,000; or (viii) made any increase
in any profit sharing, bonus, deferred compensation, insurance,
pension, retirement, or other employee benefit plan, payment, or
arrangement, made to, for or with its officers, directors, or
employees;
(c) LSI has not (i) granted or agreed to grant any options, warrants,
or other rights for its stock, bonds, or other corporate securities
calling for the issuance thereof; (ii) borrowed or agreed to borrow any
funds or incurred, or become subject to, any material obligation or
liability (absolute or contingent) except liabilities incurred in the
ordinary course of business; (iii) paid or agreed to pay any material
obligations or liabilities (absolute or contingent) other than current
liabilities reflected in or shown on the most recent LSI balance sheet
and current liabilities incurred since that date in the ordinary course
of business and professional and other fees and expenses in connection
with the preparation of this Agreement and the consummation of the
transaction contemplated hereby; (iv) sold or transferred, or agreed to
sell or transfer, any of its assets, properties, or rights (except
assets, properties, or rights not used or useful in its business which,
in the aggregate have a value of less than $1000), or canceled, or
agreed to cancel, any debts or claims (except debts or claims which in
the aggregate are of a value less than $1000); (v) made or permitted
any amendment or termination of any contract, agreement, or license to
which it is a party if such amendment or termination is material,
considering the business of LSI; or (vi) issued, delivered or agreed to
issue or deliver, any stock, bonds, or other corporate securities
including debentures (whether authorized and unissued or held as
treasury stock), except in connection with this Agreement; and
(d) to the best knowledge of LSI, it has not become subject to any law
or regulation which materially and adversely affects, or in the future,
may adversely affect, the business, operations, properties, assets or
condition of LSI.
Section 2.08 Title and Related Matters. LSI has good and marketable
title to all of its properties, inventory, interest in properties, and assets,
real and personal, which are reflected in the most recent LSI balance sheet or
acquired after that date (except properties, inventory, interest in properties,
and assets sold or otherwise disposed of since such date in the ordinary course
of business), free and clear of all liens, pledges, charges, or encumbrances
except (a) statutory liens or claims not yet delinquent; (b) such imperfections
of title and easements as do not and will not materially detract from or
interfere with the present or proposed use of the properties subject thereto or
affected thereby or otherwise materially impair present business operations on
such properties; and (c) as described in the LSI Schedules. Except as set forth
in the LSI Schedules, LSI owns, free and clear of any liens, claims,
encumbrances, royalty interests, or other restrictions or limitations of any
nature whatsoever, any and all products it is currently manufacturing, including
the underlying technology and data, and all procedures, techniques, marketing
plans, business plans, methods of management, or other information utilized in
connection with LSI's business. Except as set forth in the LSI Schedules, no
third party has any right to, and LSI has not received any notice of
infringement of or conflict with asserted rights of others with respect to any
product, technology, data, trade secrets, know-how, propriety techniques,
trademarks, service marks, trade names, or copyrights which, individually or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a materially adverse effect on the business, operations, financial
condition, income, or business prospects of LSI or any material portion of its
properties, assets, or rights.
Section 2.09 Litigation and Proceedings. There are no actions, suits,
proceedings or investigations pending or, to the knowledge LSI after reasonable
investigation, threatened by or against LSI or affecting LSI or its properties,
at law or in equity, before any court or other governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind
except as disclosed in Schedule 2.09. LSI has no knowledge of any default on its
part with respect to any judgement, order, writ, injunction, decree, award, rule
or regulation of any court, arbitrator, or governmental agency or
instrumentality or any circumstance which after reasonable investigation would
result in the discovery of such default.
Section 2.10 Contracts.
(a) LSI is not a party to, and its assets, products, technology and
properties are not bound by, any material contract, franchise, license
agreement, agreement, debt instrument or other commitments whether such
agreement is in writing or oral, except as disclosed in Schedule 2.10.
(b) All contracts, agreements, franchises, license agreements, and
other commitments to which LSI is a party or by which its properties
are bound and which are material to the operations of LSI taken as a
whole are valid and enforceable by LSI in all respects, except as
limited by bankruptcy and insolvency laws and by other laws affecting
the rights of creditors generally;
(c) LSI is not a party to or bound by, and the properties of LSI are
not subject to any contract, agreement, other commitment or instrument;
any charter or other corporate restriction; or any judgment, order,
writ, injunction, decree, or award which materially and adversely
affects, the business operations, properties, assets, or condition of
LSI; and
(d) Except as included or described in the LSI Schedules or reflected
in the most recent LSI balance sheet, LSI is not a party to any oral or
written (i) contract for the employment of any officer or employee
which is not terminable on 30 days, or less notice; (ii) profit
sharing, bonus, deferred compensation, stock option, severance pay,
pension benefit or retirement plan, (iii) agreement, contract, or
indenture relating to the borrowing of money, (iv) guaranty of any
obligation, other than one on which LSI is a primary obligor, for the
borrowing of money or otherwise, excluding endorsements made for
collection and other guaranties of obligations which, in the aggregate
do not exceed more than one year or providing for payments in excess of
$25,000 in the aggregate; (vi) collective bargaining agreement; or
(vii) agreement with any present or former officer or director of LSI.
Section 2.11 Material Contract Defaults. LSI is not in default in any
material respect under the terms of any outstanding contract, agreement, lease,
or other commitment which is material to the business, operations, properties,
assets or condition of LSI and there is no event of default in any material
respect under any such contract, agreement, lease, or other commitment in
respect of which LSI has not taken adequate steps to prevent such a default from
occurring.
