EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made and
entered into effective as of _____________, 1996, by and among LEXALITE
INTERNATIONAL CORPORATION, a Delaware corporation (together with any and all
consolidated subsidiaries, "LexaLite") and SUMMA INDUSTRIES, a California
corporation (together with any and all consolidated subsidiaries, "Summa").
R E C I T A L S
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A. The authorized capital of LexaLite consists of 2,000,000 shares of
Common Stock, $1.00 par value, of which 1,440,918 shares are issued and
outstanding and held of record by a total of 44 shareholders as of the date
hereof.
B. The authorized capital of Summa consists of 10,000,000 shares of Common
Stock, $.001 par value, of which 1,603,484 shares are issued and outstanding as
of the date hereof, and 5,000,000 shares of Preferred Stock, $.001 par value, of
which no shares have been issued or are outstanding.
C. The Common Stock of Summa is registered under Section 12(g) of the
Securities Exchange Act of 1934 and traded in The Nasdaq National Market under
the symbol "SUMX".
D. The respective Boards of Directors of LexaLite and Summa deem it
advisable and generally to the advantage of each, and in the best interest of
their respective shareholders, to merge a newly-to-be-formed California
corporation which will be a wholly-owned subsidiary ("Subsidiary") of Summa with
and into LexaLite, under and pursuant to the provisions of the California
Corporations Code and the Delaware General Corporation Law. Accordingly, the
respective Boards of Directors of LexaLite and Summa have approved, and will
recommend for approval of their respective shareholders, this Agreement and the
merger contemplated hereby, and have directed their respective proper officers
to execute and deliver this Agreement and to cause the respective corporations
to perform each of their respective obligations hereunder.
E. It is the intention of the parties hereto that all of the issued and
outstanding capital stock of LexaLite be acquired by Summa solely in exchange
for shares of the Common Stock of Summa, and that such transaction qualify as a
tax-free reorganization under Section 368(a) of the Internal Revenue Code of
1986, as amended.
F. The parties hereto simultaneously are executing that certain document
of even date herewith entitled "Agreement of Merger", a copy of which is
attached hereto as Exhibit A, which, when also executed by Subsidiary, shall be
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filed with the Secretary of State of the State of California and the Secretary
of State of the State of Delaware on the Effective Date of the Merger (as
defined hereinbelow).
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
agreements, representations, warranties and covenants herein contained, and
subject to the terms and conditions hereinafter set forth, the parties hereby
agree in accordance with the California Corporations Code, the
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Delaware General Corporation Law, the provisions of the Agreement of Merger, and
the provisions of this Agreement, that, at the Effective Time of the Agreement
of Merger, Subsidiary shall be merged with and into LexaLite (the "Merger"),
such that LexaLite, as the "Surviving Corporation" in the Merger shall continue
as a single corporation existing under the laws of the State of Delaware and as
a wholly-owned subsidiary of Summa, and the parties hereto hereby adopt and
agree to the following agreements, terms, and conditions relating to the Merger
and the manner of carrying the same into effect.
1. DEFINITIONS.
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1.1 "Agreement" shall mean, and the words "herein", "hereof", "hereunder"
and words of similar import shall refer to this instrument and any amendment
hereto.
1.2 "Agreement of Merger" shall refer to that certain document of even
date herewith, a copy of which is attached hereto as Exhibit A, the terms of
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which are fully incorporated into, and the satisfaction of which is an express
condition of, this Agreement.
1.3 "Summa Common Stock" shall refer to any and all common stock of Summa.
1.4 "Summa Shareholders" shall refer to those holders of Summa Common
Stock of record immediately prior to the Effective Time.
1.5 "Commission" shall refer to the Securities and Exchange Commission.
1.6 "Effective Date" shall mean the date specified in Section 4.3 hereof.
1.7 "Effective Time" shall mean that time specified in Section 4.3 hereof.
1.8 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.9 "Knowledge" shall mean, with respect to an entity, actual knowledge of
the Chief Executive Officer, the President and/or the Chief Administrative
Officer of that entity and, with respect to an individual, actual knowledge of
that individual.
