2.01
MERGER AGREEMENT AND PLAN OF REORGANIZATION
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THIS AGREEMENT dated as of the 22nd day of February, 1996,BY AND AMONG
II-VI INCORPORATED, a Pennsylvania corporation ("II-VI")
and II-VI LIGHTNING OPTICAL INCORPORATED, a Pennsylvania corporation,
("II-VI Lightning") (hereinafter sometimes collectively referred to as
the "Acquiring Companies"),
AND
LIGHTNING OPTICAL CORPORATION, a Florida corporation ("Lightning
Optical"), and XXXX X. XXXXXXX, XX., J. XXXXXXXXXXX XXXX, XXXXX X.
XXXXXXX, XXXXXXXXX X. XXXXXX, XX. XXXXXXX X. XXXXXXX, XXXXX X. XXXXXXX,
XXXXXX X. XXXXXX, XXXXXXX X. XXXXXXXXX, XX. XXXXX X. X. XXXX AND DR.
XXXX XXXXX, individuals and shareholders of Lightning Optical (the
"Shareholders") (Lightning Optical and the Shareholders are hereinafter
sometimes referred to collectively as the "Sellers" and Xxxx X. Xxxxxxx,
Xx., J. Xxxxxxxxxxx Xxxx, Xxxxx X. Xxxxxxx and Xxxxxxxxx X. Xxxxxx, are
hereinafter sometimes referred to as the "Majority Shareholders").
W I T N E S S E T H:
WHEREAS, Lightning Optical is engaged in the design, development,
manufacture and sale of optics, coatings, crystals and cavities used in
industrial, medical and scientific lasers and electro-optic equipment
(the "Business") and has its principal place of business in Tarpon
Springs, Florida;
WHEREAS, II-VI Lightning, a Pennsylvania business corporation qualified
to do business in Florida, is a wholly owned subsidiary of II-VI;
WHEREAS, the Boards of Directors of II-VI Lightning and Lightning
Optical have approved the acquisition of Lightning Optical by II-VI
Lightning through a merger (the "Merger"), pursuant to the Plan of
Merger attached hereto and incorporated herein as Exhibit "A" and the
transactions contemplated by this Agreement, in accordance with the
applicable provisions of the statutes of the State of Florida and
Commonwealth of Pennsylvania, which permit such Merger; and
WHEREAS, the parties intend that the Merger shall qualify as a
reorganization within the meaning of Section 368(a)(2)(D) of the
Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the promises and of the respective
representations, warranties, covenants, agreements and conditions
contained herein, and intending to be legally bound hereby, the parties
hereto for themselves, their successors and assigns, hereby agree as
follows:
MERGER.
At the Closing, Lightning Optical shall be merged into II-VI Lightning.
II-VI Lightning shall be the surviving corporation and shall continue to
be a Pennsylvania corporation and the separate existence of Lightning
Optical shall cease. The corporate existence of II-VI Lightning shall
continue unimpaired and unaffected by the Merger.
SURVIVING CORPORATION.
Articles of Incorporation; Bylaws. The Articles of Incorporation and
By-laws of II-VI Lightning in effect immediately prior to the Closing
shall be the Articles of Incorporation and By-laws of II-VI Lightning
after the Closing, until thereafter amended or repealed in accordance
with its terms and as provided by the Pennsylvania Business Corporation
Law of 1988 ("BCL").
Directors and Officers. The directors and officers of II-VI Lightning
immediately prior to the Closing shall be the directors and officers of
II-VI Lightning immediately after the Closing until their successors are
duly elected and qualified.
MERGER CONSIDERATION AND CONVERSION OF SHARES. Upon the terms and
subject to the satisfaction of the conditions contained in this
Agreement and the Plan of Merger, at the Closing:
Conversion of Lightning Optical Shares. Each share of Lightning Optical
stock issued and outstanding as of the Closing ("Lightning Optical
Shares") shall be exchanged for (a) validly issued, fully paid and
nonassessable common stock, without par value, of II-VI ("II-VI Stock")
and (b) cash in the amounts and proportions as set forth in Section 3.2
hereof.
Merger Consideration. II-VI Lightning agrees to pay a total of Four
Million Three Hundred Twenty-five Thousand and 00/100 ($4,325,000.00)
Dollars, as adjusted in accordance with Section 3.3 hereof, (hereinafter
the "Merger Consideration") for all of the Lightning Optical Shares
which shall be paid and delivered at Closing as follows:
II-VI Stock. The stock portion of the Merger Consideration shall be
paid in whole shares of II-VI Stock and shall be determined in the sole
discretion of each Shareholder as set forth on Exhibit "B" which is
attached hereto and made a part hereof. The II-VI Stock shall be
registered in accordance with the Registration Rights Agreement which is
attached hereto and made a part hereof and marked as Exhibit "C". The
per share value of II-VI Stock to be used to determine the stock portion
of the Merger Consideration shall be determined based upon the per share
closing price of II-VI Stock as reported by the NASDAQ National Market
System on the day preceding the Closing, provided, however, that the
lowest per share price which shall be used for purposes of this
transaction will be Nine ($9.00) Dollars per share and the highest price
will be Fourteen ($14.00) Dollars per share. In the event that the
closing price of II-VI Stock as reported by the NASDAQ National Market
System on the day preceding the Closing is less than Nine ($9.00)
Dollars per share, then the value of II-VI Stock to be used to determine
the stock portion of the Merger Consideration shall be Nine ($9.00)
Dollars per share. In the event that the closing price of II-VI Stock
as reported by the NASDAQ National Market System on the day preceding
the Closing is greater than Fourteen ($14.00) Dollars per share, then
the value of II-VI Stock to be used to determine the stock portion of
the Merger Consideration shall be Fourteen ($14.00) Dollars per share.
The total II-VI Stock consideration to be paid by II-VI Lightning shall
not exceed Fifty-five (55%) percent of the Merger Consideration and
shall not be less than Twenty (20%) percent of the Merger Consideration.
Cash. The balance of the Merger Consideration shall be paid in cash or
certified funds to each Shareholder as set forth on Exhibit "B", less
the amount to be paid into escrow as hereinafter set forth.
Escrow. The Majority Shareholders agree that Three Hundred Two Thousand
Seven Hundred Fifty Dollars ($302,750.00) of the cash portion of the
Merger Consideration due them shall be deposited in an escrow account
(the "Escrow Account") at Closing in accordance with the terms and
conditions of an escrow agreement in substantially the form attached
hereto and incorporated herein as Exhibit "D" (the "Escrow Agreement").
The Escrow Account shall be used to reimburse II-VI Lightning for any
adjustment in the Merger Consideration as provided for in Section 3.3,
uncollected customer receivables or excess warranty returns as provided
for in Section 11, and any breaches of the representations and
warranties contained in this Agreement as provided for in Section 10.
Adjustment of Merger Consideration. The parties hereto agree that the
Merger Consideration shall be adjusted as follows:
If the Net Worth, as hereinafter defined, of Lightning Optical is less
than One Million Fifty Thousand ($1,050,000.00) Dollars as of the
Closing, the Merger Consideration shall be reduced by the difference
between the Net Worth and One Million Fifty Thousand ($1,050,000.00)
Dollars.
If the Net Worth of Lightning Optical is greater than One Million Two
Hundred Thousand ($1,200,000.00) Dollars as of the Closing, the Merger
Consideration shall be increased by the difference between the Net Worth
and One Million Two Hundred Thousand ($1,200,000.00) Dollars.
The "Net Worth" of Lightning Optical shall be the book value of
Lightning Optical as of the Closing and shall be calculated by the
parties hereto in the same manner as the book value of Lightning Optical
was calculated as reported on the financial statements of Lightning
Optical dated October 31, 1995 which are attached hereto and made a part
hereof and marked as Exhibit "E". The parties agree to prorate any
monthly (or quarterly or annual) items of expense as of the date of the
Closing. The calculation of Net Worth shall be made within sixty (60)
days after the Closing.