Section 2.12 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, constitute
a default under, or terminate, accelerate or modify the terms of, any indenture,
mortgage, deed of trust, or other material agreement or instrument to which LSI
is a party or to which any of its assets or operations are subject.
Section 2.13 Governmental Authorizations. LSI has all licenses, franchises,
permits, and other governmental authorizations, that are legally required to
enable it to conduct its business operations in all material respects as
conducted on the date hereof. Except for compliance with federal and state
securities or corporation laws, as hereinafter provided, no authorization,
approval, consent or order of, of registration, declaration or filing with, any
court or other governmental body is required in connection with the execution
and delivery by LSI of this Agreement and the consummation by LSI of the
transactions contemplated hereby.
Section 2.14 Compliance With Laws and Regulations. To the best of its
knowledge, LSI has complied with all applicable statutes and regulations of any
federal, state, or other applicable governmental entity or agency thereof,
except to the extent that noncompliance would not materially and adversely
affect the business, operations, properties, assets or condition of LSI or
except to the extent that noncompliance would not result in the occurrence of
any material liability. This compliance includes, but is not limited to, the
filing of all reports to date with federal and state securities authorities.
Section 2.15 Insurance. All of the properties of LSI are fully insured for
their full replacement cost.
Section 2.16 Approval of Agreement. The board of directors of LSI has
authorized the execution and delivery of this Agreement by LSI and has approved
this Agreement and the transactions contemplated hereby and will recommend to
its shareholders that they approve this Agreement and the transactions
contemplated hereby.
Section 2.17 Continuity of Business Enterprises. LSI has no commitment or
present intention to liquidate Peregrine or sell or otherwise dispose of a
material portion of Peregrine' business or assets following the consummation of
the transactions contemplated hereby.
Section 2.18 Material Transactions or Affiliations. Except as disclosed
herein and in the LSI Schedules, there exists no contract, agreement or
arrangement between LSI and any predecessor and any person who was at the time
of such contract, agreement or arrangement an officer, director, or person
owning of record or known by LSI to own beneficially, 5% or more of the issued
and outstanding common stock of LSI and which is to be performed in whole or in
part after the date hereof or was entered into not more than three years prior
to the date hereof. Neither any officer, director, nor 5% shareholder of LSI
has, or has had since inception of LSI, any known interest, direct or indirect,
in any such transaction with LSI which was material to the business of LSI. LSI
has no commitment, whether written or oral, to lend any funds to, borrow any
money from, or enter into any other transaction with, any such affiliated
person.
Section 2.19 Labor Relations. LSI has not had work stoppage resulting from
labor problems. To the knowledge of LSI, no union or other collective bargaining
organization is organizing or attempting to organize any employee of LSI.
Section 2.20 LSI Schedules. LSI has delivered to Peregrine the following
schedules, which are collectively referred to as the "LSI Schedules" and which
consist of separate schedules, which are dated the date of this Agreement, all
certified by the chief executive officer of LSI to be complete, true, and
accurate in all material respects as of the date of this Agreement:
(a) a schedule containing complete and accurate copies of the certificate
of incorporation and bylaws of LSI as in effect as of the date of this
Agreement;
(b) a schedule containing the financial statements of LSI identified in
paragraph 2.04(b);
(c) a Schedule 2.20(c) containing a list indicating the name and address
of each shareholder of LSI together with the number of shares owned by
him, her or it;
(d) a schedule containing a description of all real property owned by LSI,
together with a description of every mortgage, deed of trust, pledge,
lien, agreement, encumbrance, claim, or equity interest of any nature
whatsoever in such real property;
(e) copies of all licenses, permits, and other governmental authorizations
(or requests or applications therefor) pursuant to which LSI carries
on or proposes to carry on its business (except those which, in the
aggregate, are immaterial to the present or proposed business of LSI);
(f) a schedule listing the accounts receivable and notes and other
obligations receivable of LSI as of September 30, 2001, or thereafter
other than in the ordinary course of business of LSI, indicating the
debtor and amount, and classifying the accounts to show in reasonable
detail the length of time, if any, overdue, and stating the nature and
amount of any refunds, set offs, reimbursements, discounts, or other
adjustments which are in the aggregate material and due to or claimed
by such debtor;
(g) a schedule listing the accounts payable and notes and other
obligations payable of LSI as of September 30, 2001, or that arose
thereafter other than in the ordinary course of the business of LSI,
indicating the creditor and amount, classifying the accounts to show
in reasonable detail the length of time, if any, overdue, and stating
the nature and amount of any refunds, set offs, reimbursements,
discounts, or other adjustments, which in the aggregate are material
and due to or claimed by LSI respecting such obligations;
(h) a schedule setting forth a description of any material adverse change
in the business, operations, property, inventory, assets, or condition
of LSI since September 30, 2001 required to be provided pursuant to
section 2.07 hereof; and
(i) a schedule setting forth any other information, together with any
required copies of documents, required to be disclosed in the LSI
Schedules by Sections 2.01 through 2.19.
LSI shall cause the LSI Schedules and the instruments and data delivered to
Peregrine hereunder to be promptly updated after the date hereof up to and
including the Closing Date.