1.10 "LexaLite Common Stock" shall refer to any and all common stock of
LexaLite.
1.11 "LexaLite Shareholders" shall refer collectively to any and all
holders of (i) LexaLite Common stock of record immediately prior to the
Effective Time, (ii) options, warrants, calls, commitments or other rights to
acquire shares of LexaLite Common Stock outstanding immediately prior to the
Effective Time, and (iii) securities that are convertible into or exchangeable
for any shares of LexaLite Common Stock and are outstanding immediately prior to
the Effective Time. A full and complete list of all LexaLite Shareholders of
record is attached hereto as Exhibit B.
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1.12 "Person" shall refer to any corporation, trust, partnership,
individual, association or other entity.
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1.13 "Securities Act" shall refer to the Securities Act of 1933, as
amended.
1.14 "Subsidiary" shall refer to Charlevoix The Beautiful, Inc., a newly-
to-be-formed California corporation which will be a wholly-owned subsidiary of
Summa.
1.15 "Surviving Corporation" shall refer to LexaLite as the survivor of
the Merger.
1.16 "Joint Proxy Statement/Prospectus" shall mean the joint proxy
statement of Summa and LexaLite and all supplements and amendments thereto,
mailed to shareholders of Summa and LexaLite in connection with the Merger.
1.17 "Registration Statement" shall mean the Registration Statement on
Form S-4 to be filed with the Commission by Summa under the Securities Act, and
any amendments thereto, for the purpose of registering the Summa Common Stock to
be issued in connection with the transactions contemplated by this Agreement.
1.18 "Exchange Agent" shall mean U. S. Stock Transfer Corporation, the
transfer agent and registrar for the Summa Common Stock.
2. THE SURVIVING CORPORATION.
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2.1 Name of Surviving Corporation. The corporation which shall survive
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the Merger is LexaLite (sometimes hereinafter referred to as the "Surviving
Corporation").
2.2 Certificate of Incorporation. Except as provided in Section 2.3
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below, the Certificate of Incorporation of LexaLite, as in effect immediately
before the Effective Time shall from and after the Effective Time be and
continue to be the Certificate of Incorporation of the Surviving Corporation
until changed or amended as provided by law or such Certificate of
Incorporation.
2.3 Authorized Capitalization of Surviving Corporation. The total number
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of shares of all classes of capital stock which the Surviving Corporation shall
have authority to issue shall be 1,000 shares of Common Stock, at $.001 par
value per share.
2.4 Bylaws. The Bylaws of LexaLite as in effect immediately before the
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Effective Time shall be the Bylaws of the Surviving Corporation until changed or
amended as provided in accordance with law, the Certificate of Incorporation of
the Surviving Corporation, or such Bylaws, except that such Bylaws of LexaLite
are hereby amended, effective as of the Effective Time, to provide for a Board
of Directors consisting of not less than three (3) nor more than five (5)
members, with the initial number of directors to be three (3) and thereafter
such number between three (3) and five (5) as may be established from time to
time by a resolution duly adopted by the Board of Directors.
2.5 Directors. There shall be (3) directors of the Surviving Corporation
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from and after the Effective Time (until changed in accordance with applicable
law and the Articles of Incorporation and Bylaws of the Surviving Corporation),
who shall be: James R. Swartwout, Josh T. Barnes and Thomas M. Phillips.
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3. CONVERSION OF SHARES, OPTIONS AND OTHER SECURITIES.
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3.1 Manner of Converting Shares. The manner and basis of converting
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shares of capital stock of each of Subsidiary and LexaLite into shares of
capital stock of the Surviving Corporation and of Summa shall be as follows:
3.1.1 Subsidiary Common Stock. Each share of the Subsidiary's Common
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Stock outstanding on the Effective Date shall be converted into and become at
the Effective Time one fully paid and nonassessable share of common stock, $1.00
par value per share, of the Surviving Corporation.