Any payment due II-VI Lightning by reason of a decrease in the Merger
Consideration in accordance with Section 3.3(a) hereof shall be made
first from the Escrow Account and then by the Majority Shareholders
within ten (10) days of receipt of the calculation who shall be jointly
and severally liable for any deficiency in the Escrow Account. Any
payment due the Shareholders by reason of an increase in the Merger
Consideration shall be made by II-VI Lightning to the Shareholders in
cash or certified funds within ten (10) days of receipt of the
calculation in proportion to their share ownership of Lightning Optical
as set forth on Exhibit "B".
Exchange of Lightning Optical Shares and Payment of Merger
Consideration.
At the Closing, Sellers shall deliver all of the Lightning Optical
Shares to II-VI Lightning;
At the Closing, II-VI Lightning shall deliver the certificates
representing shares of II-VI Stock required to effect the exchange in
accordance with Section 3.2(a) hereof. II-VI shall also deliver, in
certified funds or by wire transfer, the cash required to make the
payments referred to in Section 3.2(b) as well as the amount of cash
necessary to fund the Escrow Account in accordance with Section 3.2(c)
hereof.
II-VI Lightning Shares Unaffected. At the Closing, by virtue of the
Merger, each issued and outstanding share of common stock of II-VI
Lightning shall continue unchanged and remain outstanding as a share of
II-VI Lightning common stock.
CLOSING.
The closing of the transactions provided for in this Agreement shall
occur on February 22, 1996, at 8:30 A.M. at the offices of Xxxxxxxx,
German & Xxxxx, P.C., 00xx Xxxxx, Xxx Xxxxxx Xxxxx, Xxxxxxxxxx,
Xxxxxxxxxxxx 00000 or at such other time and place as the parties may
otherwise mutually agree to in writing (the "Closing"). In addition to
the exchange of shares and payment of the Merger Consideration in
accordance with the provisions of Section 3.2 hereof, at the Closing:
Sellers. Sellers shall deliver to II-VI Lightning the following
documents which shall be fully executed and enforceable in accordance
with their terms:
The Plan of Merger and all other documents necessary to effect the
Merger;
the certificate contemplated by Section 8.1 hereof;
the opinion of counsel contemplated by Section 8.3 hereof;
the Escrow Agreement contemplated by Section 3.2(c) hereof;
the Investor Agreements contemplated by Section 8.6 hereof;
the Registration Rights Agreements contemplated by Section 8.7 hereof;
all third party written consents required to effect the transaction
contemplated herein in form and substance satisfactory to II-VI
Lightning; and
Sellers shall take all such other actions and provide at the Closing any
and all other documents reasonably necessary to consummate the
transactions contemplated herein and as may be required to allow II-VI
Lightning to operate the Business upon and after the Closing.
II-VI Lightning. II-VI Lightning shall deliver to Sellers the following
documents which shall be fully executed and enforceable in accordance
with their terms:
the certificate contemplated by Section 7.1 hereof;
opinion of counsel contemplated by Section 7.2 hereof;
the Escrow Agreement contemplated by Section 3.2(c) hereof;
the Investor Agreements contemplated by Section 8.6 hereof;
the Registration Rights Agreements contemplated by Section 8.7 hereof;
and
II-VI and II-VI Lightning shall take all such other actions and provide
at the Closing any and all other documents reasonably necessary to
consummate the transactions contemplated herein.
REPRESENTATIONS AND WARRANTIES OF SELLERS.
The Majority Shareholders, jointly and severally, hereby represent and
warrant to II-VI and II-VI Lightning the following:
Organization, Powers, Etc. Lightning Optical is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Florida and has all requisite power and authority to own and
operate the Business as it is now being conducted, to own or use the
properties and assets that it purports to own or use and to execute and
deliver this Agreement and to perform the provisions hereof. Lightning
Optical is duly qualified to do business as a foreign corporation and is
in good standing under the laws of each state or other jurisdiction in
which either the ownership or use of the properties owned or used by it,
or the nature of the activities conducted by it, requires such
qualification. The execution and delivery of this Agreement by
Lightning Optical does not, and the consummation of the transactions
contemplated hereby and the performance by Lightning Optical of this
Agreement will not, violate any provisions of Lightning Optical's
Articles of Incorporation or By-laws, and will not result in the
acceleration of any obligation under any mortgage, lien, contract,
judgment or decree, instrument, order or arbitration award, to which
Lightning Optical is a party or by which Lightning Optical is bound and
which affects its assets or property. The Board of Directors of
Lightning Optical has duly authorized the transactions connected with
the Agreement, the Plan of Merger and the performance by Lightning
Optical of its obligations hereunder, and no other proceedings on the
part of Sellers or any consents, approvals, authorizations, permits from
or notifications to any person, entity or governmental or regulatory
authority, are necessary to authorize the performance by Sellers of
their obligations hereunder.
Compliance with Laws. Lightning Optical is in material compliance with
all applicable laws, regulations, ordinances and rules of each local,
state and federal government or administrative body having jurisdiction
over Lightning Optical in its operation of the Business as it is now
being conducted, and/or any of the assets owned or controlled by
Lightning Optical. The Sellers have set forth on Exhibit "F" a list of
all international sales which have been made by Lightning Optical
without an export license.
Sale, Disposition, Transfer of Assets. Sellers have not sold (other
than the condemnation of a portion of the real property of Lightning
Optical which will not adversely affect future development of the real
property), disposed of, transferred, or encumbered any of the Lightning
Optical Shares or any assets or property of Lightning Optical (or
conducted any discussions/negotiations with any third party to do so)
after the execution of that certain Letter of Intent dated January 10,
1996 by and among II-VI Virgo Incorporated and Sellers, except in the
regular course of its business or with the express approval of the
Acquiring Companies.
Licenses and Permits. Lightning Optical has all existing licenses and
permits (except the export license that may be required for the sales
listed on Exhibit "F") from all federal, state, and local governmental
entities required to operate the Business as it is presently conducted.
Contracts and Commitments. Lightning Optical is not in breach of or in
default under any of the terms or provisions of any contracts or
commitments which would adversely affect the Business as it is presently
conducted or title to of any of its assets or properties.
Property. Lightning Optical has good and marketable title to all of
the real property and the assets ("Assets") set forth on Exhibit "G"
attached hereto and made a part hereof free and clear of all mortgages,
security interests, liens, pledges, restrictions, charges or
encumbrances of any nature whatsoever, (collectively, "Liens") except
those Liens set forth on Exhibit "H" attached hereto.
Trademarks, Patents, Etc. Except as set forth on Exhibit "I" attached
hereto and made a part hereof, there are no other patents, trademarks,
service marks, trade names, copyrights or applications or registrations
therefor ("Proprietary Rights") held or used by Lightning Optical.
Lightning Optical has not received any notice and has no knowledge
indicating that it is infringing or violating any Proprietary Rights of
others in the conduct of the Business. Except as otherwise set forth on
Exhibit "I", Lightning Optical is not obligated or under any liability
whatsoever to make any payments by way of royalties, fees or otherwise
to any owner or licensee of or other claimant to any Proprietary Right,
in connection with the conduct of the Business.
Litigation. Sellers are not a party to any litigation or, threatened
with any litigation, governmental or other proceeding, investigation,
strike or other labor dispute or other controversy which might affect
the validity of this Agreement or the Plan of Merger or which,
individually or in the aggregate, might have a materially adverse effect
on the Assets or Business and there is no outstanding order, writ,
injunction, decree or ruling of any court or governmental agency against
or affecting a material portion of the Assets or the Business.