It is understood and agreed that not all of the schedules referred to above
have been completed or are available to be furnished by LSI. LSI shall have
until January 31, 2001 to provide such schedules. If LSI cannot or fails to do
so, or if Peregrine acting reasonably finds any such schedules or updates
provided after the date hereof to be unacceptable according to the criteria set
forth below, Peregrine may terminate this Agreement by giving written notice to
LSI within five (5) days after the schedules or updates were due to be produced
or were provided. For purposes of the foregoing, Peregrine may consider a
disclosure in the LSI Schedules to be "unacceptable" only if that item would
have a material adverse impact on the financial statements listed in Section
2.04(b), taken as a whole.
Section 2.21 Bank Accounts; Power of Attorney. Set forth in Schedule
2.21 is a true and complete list of (a) all accounts with banks, money market
mutual funds or securities or other financial institutions maintained by LSI
within the past twelve (12) months, the account numbers thereof, and all persons
authorized to sign or act on behalf of LSI, (b) all safe deposit boxes and other
similar custodial arrangements maintained by LSI within the past twelve (12)
months, and (c) the names of all persons holding powers of attorney from LSI or
who are otherwise authorized to act on behalf of LSI with respect to any matter,
other than its officers and directors, and a summary of the terms of such powers
or authorizations.
Section 2.22 Valid Obligation. This Agreement and all agreements and other
documents executed by LSI in connection herewith constitute the valid and
binding obligation of LSI, enforceable in accordance with its or their terms,
except as may be limited by bankruptcy, insolvency, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and subject to the
qualification that the availability of equitable remedies is subject to the
discretion of the court before which any proceeding therefor may be brought.
ARTICLE III
PLAN OF EXCHANGE
Section 3.01 The Exchange. On the terms and subject to the conditions
set forth in this Agreement, on the Closing Date (as defined in Section 3.03),
each Peregrine Shareholder who shall elect to accept the exchange offer
described herein (the "Accepting Shareholders"), shall assign, transfer and
deliver, free and clear of all liens, pledges, encumbrances, charges,
restrictions or known claims of any kind, nature, or description, the number of
shares of common stock of Peregrine set forth on Schedule 1.19(c) attached
hereto, in the aggregate constituting 100% of the issued and outstanding shares
of common stock of Peregrine held by each of such shareholders; the objective of
such Exchange being the acquisition by LSI of 100% of the issued and outstanding
common stock of Peregrine. In exchange for the transfer of such securities by
the Peregrine Shareholders, LSI shall issue to the Peregrine Shareholders (1) an
aggregate of up to 16,850,000 post reverse common shares of LSI (the "Initial
Shares"). At the Closing, each Peregrine Shareholder shall, on surrender of his
certificate or certificates representing such Peregrine shares to LSI or its
registrar or transfer agent, be entitled to receive a certificate or
certificates evidencing his proportionate interest in the Initial Shares. Upon
consummation of the transaction contemplated herein, assuming participation by
all of the Peregrine Shareholders, all of the shares of capital stock of
Peregrine shall be held by LSI.
Section 3.02 Anti-Dilution. The number of shares of LSI common stock
issuable upon exchange pursuant to Section 3.01 shall be appropriately adjusted
to take into account any other stock split, stock dividend, reverse stock split,
recapitalization, or similar change in the LSI common stock which may occur (i)
between the date of the execution of this Agreement and the Closing Date, as to
the Initial Shares, and (ii) between the date of the execution of this Agreement
and the release date, as to the Additional Shares.
Section 3.03 Closing. The closing ("Closing") of the transactions
contemplated by this Agreement shall be on a date and at such time as the
parties may agree ("Closing Date") but not later than December 31, 2001, subject
to the right of LSI or Peregrine to extend such Closing Date by up to an
additional sixty (60) days. Such Closing shall take place at a mutually
agreeable time and place.
Section 3.04 Closing Events. At the Closing, LSI, Peregrine and each of
the Accepting Shareholders shall execute, acknowledge, and deliver (or shall
ensure to be executed, acknowledged, and delivered) any and all certificates,
opinions, financial statements, schedules, agreements, resolutions, rulings or
other instruments required by this Agreement to be so delivered at or prior to
the Closing, together with such other items as may be reasonably requested by
the parties hereto and their respective legal counsel in order to effectuate or
evidence the transactions contemplated hereby. Among other things, LSI shall
provide an opinion of counsel acceptable to Peregrine as to such matters as
Peregrine may reasonably request, which shall include, but not be limited to, a
statement, to the effect that (i) to such counsel's best knowledge, after
reasonable investigation, from inception until the Closing Date, LSI has
complied with all applicable statutes and regulations of any federal, state, or
other applicable governmental entity or agency thereof, except to the extent
that noncompliance would not materially and adversely affect the business,
operations, properties, assets or condition of LSI or except to the extent that
noncompliance would not result in the occurrence of any material liability (such
compliance including, but not being limited to, the filing of all reports to
date with federal and state securities authorities) and (ii) based on a summary
of the facts and applicable law, such counsel believes that the Placement
described in Section 4.08 below is not subject to "integration" with the
offering being made pursuant to the Registration Statement (Peregrine
acknowledges that "integration" is a highly factual issue not susceptible to the
rendering of a legal opinion and that the statement to be delivered hereunder
shall merely constitute a summary of the reasoning which counsel to LSI believes
would apply if a third party were to assert that such offerings should be
integrated).
Section 3.05 Termination.