Taxes. Lightning Optical has filed or caused to be filed, within the
times and within the manner prescribed by law, all federal, state and
local tax returns and tax reports which are required to be filed by it
with respect to the Business and its Assets. Such returns are complete
and correct in all material respects, and Lightning Optical is not in
default in the payment of any taxes shown thereon. All federal, state
and local taxes due from Lightning Optical have been fully paid through
the date of Closing, or adequate provision made therefore. The charges,
accruals and reserves with respect to taxes on the books of Lightning
Optical and as reflected in the Financial Statements are adequate in
accordance with the historical tax method of accounting of Lightning
Optical consistently applied and there are no proposed tax assessments
against the Business or the Assets except as disclosed in the Financial
Statements.
Employee Benefits.
Lightning Optical represents and warrants that Exhibit "J" attached
hereto and made a part hereof contains a complete and accurate list of
all Pension Plans and Welfare Plans, as those terms are defined under
Sections 3(1) and 3(2) of the Employee Retirement Income Security Act of
1974, as amended, ("ERISA"), which Lightning Optical has ever maintained
("Employee Benefit Plans"). Lightning Optical has delivered to the
Acquiring Companies true and correct copies of all documents relating to
the Employee Benefit Plans.
Except as set forth in Exhibit "K" attached hereto and made a part
hereof, Lightning Optical has performed all of its obligations under the
Employee Benefit Plans and has accrued on its financial statements all
of the obligations and liabilities under the Employee Benefit Plans.
Lightning Optical is in full compliance with ERISA, the Internal Revenue
Code of 1986, as amended, and all other applicable laws, regulations and
administrative orders or rulings with respect to the Employee Benefit
Plans.
Lightning Optical has never established, maintained, nor contributed to
nor otherwise participated in, nor had an obligation to maintain,
contribute to, nor otherwise participate in, any Multi-Employer Plan, as
defined under Section 3(37) of ERISA.
No Broker's or Finder's Fees. No agent, broker, finder, person or firm
acting on behalf of Sellers or under Seller's authority is or will be
entitled to any commissions or broker's or finder's fees from the
Acquiring Companies or Sellers with respect to any of the transactions
contemplated herein.
Legal, Valid and Binding Obligation. The execution and delivery of this
Agreement and of all documents required by this Agreement to be executed
and delivered by Sellers to II-VI Lightning, and the consummation of the
transactions contemplated hereby, will not violate any provision of any
order, writ, judgment or award applicable to Sellers, or to the
knowledge of Sellers, any law, statute, rule or regulation of any
governmental body, agency or department, and will not conflict with or
result in any violation of any of the terms, conditions or provisions
hereof or constitute a default under or result in the creation of any
lien, charge, security interest or encumbrance upon the Business or the
Assets.
Financial Statements. The financial statements of Lightning Optical
dated October 31, 1995 and December 31, 1995, attached hereto and made a
part hereof and marked as Exhibit "E", (collectively, the "Financial
Statements"), are all true, correct and complete, present fairly and
accurately the financial position, assets, liabilities and results of
operation of the Business as of the dates and periods indicated thereon,
and since the end of the respective periods indicated on such Financial
Statements, there has been no adverse material change in the financial
condition, assets, liabilities (accrued, absolute, contingent or
otherwise) of the Business. The parties hereto acknowledge that the
Financial Statements have not been prepared in accordance with generally
accepted accounting principles.
Absence of Certain Changes or Events. Except as set forth in Exhibit
"L" attached hereto and made a part hereof, since January 10, 1996,
there has not been:
any material adverse change in the Business or the Assets;
any damage, destruction or casualty loss, whether covered by insurance
or not, materially and adversely affecting the Business or the Assets;
with respect to those employees employed by the Business, (i) any
increase in the rate or terms of compensation payable or to become
payable by Lightning Optical to its directors, officers or employees,
(ii) any increase in the rate or terms of any bonus, insurance, pension
or Employee Benefit Plan, payment or arrangement made to, for or with
any such directors, officers or employees, or (iii) any special bonus or
remuneration paid, or any written employment contract executed or
amended;
any entry into any agreement, commitment or transaction (including,
without limitation, any borrowing, capital expenditure or capital
financing or any amendment, modification or termination of any existing
agreement, commitment or transaction) by Lightning Optical, which is
material to the Business;
any conduct of the Business which is outside the ordinary course of the
Business or is not substantially in the manner that the Business was
heretofore conducted;
any purchase or other acquisition of property, any sale, lease or other
disposition of property, or any expenditure, except in the ordinary
course of the Business;
any material liability incurred except in the ordinary course of the
Business; or
any encumbrance or consent to encumbrance of any Assets.
Leases. All of the real property leases set forth on Exhibit "M" are
valid, binding and enforceable in accordance with their respective
terms, are in full force and effect, and there are no existing material
defaults thereof by Sellers or any of the lessors thereunder. The
lessors under such leases have consented or prior to the Closing will
have consented (where such consent is necessary) to the consummation of
the transactions contemplated by this Agreement.
Insurance. Exhibit "N" which is attached hereto and made a part
hereof sets forth a list of all current policies of fire, liability,
worker's compensation and other forms of insurance owned or held by and
insuring Lightning Optical and the Shareholders or the Assets with
respect to the Business. All insurance premiums covering all periods up
to and including Closing have been paid, or adequate provisions made
therefore by Lightning Optical.
Labor Matters. Lightning Optical is in compliance with applicable
laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and is not engaged in any
unfair labor practice. There is no labor strike, dispute, slowdown or
stoppage actually pending or, to the best knowledge of Lightning
Optical, threatened against or affecting Lightning Optical. Lightning
Optical has not experienced any primary work stoppage involving
employees of the Business. No labor unions presently represent any
employees of Lightning Optical and Sellers are not aware of any pending
or threatened effort to organize employees involved with the Business
into a labor union or similar collective bargaining unit.
Certain Contracts and Arrangements. Except as listed in Exhibit "O",
which is attached hereto and made a part hereof, Lightning Optical is
not a party to any material contract, commitment or agreement relating
to or affecting the Business. For the purposes of this Section 5.18,
contracts, commitments or agreements with an entity or person for
obligations of or benefits to Lightning Optical valued in excess of
$20,000 shall be considered material.
Order Backlog. The backlog of sales orders for purchases of products of
the Business that exists on the date of the Closing, will not be
materially different from the historical backlog of Lightning Optical
prior to the Closing. A listing of the backlog is more fully set forth
on Exhibit "P" which is attached hereto and made a part hereof.
Environmental Compliance.
Hazardous Substances. Except as set forth on Exhibit "Q", which is
attached hereto and made a part hereof, and other than in compliance
with all applicable Environmental Laws, no Hazardous Substance (i) is or
has been used, treated, stored, generated, manufactured or otherwise
handled on any property or premises with respect to which the Business
has been conducted (a "Business Property") while operated by Lightning
Optical or (ii) has otherwise come to be located in, on or under any
Business Property while operated by Lightning Optical. No Hazardous
Substance is stored on any Business Property except in quantities
necessary to satisfy the reasonably anticipated use or consumption by
Sellers. No Business Property has been contaminated by any Hazardous
Substance while operated by Lightning Optical. With respect to any
Business Property previously leased, controlled, operated or occupied by
Sellers, no contamination occurred during the period of the Sellers'
tenancy, control, operation or occupancy and, to the best of Sellers'
knowledge, information and belief, no property adjacent or in the
immediate vicinity of any Business Property is contaminated.
Permits. The permits described on Exhibit "R", which is attached
hereto and made a part hereof, are all the permits and authorizations
required by any Environmental Law for the business or operations and the
current use, occupancy or condition of any Business Property.
Compliance with Laws. Each Business Property and all operations of the
Business are in material compliance with all applicable Environmental
Laws, including, without limitation, the terms and conditions of any
permits described on the attached Exhibit "R". Sellers, are not aware
of and have not received notice of any past, present or anticipated
future events, conditions, activities, investigations, studies, plans or
proposals that would interfere with or prevent compliance by Lightning
Optical or any Business Property with any Environmental Law or which may
give rise to any common law or other liability against Lightning
Optical, or involving the Business or operations of Lightning Optical at
or with respect to any Business Property, and related in any way to
Hazardous Substances or Environmental Laws.
Proceedings. Sellers have not received any notice, and do not have
actual knowledge, of any pending or threatened claim, action, demand,
suit, proceeding, hearing or governmental study or investigation against
or involving Lightning Optical with respect to the Business or any
Business Property and related in any way to Hazardous Substances. With
respect to the Business and/or Assets, no claims have been made against
Lightning Optical under any Environmental Law, and no presently
outstanding citations or notices have been issued against Lightning
Optical under any Environmental law (except minor claims, all of which
have been resolved without material damages, fines or penalties),
including without limitation any claim relating to or arising out of the
manufacture, processing, distribution, generation, use, treatment,
storage, disposal, spill, leak, release, transport or other handling of
any Hazardous Substance.
Underground Storage Tanks. There are no underground storage tanks
(whether or not excluded from regulation under any Environmental Law) on
any Business Property or otherwise owned or operated by Lightning
Optical, with respect to the Business or the Assets, including all
underground storage tanks in use, out of service, closed or
decommissioned in place. All underground storage tanks previously on
any Business Property owned or operated by Lightning Optical with
respect to the Business have been properly decommissioned in compliance
with all applicable Environmental Laws.
Waste Disposal. No wastes, including without limitation, garbage and
refuse, have been disposed of on any Business Property. All wastes
generated by Lightning Optical with respect to the Business and/or the
Assets are and have been properly transported off site and disposed of
in compliance with all applicable Environmental Laws. With respect to
the Business, Lightning Optical has not arranged for the disposal or
treatment of any Hazardous Substances at, and has not transported or
arranged for transportation on behalf of itself or any third party any
Hazardous Substances to, any facility, site or property listed or
proposed for listing on the National Priority List or the Comprehensive
Environmental Response, Compensation, Liability Information System list
compiled by the Environmental Protection Agency or any similar or
comparable list compiled or maintained by any state or local
governmental authority.
Records. Sellers have disclosed and made available to the Acquiring
Companies true, complete and correct copies or results of any reports,
studies, analysis, tests or monitoring in the possession of or initiated
by Lightning Optical pertaining to the existence of Hazardous Substances
and any other environmental concerns relating to any Business Property,
the Business, the Assets, or any operations of Lightning Optical with
respect thereto.
For purposes of this Section 5.20, the capitalized terms shall be
defined as follows:
Environmental Law. The term "Environmental Law" means any federal,
state or local statute, regulation or ordinance pertaining to the
protection of human health or the environment and any applicable orders,
judgments, decrees, permits, licenses or other authorizations or
mandates under such laws.
Hazardous Substance. The term "Hazardous Substance" means any material
regulated as such under applicable environmental laws or listed as a
hazardous substance under the Comprehensive Environmental Response,
Compensation and Liability Act or any comparable state law that is
applicable. Furthermore, without limitation, Hazardous Substance
includes petroleum or any fraction thereof, regulated under the Resource
Conservation and Recovery Act and similar local laws, and radio-
neucleoides and similar radioactive waste materials, regulated under the
Atomic Energy Act and similar federal and state laws.
Contamination. The term "Contamination" or "Contaminated" means the
presence of a Hazardous Substance in the soil, water (including surface
water and groundwater) or ambient air if such presence of a Hazardous
Substance constitutes a violation of applicable Environmental Laws or if
removal or remedial action is required by applicable Environmental Laws
with respect to such presence of a Hazardous Substance or legally could
be required by a governmental agency or court under applicable
Environmental Laws.
Capitalization. The authorized capital stock of Lightning Optical
consists of 1,000,000 shares of common stock, par value $.01 per share,
of which 732,875 shares are issued and outstanding and 500,000 shares of
preferred stock, par value $.01 per share, none of which is issued and
outstanding, which constitute all of the Lightning Optical Shares. All
of the Series A Preferred Shares have been validly redeemed immediately
prior to the Merger. Shareholders are and will be at Closing the sole
record and beneficial owners and holders of the Lightning Optical
Shares, free and clear of all liens and encumbrances. No legend or
other reference to any purported encumbrance appears upon any
certificate representing the Lightning Optical Shares other than the
Rule 144 restrictive legend. The Lightning Optical Shares have been
duly authorized and validly issued and are fully paid and nonassessable.
There are no contracts or agreements of any kind relating to the
issuance, sale, or transfer of any equity or other securities of
Lightning Optical. None of the outstanding Lightning Optical Shares was
issued in violation of law. Lightning Optical does not have any
contract or agreement to acquire, any equity securities or other
securities of any third party or any direct or indirect equity or
ownership interest in any other business. The Sellers have performed
all of their obligations and have no further liability in connection
with the redemption on August 24, 1995 of Two Hundred Five Thousand
(205,000) shares of the common stock of Lightning Optical owned by
Xxxxxxx X. Xxxxxxxxxxx.
Books and Records. The books on August 24, 1995 of account, minute
books, stock record books, and other records of Lightning Optical, all
of which have been made available to the Acquiring Companies, are
complete and correct and have been maintained in accordance with sound
business practices, including the maintenance of an adequate system of
internal controls. The minute books of Lightning Optical contain
accurate and complete records of all meetings held of, and corporate
action taken by, the stockholders, the Board of Directors, and
committees of the Board of Directors of Lightning Optical, and no
meeting of any such stockholders, Board of Directors, or committee has
been held for which minutes have not been prepared and are not contained
in such minute books.
No Undisclosed Liabilities. Lightning Optical has no liabilities or
obligations of any nature whatsoever except for liabilities or
obligations reflected in or reserved against in the Financial Statements
and except as set forth on Exhibit "H".
Accounts Receivable All accounts receivable of Lightning Optical that
are reflected on the Financial Statements or on the accounting records
of Lightning Optical as of the Closing (collectively, the "Accounts
Receivable") are set forth on Exhibit "S" which is attached hereto and
made a part hereof, and represent or will represent valid obligations
arising from sales actually made or services actually performed in the
ordinary course of business. Unless paid prior to the Closing, the
Accounts Receivable are or will be as of the Closing current and
collectible as shown on the Financial Statements.
Inventory All inventory of Lightning Optical, whether or not reflected
in Financial Statements, consists of a quality and quantity usable and
salable in the ordinary course of the Business, except for obsolete
items and items of below-standard quality, all of which have been
written off or written down to net realizable value in the Financial
Statements. The quantities of each item of inventory (whether raw
materials, work-in-process, or finished goods) are not excessive, but
are reasonable in the present circumstances of Lightning Optical.
No Misstatements. Neither this Agreement, nor any Exhibits attached
hereto, nor any other document, record or material provided by Sellers
to the Acquiring Companies in connection with the transactions
contemplated hereunder, contains any untrue statement of material fact,
or omits to state a fact necessary in order to make the statement
contained herein and/or therein in light of the circumstances in which
they were made, not misleading.
No Insolvency. No insolvency proceedings of any character, including
without limitation, bankruptcy, receivership, reorganization or
arrangement with creditors, voluntary or involuntary, affecting the
Assets or the Business, are pending or threatened. Sellers have not
made any assignment for the benefit of creditors, and has/have not taken
any other action with a view to, or which will constitute the basis for
the institution of any such insolvency proceedings which would affect
the Assets or the Business.