(a) This Agreement may be terminated by the board of directors of either
LSI or Peregrine at any time prior to the Closing Date if:
(i) there shall be any actual or threatened action or proceeding
before any court or any governmental body which shall seek to restrain,
prohibit, or invalidate the transactions contemplated by this Agreement and
which, in the judgement of such board of directors, made in good faith and
based upon the advice of its legal counsel, makes it inadvisable to proceed
with the Exchange; or
(ii) any of the transactions contemplated hereby are disapproved by
any regulatory authority whose approval is required to consummate such
transactions (which does not include the Securities and Exchange
Commission) or in the judgement of such board of directors, made in good
faith and based on the advice of counsel, there is substantial likelihood
that any such approval will not be obtained or will be obtained only on a
condition or conditions which would be unduly burdensome, making it
inadvisable to proceed with the Exchange.
In the event of termination pursuant to this paragraph (a) of Section 3.05, no
obligation, right or liability shall arise hereunder, and each party shall bear
all of the expenses incurred by it in connection with the negotiation, drafting,
and execution of this Agreement and the transactions herein contemplated in
accordance with the Expense Sharing Agreement attached hereto as Exhibit "B".
(b) This Agreement may be terminated by the board of directors of LSI at any
time prior to the Closing Date if:
(i) there shall have been any change after the date of the latest balance
sheet of Peregrine in the assets, properties, business, or financial
condition of Peregrine, which could have a materially adverse effect on the
financial statements of Peregrine listed in Section 1.04(a) taken as a
whole, except any changes disclosed in the Peregrine Schedules;
(ii) the board of directors of LSI determines in good faith that one or
more of LSI's conditions to Closing has not occurred, through no fault of
LSI.
(iii) LSI takes the termination action specified in Section 1.18 as a
result of Peregrine Schedules or updates thereto which LSI finds
unacceptable;
(iv) on or before December 31, 2001, LSI notifies Peregrine that LSI's
investigation pursuant to Section 4.01 below has uncovered information
which it finds unacceptable by the same criteria set forth in Section 1.19;
or
(v) Peregrine shall fail to comply in any material respect with any of its
covenants or agreements contained in this Agreement or if any of the
representations or warranties of Peregrine contained herein shall be
inaccurate in any material respect, where such noncompliance or inaccuracy
has not been cured within ten (10) days after written notice thereof.
If this Agreement is terminated pursuant to this paragraph (b) of Section 3.05,
this Agreement shall be of no further force or effect, and no obligation, right
or liability shall arise hereunder, except that Peregrine shall bear its own
costs as well as the reasonable costs of LSI in connection with the negotiation,
preparation, and execution of this Agreement and qualifying the offer and sale
of securities to be issued in the Exchange under the registration requirements,
or exemption from the registration requirements, of state and federal securities
laws.
(c) This Agreement may be terminated by the board of directors of
Peregrine at any time prior to the Closing Date if:
(i) there shall have been any change after the date of the latest balance
sheet of LSI in the assets, properties, business or financial condition of
LSI, which could have a material adverse effect on the financial statements
of LSI listed in Section 2.04(b) taken as a whole, except any changes
disclosed in the LSI Schedules;
(ii) the board of directors of Peregrine determines in good faith that
one or more of Peregrine' conditions to Closing has not occurred, through
no fault of Peregrine;
(iii) Peregrine takes the termination action specified in Section 2.20
as a result of LSI Schedules or updates thereto which Peregrine finds
unacceptable;
(iv) on or before December 31, 2001 Peregrine notifies LSI that
Peregrine' investigation pursuant to Section 4.01 below has uncovered
information which it finds unacceptable by the same criteria set forth in
Section 2.20; or
(v) LSI shall fail to comply in any material respect with any of its
covenants or agreements contained in this Agreement or if any of the
representations or warranties of LSI contained herein shall be inaccurate
in any material respect, where such noncompliance or inaccuracy has not
been cured within ten (10) days after written notice thereof.
If this Agreement is terminated pursuant to this paragraph (c) of Section 3.05,
this Agreement shall be of no further force or effect, and no obligation, right
or liability shall arise hereunder, except that LSI shall bear its own costs as
well as the reasonable costs of Peregrine and its principal shareholders
incurred in connection with the negotiation, preparation and execution of this
Agreement.
ARTICLE IV
SPECIAL COVENANTS
Section 4.01 Access to Properties and Records. LSI and Peregrine will
each afford to the officers and authorized representatives of the other full
access to the properties, books and records of LSI or Peregrine, as the case may
be, in order that each may have a full opportunity to make such reasonable
investigation as it shall desire to make of the affairs of the other, and each
will furnish the other with such additional financial and operating data and
other information as to the business and properties of LSI or Peregrine, as the
case may be, as the other shall from time to time reasonably request. Without
limiting the foregoing, as soon as practicable after the end of each fiscal
quarter (and in any event through the last fiscal quarter prior to the Closing
Date), each party shall provide the other with quarterly internally prepared and
unaudited financial statements.
Section 4.02 Delivery of Books and Records. At the Closing, Peregrine shall
deliver to LSI the originals of the corporate minute books, books of account,
contracts, records, and all other books or documents of Peregrine now in the
possession of Peregrine or its representatives.
Section 4.03 Third Party Consents and Certificates. LSI and Peregrine agree
to cooperate with each other in order to obtain any required third party
consents to this Agreement and the transactions herein contemplated.
Section 4.04 Name Change. At or prior to the Closing Date, LSI's Board of
Directors shall have approved an amendment to the certificate of incorporation
to change the name of LSI to "Peregrine, INC." Such amendment shall be carried
out promptly upon approval of the same by the shareholders of LSI.