REPRESENTATIONS AND WARRANTIES OF ACQUIRING COMPANIES.
II-VI and II-VI Lightning hereby represent and warrant the following to
the Sellers:
Organization, Powers, Etc. The Acquiring Companies are corporations
duly organized, validly existing and in good standing under the laws of
the Commonwealth of Pennsylvania and have all requisite power and
authority to own and operate their respect businesses as presently
conducted and to execute and deliver this Agreement and the other
documents referred to herein and to perform the provisions hereof. The
execution and delivery of this Agreement and the other documents
referred to herein does not, and the consummation of the transactions
contemplated hereby and the performance of this Agreement and the other
documents referred to herein will not, violate any provisions of the
articles of incorporation or by-laws of the Acquiring Companies and will
not result (with notice or the passage of time) in a default under or
the acceleration or breach of any obligation under any mortgage, lien,
contract, judgment or decree, instrument, order or arbitration award, to
which the Acquiring Companies are a party or by which they are bound.
The Boards of Directors of the Acquiring Companies have duly authorized
the execution and delivery of this Agreement the performance of the
obligations hereunder, and no other proceedings on the part of II-VI or
II-VI Lightning are necessary to authorize the performance of their
obligations hereunder.
Authorized Stock. The shares of II-VI Stock which are to be delivered
hereunder have been duly authorized and validly issued by II-VI and
shall be delivered to the Shareholders free and clear of any liens and
encumbrances.
II-VI Information. All of the information which has been provided to
the Shareholders by II-VI under paragraph 1 of the Investor Agreement is
true and correct in all material respects.
Litigation. The Acquiring Companies are not a party to any litigation
or, to the best of their knowledge, threatened with any litigation,
governmental or other proceeding, investigation, strike or other labor
dispute or other controversy which might affect the validity of this
Agreement or which, individually or in the aggregate, might result in
any material liability to the Acquiring Companies or materially and
adversely affect their assets or operations, and there is no outstanding
order, writ, injunction, decree or ruling of any court or governmental
agency against or affecting the Acquiring Companies or a material
portion of their assets or business.
Broker's and Finder's Fees. No agent, broker, finder, person or firm
acting on behalf of the Acquiring Companies or under their authority is
or will be entitled to any commissions or broker's or finder's fees with
respect to any of the transactions contemplated hereof.
Legal, Valid and Binding Obligation. The execution and delivery of this
Agreement and of all documents required by this Agreement to be executed
and delivered by the Acquiring Companies to Sellers, and the
consummation of the transactions contemplated hereby will not violate
any provision of any order, writ, judgment, award, law, statute, rule or
regulation of any court, arbitrator or governmental body, agency or
department and will not conflict with or result in any violation of any
of the terms, conditions or provisions hereof.
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS.
The obligations of Sellers under this Agreement are subject to the
satisfaction at or prior to the Closing of each of the following
conditions:
Certificate. The Acquiring Companies shall have performed and complied
with all of the covenants and agreements contained in this Agreement
required to be performed and complied with by the Acquiring Companies at
or prior to the Closing, and the representations and warranties of the
Acquiring Companies set forth in this Agreement shall be true and
correct in all material respects as of the date of the Closing, as
though made at and as of the date hereof (except as otherwise
contemplated by this Agreement), and Sellers shall receive a certificate
to that effect signed on behalf of the Acquiring Companies.
Legal Opinion. Sellers shall have received an opinion from Xxxxxxxx,
German & Xxxxx, P.C., counsel for the Acquiring Companies dated the date
of the Closing and in form and substance reasonably satisfactory to
Sellers and its counsel, substantially to the effect that:
The Acquiring Companies are corporations duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania;
This Agreement has been executed and delivered by the Acquiring
Companies and (assuming the Agreement is a valid and binding obligation
of Sellers) is a valid and binding obligation of the Acquiring
Companies, enforceable against the Acquiring Companies in accordance
with its terms, except that such enforcement may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditor's rights, and (ii)
general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law); and
The actions of execution, delivery and performance of this Agreement by
the Acquiring Companies will not constitute a violation of the articles
of incorporation or by-laws (or other similar governing documents), as
currently in effect for the Acquiring Companies.
The shares of II-VI Stock which are to be delivered hereunder have been
duly authorized and validly issued by II-VI and shall be delivered to
the Shareholders free and clear of any liens and encumbrances.
Such opinion may expressly rely as to matters of fact upon certificates
furnished by the Acquiring Companies, executed by appropriate officers
and directors of the Acquiring Companies and by public officials.
Consents. All required consents and approvals for the consummation of
the transactions hereunder, including, without limitation, those listed
on Exhibit "T" attached hereto and made part hereof shall have been
obtained.
Employment Agreements. Employment Agreements will have been executed
between II-VI Lightning and the following individuals: X. Xxxxxxx, X.
Xxxxxx, C. Kennimore, X. Xxxxxx, X. Xxxxxx, A. Cassanho and X. Xxxxxxxx.
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING COMPANIES.
The obligations of the Acquiring Companies under this Agreement are
subject to the satisfaction at or prior to the Closing of each of the
following conditions:
Certificate. Sellers shall, in all material respects, have performed
and complied with the covenants and agreements contained in this
Agreement required to be performed and complied with by Sellers at or
prior to the Closing and the representations and warranties of Sellers
set forth in this Agreement shall be true and correct in all material
respects as of the date of the Closing, as though made at and as of the
date thereof (except as otherwise contemplated by this Agreement), and
the Acquiring Companies shall have received a certificate to that effect
signed on behalf of Sellers.
No Changes. There shall not have been, since January 10, 1996, any
material adverse change in the Business.
Legal Opinion. The Acquiring Companies shall have received an opinion
from Johnson, Blakely, Pope, Bokor, Xxxxxx & Xxxxx, P.A. counsel to
Sellers dated as of the Closing and in form and substance reasonably
satisfactory to the Acquiring Companies and their counsel, substantially
to the effect that:
Lightning Optical is a corporation duly organized, validly existing and
in good standing under the laws of the State of Florida;
The authorized capital stock of Lightning Optical consists of 1,000,000
shares of common stock, par value $.01 per share, of which 732,875
shares are issued and outstanding and 500,000 shares of preferred stock,
par value $.01 per share, none of which is issued and outstanding, which
constitute all of the Lightning Optical Shares. The Shareholders are
the sole record and beneficial owners and holders of the Lightning
Optical Shares, free and clear of all liens and encumbrances. The
Lightning Optical Shares have been duly authorized and validly issued
and are fully paid and nonassessable. There are no contracts or
agreements of any kind relating to the issuance, sale, or transfer of
any equity or other securities of Lightning Optical. None of the
outstanding Lightning Optical Shares was issued in violation of law.
Lightning Optical does not have any contract or agreement to acquire,
any equity securities or other securities of any third party or any
direct or indirect equity or ownership interest in any other business.