Section 4.05 LSI Shareholder Meeting. LSI shall call a special shareholders
meeting to be held on or prior to the Closing Date at which meeting the
shareholders of LSI shall be requested to approve, and LSI's Board of Directors
shall recommend approval of, the terms of this Agreement, including the name
change and increase in authorized capital described in Section 4.04 and such
other matters as shall require shareholder approval hereunder.
Section 4.06 Consent of Peregrine Shareholders and Directors. Peregrine
shall use its best efforts to obtain the consent of all Peregrine Shareholders
to participate in the Exchange In addition, Peregrine's directors shall also
appove the Exchange.
Section 4.07 Designation of Directors and Officers. On or before the
Closing Date, LSI shall increase its board of directors to ten (10) persons.
Xxxxxxx X. XxXxxxxx, Xx. shall be designated as Chairman of the Board of LSI and
Xxxxxx X. Xxxxxxxx, Xxxxx Xxxxxx , Rear Admiral Xxxxxx X. Xxxxxxxxx, Xxxxxxxx X.
Xxxxx, Xxxxx X. Xxxxxxx, PhD, Xxxxxxx X. Xxxxxxxx, Xxxxx Xxxxx XXX, Xxx Xxxxxxxx
and Xxxxx Xxxxxxxx shall be designated as additional board members.
Section 4.08 Exclusive Dealing Rights. Until 5:00 P.M. Eastern Daylight
Time on December 31, 2001.
(a) In recognition of the substantial time and effort which LSI has
spent and will continue to spend in investigating Peregrine and its
business and in addressing the matters related to the transactions
contemplated herein, each of which may preempt or delay other
management activities, neither Peregrine, nor any of its officers,
employees, representatives or agents will directly or indirectly
solicit or initiate any discussions or negotiations with, or, except
where required by fiduciary obligations under applicable law as advised
by counsel, participate in any negotiations with or provide any
information to or otherwise cooperate in any other way with, or
facilitate or encourage any effort or attempt by, any corporation,
partnership, person or other entity or group (other than LSI and its
directors, officers, employees, representatives and agents) concerning
any merger, sale of substantial assets, sale of shares of capital
stock, (including without limitation, any public or private offering of
the common stock of Peregrine) or similar transactions involving
Peregrine (all such transactions being referred to as "Peregrine
Acquisition Transactions"). If Peregrine receives any proposal with
respect to a Peregrine Acquisition Transaction, it will immediately
communicate to LSI the fact that it has received such proposal and the
principal terms thereof.
(b) In recognition of the substantial time and effort which Peregrine
has spent and will continue to spend in investigating LSI and its
business and in addressing the matters related to the transactions
contemplated herein, each of which may preempt or delay other
management activities, neither LSI, nor any of its officers, employees,
representatives or agents will directly or indirectly solicit or
initiate any discussions or negotiations with, or, except where
required by fiduciary obligations under applicable law as advised by
counsel, participate in any negotiations with or provide any
information to or otherwise cooperate in any other way with, or
facilitate or encourage any effort or attempt by, any corporation,
partnership, person or other entity or group (other than Peregrine and
its directors, officers, employees, representatives and agents)
concerning any merger, sale of substantial assets, sale of shares of
capital stock, (including without limitation, any public or private
offering of the common stock of LSI or similar transactions involving
LSI (all such transactions being referred to as "LSI Acquisition
Transactions"). If LSI receives any proposal with respect to a LSI
Acquisition Transaction, it will immediately communicate to Peregrine
the fact that it has received such proposal and the principal terms
thereof.
Section 4.09 Actions Prior to Closing.
(a) From and after the date of this Agreement until the Closing Date and
except as set forth in the LSI Schedules or Peregrine Schedules or as permitted
or contemplated by this Agreement, LSI (subject to paragraph (d) below) and
Peregrine respectively, will each:
(i) carry on its business in substantially the same manner as it has
heretofore;
(ii) maintain and keep its properties in states of good repair and
condition as at present, except for depreciation due to ordinary wear
and tear and damage due to casualty;
(iii)maintain in full force and effect insurance comparable in amount and
in scope of coverage to that now maintained by it;
(iv) perform in all material respects all of its obligations under material
contracts, leases, and instruments relating to or affecting its
assets, properties, and business;
(v) use its best efforts to maintain and preserve its business
organization intact, to retain its key employees, and to maintain its
relationship with its material suppliers and customers; and
(vi) fully comply with and perform in all material respects all obligations
and duties imposed on it by all federal and state laws and all rules,
regulations, and orders imposed by federal or state governmental
authorities.
(b) From and after the date of this Agreement until the Closing Date,
neither LSI nor Peregrine will:
(i) make any changes in their articles or certificate of incorporation or
bylaws;
(ii) take any action described in Section 1.07 in the case of Peregrine, or
in Section 2.07, in the case of LSI (all except as permitted therein
or as disclosed in the applicable party's schedules);
(iii)enter into or amend any contract, agreement, or other instrument of
any of the types described in such party's schedules, except that a
party may enter into or amend any contract, agreement, or other
instrument in the ordinary course of business involving the sale of
goods or services; or
(iv) sell any assets or discontinue any operations (other than the
Divestiture), sell any shares of capital stock (other than as
contemplated in Sections 4.07 and 4.08 hereof and the sale of
securities underlying existing warrants or options of LSI) or conduct
any similar transactions other than in the ordinary course of
business.