This Agreement has been executed and delivered by Sellers and (assuming
the Agreement is a valid and binding obligation of the Acquiring
Companies) is a valid and binding obligation of Sellers, enforceable
against Sellers, jointly and severally, in accordance with its terms,
except that such enforcement may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights, and (ii) general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law);
The execution and delivery of this Agreement and of all documents
required by this Agreement to be executed and delivered by Sellers to
II-VI Lightning, and the consummation of the transactions contemplated
hereby, will not violate any provision of any order, writ, judgment or
award applicable to Sellers, or any law, statute, rule or regulation of
any governmental body, agency or department, and will not conflict with
or result in any violation of any of the terms, conditions or provisions
terms, conditions or provisions hereof or any agreement or commitment to
which Lightning Optical or any Shareholder is a party, or constitute a
default under or result in the creation of any lien, charge, security
interest or encumbrance upon the Business or the Assets;
Lightning Optical is in material compliance with all applicable laws,
regulations, ordinances and rules of each local, state and federal
government or administrative body having jurisdiction over Lightning
Optical in its operation of the Business as it is now being conducted,
or any of the Assets owned or controlled by Lightning Optical;
Lightning Optical is not in breach of or in default under any of the
terms or provisions of any contracts or commitments which would
adversely affect the Assets or the Business as it is presently
conducted;
Sellers are not a party to any litigation or, threatened with any
litigation, governmental or other proceeding, investigation, strike or
other labor dispute or other controversy which might affect the validity
of this Agreement or the Plan of Merger or which, individually or in the
aggregate, might have a materially adverse effect on the Assets or
Business and there is no outstanding order, writ, injunction, decree or
ruling of any court or governmental agency against or affecting a
material portion of the Assets or the Business; and
The actions of execution, delivery and performance of this Agreement by
Sellers will not constitute a violation of the articles of incorporation
or by-laws (or other similar governing documents), as currently in
effect, for Lightning Optical and will not require any consent,
approval, authorization or permit of, or filing with or notification to,
any governmental or regulatory authority.
Such opinion may expressly rely as to matters of fact upon certificates
furnished by Sellers, by appropriate officers and directors of Sellers,
and by public officials.
Consents. All required consents and approvals for the consummation of
the transactions hereunder, including, without limitation, those listed
on Exhibit "T" attached hereto and made part hereof shall have been
obtained.
Employment Agreements. Employment Agreements will have been executed
between II-VI Lightning and the following individuals: X. Xxxxxxx, X.
Xxxxxx, C. Kennimore, X. Xxxxxx, X. Xxxxxx, A. Cassanho and X. Xxxxxxxx.
Investor Agreements. An investor agreement by and among II-VI and the
Shareholders in the form of Exhibit "U", attached hereto and made a part
hereof, (the "Investor Agreements") shall have been executed by each
Shareholder.
Registration Rights Agreements. A registration rights agreement by and
among II-VI and the Shareholders in the form of Exhibit "C", attached
hereto and made a part hereof (the "Registration Rights Agreements")
shall have been executed by each Shareholder.
FURTHER ASSISTANCE. Subsequent to the Closing, each of the parties
hereto, at the request of the other, shall execute, deliver and
acknowledge all such further instruments and documents and do and
perform all such other acts and deeds as may reasonably be required more
effectively to vest in each other the rights intended to be conferred
upon such party pursuant to this Agreement.
SURVIVAL; INDEMNIFICATION.
Survival; Remedy for Breach. The covenants, agreements, representations
and warranties of the parties hereto contained herein and in any exhibit
or schedule attached or delivered pursuant hereto shall survive the
Closing for a period of one (1) year from the date thereof (the
"Survival Date"), except as otherwise set forth in Section 10.3.
Any covenant, agreement, representation or warranty in respect of which
indemnity may be sought under Sections 10.1, 10.2 or 10.3 shall survive
the time at which it would otherwise terminate pursuant to this Section
if, prior to such time, a notice specifying with reasonable detail and
accuracy the breach thereof giving rise to such indemnity shall have
been given to the party against which such indemnity may be sought.
Indemnification.
The Majority Shareholders shall jointly and severally, indemnify, defend
and hold harmless the Acquiring Companies and their officers, directors,
employees and agents, (collectively, "Indemnities") from and against any
and all claims, proceedings, actions, demands, liabilities, damages
(including consequential, incidental and special damages) fines,
penalties, losses, costs, consultant fees and other monetary sums,
expenses (including reasonable attorneys' fees in connection with any
administrative proceedings, trial, appeal or petition for review) and
amounts paid in settlement ("Loss" or collectively, "Losses") of any
nature whatsoever, whether contingent or accrued, arising out of, in
connection with or in any way relating to (i) the breach by Sellers of
any representation or warranty or any other provision contained in this
Agreement, (ii) any liabilities or obligations of any of Sellers other
than the liabilities or obligations specifically disclosed in the
Financial Statements or in this Agreement, (iii) the relationship or
former relationship between Sellers and any entity or person who is or
was an employee of the Business with respect to any loss arising from
events which occurred prior to Closing, (iv) products of Lightning
Optical shipped prior to the Closing, arising from any claims or actions
brought for personal injury, death, property damage or other economic
losses, such as loss of use or loss of profits, whether such action or
claim is based on a theory of negligence, breach of warranty, (express
or implied), failure to discharge a duty to warn or instruct (whether
negligent or innocent) under any other legal theory in contract or tort,
(v) the actual or alleged presence, use, treatment, storage, generation,
manufacture, transport, release, leak, spill, disposal or other handling
of Hazardous Substances, at any location of or in connection with the
Business prior to Closing as set forth in Section 5.20, or (vi)
entitlement or claimed entitlement to any brokerage fee, commission or
finders fee incurred by reason of actions taken by Sellers.
Losses shall include without limitation (i) the cost of any
investigation, removal, remedial, defense (including without limitation
attorney and expert and technical consultant's fees) or other action
that is required by any Environmental Law, that is required by judicial
order or by order of or agreement with any governmental authority, that
is necessary or appropriate to prevent any such order from being issued
or that otherwise is reasonable under the circumstances or that is
required to respond to or defend any action that is premised on
Environmental Law or environmental common law causes of action, (ii)
capital expenditures necessary to cause the Assets or the operations or
Business to be in compliance with any and all requirements of
Environmental Laws, (iii) Losses for injury or death of any person,
including an Indemnitee, and (iv) Losses for damage to the property of
an Indemnitee or any other person, including diminution in value or loss
of use. The amount of Loss shall be reduced by the proceeds of any
insurance claim actually received by or paid to the Indemnitee in
respect of such Loss.
The Majority Shareholders' obligations under this Section are
conditioned upon receipt from II-VI or II-VI Lightning, on or prior to
the Survival Date, of a written notification of the Losses which are the
subject of indemnification and the applicable representation, warranty,
covenant or agreement of any claim for indemnity, which notice shall
preserve the Acquiring Companies' claim for indemnification and continue
Sellers' obligation to indemnify the Acquiring Companies hereunder until
such time as indemnification has been made or the claim has been
withdrawn or otherwise resolved. The notice required under this Section
10.2 shall be provided promptly on or prior to the Survival Date,
provided that any failure to give notice promptly shall not be a defense
to Sellers' obligation to indemnify if such failure to give notice
promptly has not materially increased the Loss incurred and then only to
the extent of such additional Loss incurred as a result of such failure
to give notice promptly.
The Acquiring Companies shall indemnify, defend and hold harmless
Sellers and their respective officers, directors, employees and agents,
(collectively, "Indemnities") from and against any and all claims,
proceedings, actions, demands, liabilities, damages (including
consequential, incidental and special damages) fines, losses, costs,
expenses (including reasonable attorneys' fees in connection with any
administrative proceeding, trial, appeal or petition for review) and
amounts paid in settlement ("Loss" or collectively, "Losses") of any
nature whatsoever, whether contingent or accrued, arising out of, in
connection with or in any way relating to (i) the breach of any
representation or warranty or any other provision contained in this
Agreement, (ii) any liabilities or obligations of any of the Acquiring
Companies, (iii) the relationship between the Acquiring Companies and
any entity or person who is or was an employee of the Business with
respect to any loss arising from events which occurred after Closing,
(iv) products of the Acquiring Companies shipped after the Closing,
arising from any claims or actions brought for personal injury, death,
property damage or other economic losses, such as loss of use or loss of
profits, whether such action or claim is based on a theory of
negligence, breach of warranty, (express or implied), failure to
discharge a duty to warn or instruct (whether negligent or innocent)
under any other legal theory in contract or tort, (v) the actual or
alleged use, treatment, storage, generation, manufacture, transport,
release, leak, spill, disposal or other handling of Hazardous
Substances, at any location of or in connection with the Business after
the Closing, or (vi) entitlement or claimed entitlement to any brokerage
fee, commission or finders fee incurred by reason of actions taken by
the Acquiring Companies.
The Acquiring Companies' obligations under this Section are conditioned
upon receipt from Sellers, on or prior to the Survival Date, of a
written notification of the Losses which are the subject of
indemnification and the applicable representation, warranty, covenant or
agreement of any claim for indemnity, which notice shall preserve
Sellers' claim for indemnification and continue the Acquiring Companies'
obligation to indemnify Sellers hereunder until such time as
indemnification has been made or the claim has been withdrawn or
otherwise resolved. The notice required under this Section 10.2 shall
be provided promptly on or prior to the Survival Date, provided that any
failure to give notice promptly shall not be a defense to the Acquiring
Companies' obligation to indemnify if such failure to give notice
promptly has not materially increased the Loss incurred and then only to
the extent of such additional Loss incurred as a result of such failure
to give notice promptly.
Special Agreements. Notwithstanding anything in this Agreement to the
contrary, the parties hereto agree as follows:
The covenants, agreements, representations and warranties relating to
any tax liability shall survive until March 15, 1997. If notice of
audit is received from any governmental agency before March 15, 1997,
the Majority Shareholders agree to be responsible for any additional
taxes, penalties and interest arising from such audit. II-VI Lightning
agrees to pay the accounting and legal fees incurred in any such audit
and further agrees to pay ten percent (10%) of any settlement of
additional taxes, penalties and interest arising from such audit.
Any claim for indemnification arising by reason of any willful or
fraudulent misrepresentation by the Sellers shall survive the Closing
for a period of three (3) years from the date thereof.
The parties hereto agree that any regulatory obligations, liabilities,
or deficiencies of any kind, which presently exist or which may be found
to exist under the export control regulations, arising prior to the date
of Closing, or arising after the date of Closing but in reference to
obligations, liabilities, or deficiencies occurring or existing prior to
the date of Closing, remain the responsibility of Lightning Optical.
The parties agree that any Losses arising from any possible regulatory
action taken after the Closing attributable to international sales by
Lightning Optical which occurred prior to the Closing, including
consultant and attorney fees attributable to any possible disclosure
process, shall be payable as follows:
Losses up to twenty-five thousand dollars ($25,000.00) shall be the sole
responsibility of the Sellers;
Losses between twenty-five thousand dollars ($25,000.00) and one hundred
thousand dollars ($100,000.0) shall be allocated eighty percent (80%) to
the Sellers and twenty percent (20%) to II-VI Lightning; and
Any Losses in excess of one hundred thousand dollars ($100,000.00) shall
be the sole responsibility of II-VI Lightning.
The Majority Shareholders shall be permitted to participate in any
decisions concerning a settlement with any governmental agencies of the
United States of America in this matter. The Majority Shareholders
agree to cooperate with II-VI Lightning and shall not unreasonably
withhold any required consent to the settlement.
II-VI Lightning agrees to pay all legal expenses in connection with any
environmental claims.
If Xxxxxxx X. Xxxxxxxxxxx has not made a claim or demand by the Survival
Date then the Majority Shareholders shall be relieved from any further
indemnification hereunder for any claims by Xx. Xxxxxxxxxxx.
The maximum obligation for each Majority Shareholder hereunder shall be
the portion of the Merger Consideration received by such Majority
Shareholder.
UNCOLLECTED RECEIVABLES AND WARRANTY RETURNS.
Uncollectible Accounts Receivable. Except as set forth on Exhibit "V"
which is attached hereto and made a part hereof, Shareholders shall
reimburse II-VI Lightning for any Accounts Receivable, that, after
commercially reasonable efforts, (including telephone calls and/or
letters but excluding any third-party collection efforts and lawsuits),
are not collected by II-VI Lightning within one hundred eighty (180)
days after the Closing. Shareholders agree to reimburse II-VI Lightning
for any Accounts Receivable set forth on Exhibit "V" if such amounts are
not collected within one (1) year from the Closing. Shareholders agree
to reimburse II-VI Lightening for any Accounts Receivable set forth on
Exhibit "V" if such amounts are not collected within one (1) year from
the Closing. The Majority Shareholders shall be allowed to participate
with II-VI Lightning in any collection efforts.
Warranty Returns. Shareholders shall reimburse II-VI Lightning for any
Warranty Returns in the Business which exceed one percent (1%) of gross
sales for the period beginning on the Closing and ending one hundred
eighty (180) days after the Closing. "Warranty Returns" shall mean the
return of any product sold or supplied by Lightning Optical to a
customer or any third party which such customer or third party
determines to be defective.
Notice to Shareholders. II-VI Lightning shall provide the Shareholders
with a list of the uncollected Accounts Receivable and Warranty Returns
for which II-VI Lightning is entitled to reimbursement in accordance
with Sections 11.1 and 11.2 hereof. Shareholders shall reimburse II-VI
Lightning for the full amount of the uncollected Accounts Receivable and
Warranty Returns set forth on the aforesaid list within ten (10) days
notice from II-VI Lightning. During such ten (10) day period,
Shareholders shall have the right to audit the list of uncollected
Accounts Receivable and Warranty Returns. II-VI Lightning agrees to
assign to the Shareholders all of its right, title and interest to the
uncollected Accounts Receivable upon payment from the Shareholders.
Reimbursement From Escrow Account. Any amount due II-VI Lightning from
the Shareholders in accordance with this Section 11 shall be paid first
from the Escrow Account and then by the Majority Shareholders within ten
(10) days of receipt of the notice who shall remain jointly and
severally liable for any deficiency in the Escrow Account.
FINANCIAL STATEMENTS OF LIGHTNING OPTICAL.
Audited Financial Statements. Sellers agree to cooperate with II-VI
Lightning in connection with the preparation of audited financial
statements for Lightning Optical for the fiscal year ending June 30,
1995 and a review update through December 31, 1995. Such audit of the
financial statements will be conducted by Xxxxxx, Xxxxxxxxx & Co. and
the Shareholders agree to pay Fifteen Thousand ($15,000) towards the
accounting fees of Xxxxxx, Xxxxxxxxx & Co. for the audit. Any
accounting fees related to the audit by Xxxxxx, Xxxxxxxxx & Co. in
excess of Fifteen Thousand Dollars ($15,000) will be paid by the
Acquiring Companies.
Consent. Sellers consent to the inclusion by II-VI of any financial
statements of Lightning Optical required by law, rule or regulation to
be included by II-VI in any registration or report filed by II-VI
pursuant to the securities laws of the United States or any state
thereof. Sellers will cooperate to secure the consent of the accounting
firm and/or accountants who prepared the financial statements of
Lightning Optical required pursuant to the foregoing sentence.
COSTS AND EXPENSES.
All costs and expenses incurred in conducting the transactions described
under this Agreement in the manner its prescribes, shall be borne by
II-VI Lightning and Sellers in the following manner:
Taxes. All applicable sales, transfer, documentary, and similar taxes,
if any, that may be due and payable as a result of the Merger as
provided herein, whether levied on the Sellers or II-VI Lightning, shall
be paid one-half by the Shareholders and one-half by II-VI
Lightning.
Fees. Except as set forth in Section 12.1 above, the Shareholders shall
pay the fees and charges of the attorneys, accountants and other
professionals retained by them.
Other Expenses. All other expenses shall be paid by the party which
incurred them.
CONSENTS. Each party will use efforts to obtain consents, if any, of
all persons and entities necessary to the consummation of the Merger
pursuant to this Agreement.