(C) In light of the fact that Peregrine' shareholders will control LSI as a
result of the Exchange, from and after the date of this Agreement until the
Closing Date, LSI shall take no action which is material to its business without
the prior written approval of Peregrine, which Peregrine may give or withhold in
its sole discretion after consultation with LSI.
Section 4.10 Sales Under Rule 144 or 145,If Applicable.
(a) LSI will use its best efforts to at all times comply with the
reporting requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), including timely filing of all periodic
reports required under the provisions of the Exchange Act and the rules
and regulations promulgated thereunder.
(b) Upon being informed in writing by any such person holding
restricted stock of LSI that such person intends to sell any shares
under Rule 144, Rule 145 or Regulation S promulgated under the
Securities Act (including any rule adopted in substitution or
replacement thereof), LSI will certify in writing to such person that
it has filed all of the reports required to be filed by it under the
Exchange Act to enable such person to sell such person's restricted
stock under Rule 144, 145 or Regulation S, as may be applicable in the
circumstances, or will inform such person in writing that it has not
filed any such report or reports.
(c) If any certificate representing any such restricted stock is
presented to LSI's transfer agent for registration of transfer in
connection with any sale theretofore made under Rule 144, 145 or
Regulation S, provided such certificate is duly endorsed for transfer
by the appropriate person(s) or accompanied by a separate stock power
duly executed by the appropriate person(s) in each case with reasonable
assurances that such endorsements are genuine and effective, and is
accompanied by an opinion of counsel satisfactory to LSI and its
counsel that the stock transfer has complied with the requirements of
Rule 144, 145 or Regulation S, as the case may be, LSI will promptly
instruct its transfer agent to register such shares and to issue one or
more new certificates representing such shares to the transferee and,
if appropriate under the provisions of Rule 144, 145 or Regulation S,
as the case may be, free of any stop transfer order or restrictive
legend. The provisions of this Section 4.11 shall survive the Closing
and the consummation of the transactions contemplated by this
Agreement.
Section 4.11 Indemnification.
(a) Peregrine hereby agrees to indemnify LSI and each of the officers,
agents and directors of LSI as of the date of execution of this
Agreement against any loss, liability, claim, damage, or expense
(including, but not limited to, any and all expense whatsoever
reasonably incurred in investigating, preparing, or defending against
any litigation, commenced or threatened, or any claim whatsoever), to
which it or they may become subject arising out of or based on any
inaccuracy appearing in or misrepresentations made under Article I of
this Agreement. The indemnification provided for in this paragraph
shall survive the Closing and consummation of the transactions
contemplated hereby and termination of this Agreement.
(b) LSI hereby agrees to indemnify Peregrine and each of the officers,
agents, and directors of Peregrine and each of the Peregrine
Shareholders as of the date of execution of this Agreement against any
loss, liability, claim, damage, or expense (including, but not limited
to, any and all expense whatsoever reasonably incurred in
investigating, preparing, or defending against any litigation,
commenced or threatened, or any claim whatsoever), to which it or they
may become subject arising out of or based on any inaccuracy appearing
in or misrepresentation made under Article II of this Agreement. The
indemnification provided for in this paragraph shall survive the
Closing and consummation of the transactions contemplated hereby and
termination of this Agreement.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF LSI
The obligations of LSI under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 5.01 Accuracy of Representations and Performance of Covenants.
The representations and warranties made by Peregrine in this Agreement were true
when made and shall be true at the Closing Date with the same force and effect
as if such representations and warranties were made at and as of the Closing
Date (except for changes therein permitted by this Agreement). Peregrine shall
have performed or complied with all covenants and conditions required by this
Agreement to be performed or complied with by Peregrine prior to or at the
Closing. LSI shall be furnished with a certificate, signed by a duly authorized
executive officer of Peregrine and dated the Closing Date, to the foregoing
effect.
Section 5.02 Officer's Certificate. LSI shall have been furnished with
a certificate dated the Closing Date and signed by a duly authorized officer of
Peregrine to the effect that no litigation, proceeding, investigation, or
inquiry is pending, or to the best knowledge of Peregrine threatened, which
might result in an action to enjoin or prevent the consummation of the
transactions contemplated by this Agreement, or, to the extent not disclosed in
the Peregrine Schedules, by or against Peregrine, which might result in any
material adverse change in any of the assets, properties, business, or
operations of Peregrine.
Section 5.03 No Material Adverse Change. Prior to the Closing Date,
there shall not have occurred any change in the financial condition, business,
or operations of Peregrine nor shall any event have occurred which, with the
lapse of time or the giving of notice, is determined to be unacceptable using
the criteria set forth in Section 1.19.
Section 5.04 Good Standing. LSI shall have received a certificate of
good standing from the State of Colorado dated as of a date within ten days
prior to the Closing Date certifying that Peregrine is in good standing as a
corporation in the State of Colorado.
Section 5.05 Approval by Peregrine Shareholders. The Exchange shall
have been approved, and shares delivered in accordance with Section 3.01, by the
holders of not less than ninety percent (90%) of the outstanding common stock of
Peregrine, unless a lesser number is agreed to by LSI.
Section 5.06 No Governmental Prohibition. No order, statute, rule,
regulation, executive order, injunction, stay, decree, judgment or restraining
order shall have been enacted, entered, promulgated or enforced by any court or
governmental or regulatory authority or instrumentality which prohibits the
consummation of the transactions contemplated hereby.
Section 5.07 Consents. All consents, approvals, waivers or amendments
pursuant to all contracts, licenses, permits, trademarks and other intangibles
in connection with the transactions contemplated herein, or for the continued
operation of LSI and Peregrine after the Closing Date on the basis as presently
operated shall have been obtained.
Section 5.08 Other Items.
------------
(a) LSI shall have received a list of Peregrine' shareholders
containing the name, address, and number of shares held by each
Peregrine shareholder as of the date of Closing, certified by an
executive officer of Peregrine as being true, complete and accurate;
and
(b) LSI shall have received such further opinions, documents,
certificates or instruments relating to the transactions contemplated
hereby as LSI may reasonably request.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF Peregrine
AND THE Peregrine SHAREHOLDERS
The obligations of Peregrine and the Peregrine Shareholders under this
Agreement are subject to the satisfaction, at or before the Closing Date, of the
following conditions:
Section 6.01 Accuracy of Representations and Performance of Covenants.
The representations and warranties made by LSI in this Agreement were true when
made and shall be true as of the Closing Date (except for changes therein
permitted by this Agreement) with the same force and effect as if such
representations and warranties were made at and as of the Closing Date.
Additionally, LSI shall have performed and complied with all covenants and
conditions required by this Agreement to be performed or complied with by LSI
and shall have satisfied the conditions described below prior to or at the
Closing:
(a) Immediately prior to the Closing, LSI shall have no more than an
aggregate of 3,915,111shares of common stock issued and outstanding or
issuable pursuant to outstanding warrants and options, excluding any shares
and warrants issuable pursuant to the Exchange or the Placement.
(b) The shareholders of LSI shall have approved the Exchange and the
related transactions described herein.
Peregrine shall have been furnished with certificates, signed by duly authorized
executive officers of LSI and dated the Closing Date, to the foregoing effect.
Section 6.02 Officer's Certificate. Peregrine shall have been furnished
with certificates dated the Closing Date and signed by duly authorized executive
officers of LSI, to the effect that no litigation, proceeding, investigation or
inquiry is pending, or to the best knowledge of LSI threatened, which might
result in an action to enjoin or prevent the consummation of the transactions
contemplated by this Agreement or, to the extent not disclosed in the LSI
Schedules, by or against LSI, which might result in any material adverse change
in any of the assets, properties or operations of LSI.
Section 6.03 No Material Adverse Change. Prior to the Closing Date,
there shall not have occurred any change in the financial condition, business or
operations of LSI nor shall any event have occurred which, with the lapse of
time or the giving of notice, is determined to be unacceptable using the
criteria set forth in Section 2.20.
Section 6.04 Good Standing. Peregrine shall have received a certificate
of good standing from the Secretary of State of the State of Nevada or other
appropriate office, dated as of a date within ten days prior to the Closing Date
certifying that LSI is in good standing as a corporation in the State of Nevada
and has filed all tax returns required to have been filed by it to date and has
paid all taxes reported as due thereon.
Section 6.05 No Governmental Prohibition. No order, statute, rule,
regulation, executive order, injunction, stay, decree, judgment or restraining
order shall have been enacted, entered, promulgated or enforced by any court or
governmental or regulatory authority or instrumentality which prohibits the
consummation of the transactions contemplated hereby.
Section 6.06 Consents. All consents, approvals, waivers or amendments
pursuant to all contracts, licenses, permits, trademarks and other intangibles
in connection with the transactions contemplated herein, or for the continued
operation of LSI and Peregrine after the Closing Date on the basis as presently
operated shall have been obtained.
Section 6.07 Other Items. Peregrine shall have received further
opinions, documents, certificates, or instruments relating to the transactions
contemplated hereby as Peregrine may reasonably request.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Brokers. LSI and Peregrine agree that, except as set out
on Schedule 7.01 attached hereto, there were no finders or brokers involved in
bringing the parties together or who were instrumental in the negotiation,
execution or consummation of this Agreement. LSI and Peregrine each agree to
indemnify the other against any claim by any third person other than those
described above for any commission, brokerage, or finder's fee arising from the
transactions contemplated hereby based on any alleged agreement or understanding
between the indemnifying party and such third person, whether express or implied
from the actions of the indemnifying party.
Section 7.02 Governing Law. This Agreement shall be governed by,
enforced, and construed under and in accordance with the laws of the United
States of America and, with respect to the matters of state law, with the laws
of the State of Nevada without giving effect to principles of conflicts of law
thereunder. Each of the parties (a) irrevocably consents and agrees that any
legal or equitable action or proceedings arising under or in connection with
this Agreement shall be brought exclusively in the federal courts of the United
States, (b) by execution and delivery of this Agreement, irrevocably submits to
and accepts, with respect to any such action or proceeding, generally and
unconditionally, the jurisdiction of the aforesaid court, and irrevocably waives
any and all rights such party may now or hereafter have to object to such
jurisdiction.
Section 7.03 Notices. Any notice or other communications required or
permitted hereunder shall be in writing and shall be sufficiently given if
personally delivered to it or sent by telecopy, overnight courier or registered
mail or certified mail, postage prepaid, addressed as follows:
If to LSI, to: LSI COMMUNICATIONS, INC.
0000 Xxxxxxxx Xxxx.
Xxxxxxxx, Xxxx 00000
With copies to:
Vanderkam & Xxxxxxx
000 Xxxxxxxxx, #000
Xxxxxxx, Xxxxx 00000
If to Peregrine, to: PEREGRINE CONTROL TECHNOLOGIES, INC.