PUBLIC ANNOUNCEMENTS. Except for statements required to be made by law
or upon the advice of counsel, the parties hereto shall not issue any
press release or make any such public statement with respect to this
Agreement and the transactions contemplated hereby except by mutual
consent.
MISCELLANEOUS.
Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given when delivered personally or on the
second succeeding business day after being mailed by registered or
certified mail to the appropriate party at its address below (or at such
other address for such party as shall be specified by written notice by
such party):
If to II-VI or II-VI Lightning at:
II-VI Incorporated
000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, President
With a copy to:
Xxxxxx X. German, Esquire
Xxxxxxxx, German and Xxxxx, P.C.
Xxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
If to Lightning or the Shareholders:
Xx. Xxxx X. Xxxxxxx, Xx.
Mr. J. Xxxxxxxxxxx Xxxx
Xx. Xxxxx X. Xxxxxxx
Xx. Xxxxxxxxx X. Xxxxxx
Xx. Xxxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxxxx
Xx. Xxxxx X. X. Xxxx
Dr. Xxxx Xxxxx
c\o Lightning Optical Corporation
000 X. Xxxxxx Xxxxxx
Xxxxxx Xxxxxxx, Xxxxxxx 00000
With a copy to:
Xxxxxxx X. Xxxxxx, Esquire
Johnson, Blakely, Pope,
Bokor, Xxxxxx & Xxxxx, P.A.
000 Xxxxxxxx Xxxxxx
P. O. Xxx 0000
Xxxxxxxxxx, Xxxxxxx 00000-0000
Headings. The headings in this Agreement are intended solely for the
convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
Governing Law. This Agreement shall be construed and the rights of the
parties here to determined, in accordance with the laws of the
Commonwealth of Pennsylvania.
Assignment. Neither party may assign this Agreement, other than the
right to receive payments hereunder, without the express written consent
of the other party in each instance, which consent shall not be
unreasonably withheld. Nothing in this Agreement, express or implied,
is intended to confer upon any person, other than the parties hereto and
their and permitted assigns, any rights or remedies under or by reason
of this Agreement.
Severability. If any term or provision of this Agreement or any
application thereof shall be invalid or unenforceable, the remainder of
this Agreement and any other application of such provision shall not be
affected thereby.
Real Estate Taxes. The parties hereto agree that all real estate taxes
with respect to the premises utilized in the Business and any intangible
or personal property tax with respect to the Assets shall be prorated as
of the date of the Closing.
Entire Agreement. This Agreement and the documents specifically
referred to herein or required to be delivered pursuant to the terms
hereof, represent the entire agreement of the parties hereto with
respect to the subject matter hereof superseding all prior agreements,
understandings, discussions, negotiations and commitments of any kind.
This Agreement constitutes the entire understanding between the parties
with respect to the subject matter it addresses and no waiver or
modification of the terms hereof shall be valid unless in writing signed
by the party to be charged and only to the extent therein set forth.
Execution of Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of
which shall constitute the same agreement.
Binding Effect. Subject to the provisions of Section 16.4 hereof, this
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
Arbitration. All disputes arising under this Agreement or with respect
to its interpretation or enforcement not otherwise resolved by the
parties hereto shall be submitted to and decided by arbitration in the
City of Tampa, Florida, for determination by the American Arbitration
Association in accordance with its then existing rules pertaining
thereto using one arbitrator. Filing fees and other costs assessed by
the American Arbitration Association shall initially be shared between
and paid equally, one-half by II-VI Lightning and one-half by
the Shareholders, in proportion to their share ownership of Lightning
Optical as set forth on Exhibit B, provided that the non-prevailing
party in such arbitration, within thirty (30) days following a final
determination of such arbitration, shall reimburse the prevailing party
for any such fees and costs previously advanced by the prevailing party
to the extent so awarded by the arbitrator. The decision of the
arbitration shall be final and binding upon all parties and judgment
upon the award may be entered in any Court having jurisdiction thereof.
Remedies and Rights Not Exclusive. Except as expressly provided to the
contrary herein, no remedies or rights herein conferred upon or reserved
to the parties are intended to be exclusive of any remedy or right
provided by law, but each shall be cumulative and shall be in addition
to every other remedy or right given thereunder, or now or hereafter
existing at law or in equity or by statute.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as
of the date first above written.
ATTEST: II-VI INCORPORATED
By: /s/ Xxxxxx X. German By: /s/ Xxxxxxx X. Xxxxxx
------------------------- ----------------------------------
Title: Secretary Title: President
---------------------- ----------------------------
(Corporate Seal)
ATTEST: II-VI LIGHTNING INCORPORATED
By: /s/ Xxxxx Xxxxxxxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------- ----------------------------------
Title: Title: President
---------------------- ----------------------------
(Corporate Seal)
ATTEST: LIGHTNING OPTICAL CORPORATION
By: Xxxxx X. Xxxxxxx By: /s/ Xxxx X. Xxxxxxx, Xx.
---------------- ----------------------------
Title: Secretary Title: President
---------------------- ----------------------------
(Corporate Seal)
WITNESS:
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxx X. Xxxxxxx, Xx.
------------------------- ----------------------------------
XXXX X. XXXXXXX, XX.
/s/ Xxxxxxx X. Xxxxxx /s/ J. Xxxxxxxxxxx Xxxx
------------------------- ----------------------------------
J. XXXXXXXXXXX XXXX
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxxx X. Xxxxxxx
------------------------- ----------------------------------
XXXXX X. XXXXXXX
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxxxxx X. Xxxxxx
------------------------- ----------------------------------
XXXXXXXXX X. XXXXXX
/s/ Xxxxxxx X. Xxxxxx /s/ Xx. Xxxxxxx X. Xxxxxxx
------------------------- ----------------------------------
XX. XXXXXXX X. XXXXXXX
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxxx X. Xxxxxxx
------------------------- ----------------------------------
XXXXX X. XXXXXXX
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxx X. Xxxxxxx
------------------------- ----------------------------------
XXXXXX X. XXXXXXX
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxxx X. Xxxxxxxxx
------------------------- ----------------------------------
XXXXXXX X. XXXXXXXXX
/s/ Xxxxxxx X. Xxxxxx /s/ Xx. Xxxxx H. T. Chai
------------------------- ----------------------------------
XX. XXXXX X. X. XXXX
/s/ Xxxxxxx X. Xxxxxx /s/ Dr. Xxxx Xxxxx
------------------------- ----------------------------------
DR. XXXX XXXXX
LIST OF OMITTED EXHIBITS
Pursuant to Regulation S-K 601(b)(2), the following exhibits have been
omitted from this Exhibit 2.01 to the Registrant's Form 8-K for the
event dated February 22, 1996:
Exhibit A -Plan of Merger
Exhibit B -Schedule of Shareholder
Cash/Stock Elections
Exhibit E -Financial Statements dated October 31, 1995
Exhibit F -List of International Sales
Exhibit G -List of Assets
Exhibit H -Schedule of Liens
Exhibit I -List of Patents, Trademarks, etc.
Exhibit J -Schedule of Employee Benefit Plans
Exhibit K -Schedule of Employee
Benefit Plan Noncompliance
Exhibit L -Schedule of Material Changes
Exhibit M -Schedule of Leases
Exhibit N -Schedule of Insurance Policies
Exhibit O -Schedule of Material Contracts
Exhibit P -Schedule of Backlog
Exhibit Q -Schedule of Hazardous Substances
Exhibit R -Schedule of Environmental Permits
Exhibit S -Schedule of Accounts Receivable
Exhibit T -Schedule of Required Consents
Exhibit U -Investor Agreements
Exhibit V -Uncollectible Accounts Receivable
The registrant agrees to supplementally furnish to the Securities and
Exchange Commission a copy of any of the foregoing omitted schedules.