0000 Xxxx Xxxxxxx Xxxxx, Xxx. 000
Xxxxxx, XX 00000
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given (i) upon receipt, if personally delivered, (ii) on
the day after dispatch, if sent by overnight courier, (iii) upon dispatch, if
transmitted by telecopy and receipt is confirmed by telephone and (iv) three (3)
days after mailing, if sent by registered or certified mail.
Section 7.04 Attorney's Fees. In the event that either party institutes
any action or suit to enforce this Agreement or to secure relief from any
default hereunder or breach hereof, the prevailing party shall be reimbursed by
the losing party for all costs, including reasonable attorney's fees, incurred
in connection therewith and in enforcing or collecting any judgement rendered
therein.
Section 7.05 Confidentiality. Each party hereto agrees with the other
that, unless and until the transactions contemplated by this Agreement have been
consummated, it and its representatives will hold in strict confidence all data
and information obtained with respect to another party or any subsidiary thereof
from any representative, officer, director or employee, or from any books or
records or from personal inspection, of such other party, and shall not use such
data or information or disclose the same to others, except (i) to the extent
such data or information is published, is a matter of public knowledge, or is
required by law to be published; or (ii) to the extent that such data or
information must be used or disclosed in order to consummate the transactions
contemplated by this Agreement. In the event of the termination of this
Agreement, each party shall return to the other party all documents and other
materials obtained by it or on its behalf and shall destroy all copies, digests,
work papers, abstracts or other materials relating thereto, and each party will
continue to comply with the confidentiality provisions set forth herein.
Section 7.06 Public Announcements and Filings. Unless required by
applicable law or regulatory authority, none of the parties will issue any
report, statement or press release to the general public, to the trade, to the
general trade or trade press, or to any third party (other than its advisors and
representatives in connection with the transactions contemplated hereby) or file
any document, relating to this Agreement and the transactions contemplated
hereby, except as may be mutually agreed by the parties. Copies of any such
filings, public announcements or disclosures, including any announcements or
disclosures mandated by law or regulatory authorities, shall be delivered to
each party at least one (1) business day prior to the release thereof.
Section 7.07 Schedules; Knowledge. Each party is presumed to have full
knowledge of all information set forth in the other party's schedules delivered
pursuant to this Agreement.
Section 7.08 Third Party Beneficiaries. This contract is strictly
between LSI and Peregrine, and, except as specifically provided, no director,
officer, stockholder (other than the Peregrine Shareholders), employee, agent,
independent contractor or any other person or entity shall be deemed to be a
third party beneficiary of this Agreement.
Section 7.09 Expenses. Subject to Sections 3.05 and 7.04 above, whether
or not the Exchange is consummated, each of LSI and Peregrine will bear their
own respective expenses, including legal, accounting and professional fees,
incurred in connection with the Exchange or any of the other transactions
contemplated hereby.
Section 7.10 Entire Agreement. This Agreement represents the entire
agreement between the parties relating to the subject matter thereof and
supersedes all prior agreements, understandings and negotiations, written or
oral, with respect to such subject matter.
Section 7.11 Survival; Termination. The representations, warranties,
and covenants of the respective parties shall survive the Closing Date and the
consummation of the transactions herein contemplated for a period of two years.
Section 7.12 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.
Section 7.13 Amendment or Waiver. Every right and remedy provided
herein shall be cumulative with every other right and remedy, whether conferred
herein, at law, or in equity, and may be enforced concurrently herewith, and no
waiver by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to the Closing Date, this
Agreement may by amended by a writing signed by all parties hereto, with respect
to any of the terms contained herein, and any term or condition of this
Agreement may be waived or the time for performance may be extended by a writing
signed by the party or parties for whose benefit the provision is intended.
Section 7.14 Best Efforts. Subject to the terms and conditions herein
provided, each party shall use its best efforts to perform or fulfill all
conditions and obligations to be performed or fulfilled by it under this
Agreement so that the transactions contemplated hereby shall be consummated as
soon as practicable. Each party also agrees that it shall use its 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 this Agreement and the transactions contemplated
herein.
IN WITNESS WHEREOF, the corporate parties hereto have caused this
Agreement to be executed by their respective officers, hereunto duly authorized,
as of the date first-above written.
ATTEST: LSI COMMUNICATIONS, INC.
BY:/s/ Xxxx Xxxxxx
------------------------------------- ---------------------------------
Secretary or Assistant Secretary President
ATTEST: PEREGRINE CONTROL TECHNOLOGIES, INC.
/s/ Xxxxx Xxxx BY: /s/ Xxxxxx Xxxxxxxx
-------------------------------------- ---------------------------------
Secretary or Assistant Secretary President
The undersigned shareholders of PEREGRINE CONTROL TECHNOLOGIES, INC.
hereby agree to participate in the Exchange on the terms set forth above.
Subject to Section 7.11 above, each of the undersigned hereby represents and
affirms that he has read each of the representations and warranties of PEREGRINE
CONTROL TECHNOLOGIES, INC. set out in Article I hereof and that, to the best of
his knowledge, all of such representations and warranties are true and correct.
/s/ Xxxxx Xxxxxxx, individually
------------------------
Xxxxx Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx, individually
------------------------
Xxxxxxx X. Xxxxxxxx
/s/ Xxxxxxx Xxxxxxxx, individually
------------------------
Xxxxxxx Xxxxxxxx