3.1.2 LexaLite Common Stock and Options.
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(a) Subject in all events to the provisions of Section 3.1.2(c) below, each
share of Lexalite Common Stock outstanding on the Effective Date shall, as a
consequence of the Merger, be converted into one and one-half (1.5) shares of
Summa Common Stock.
(b) Subject in all events to the provisions of Section 3.1.2(c) below, all
Options (as defined in Section 6.2(a) below) shall be canceled as of the
Effective Time by agreements with the holders thereof to accept, in the place
thereof, options to purchase one and one-half (1.5) times as many shares of
Summa Common Stock, at the same aggregate exercise price, all as provided in
Section 10.7 below.
(c) In the event that the average closing price of Summa Common Stock on
The Nasdaq National Market during the 5 consecutive trading days ending on and
including the third trading day prior to the date on which the meeting of
LexaLite Shareholders has been called for the purpose of voting on the Merger is
less than $6.66 per share, LexaLite may notify Summa of Lexalite's intention to
terminate this Agreement and the transactions contemplated hereby unless the
number of shares of Summa Common Stock issuable to the Lexalite Shareholders as
a consequence of the Merger is increased as provided below. Upon receipt of
such notification, Summa may elect to (i) terminate this Agreement and the
transactions contemplated hereby, or (ii) to increase the number of shares of
Summa Common Stock issuable to the LexaLite Shareholders as a group to that
number of shares of Summa Common Stock which would have an aggregate value
(based upon the average closing price calculated as provided above) equal to
$15,000,000. Summa has advised Lexalite that in all likelihood Summa would not
elect to increase the number of shares of Summa Common Stock issuable to the
LexaLite Shareholders as a group as provided above if the increased number of
shares would exceed 3,000,000, including the shares to be issuable upon exercise
of the warrants and options to be granted as provided in Section 10.7 below.
3.1.3 LexaLite Common Stock Owned by LexaLite. Shares of the Summa
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Common Stock shall not be issued as a consequence of the Merger in respect of
shares of LexaLite Common Stock owned by LexaLite immediately prior to the
Effective Time, if any, and as of the Effective Time any and all such shares of
LexaLite Common Stock owned by LexaLite shall be canceled and retired, and all
rights in respect thereof shall cease to exist.
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3.2 Surrender and Exchange of LexaLite Stock. After the Effective Date,
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each holder of an outstanding certificate or certificates theretofore
representing shares of LexaLite Common Stock shall surrender such certificate or
certificates to the Exchange Agent and shall receive in exchange therefor
certificates representing the number of whole shares of Summa Common Stock into
which the shares of LexaLite Common Stock theretofore represented by the
certificate or certificates so surrendered (together with cash in lieu of a
fractional share, if any, as provided in Section 3.3 below). After the
Effective Time, certificates formerly representing shares of LexaLite Common
Stock shall be deemed for all purposes, other than the payment of dividends or
other distributions, if any, payable to holders of record of shares of Summa
Common Stock as of any date subsequent to the Effective Date, to evidence the
number of shares of Summa Common Stock into which such shares of LexaLite Common
Stock have been converted under Section 3.1 hereof; provided, however, that upon
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surrender and exchange of such outstanding certificates theretofore representing
shares of LexaLite Common Stock there shall be paid by the Exchange Agent to the
record holders of the certificates issued in exchange therefor, the amount,
without interest thereon, of dividends and other distributions, if any, which
theretofore have become payable with respect to the number of whole shares of
Summa Common Stock represented thereby.
3.3 Fractional Shares. No fractional shares of Summa Common Stock and no
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scrip certificates therefor shall be issued to represent any fractional share
interests in shares of Summa Common Stock, and such fractional share interest
shall not entitle the owners thereof to vote, to receive dividends, or to
exercise any other right of shareholders of Summa. In lieu of a fractional
share or scrip certificate, each holder of a share of LexaLite Common Stock
otherwise entitled to a fractional interest in a share of Summa Common Stock
shall be entitled to receive a cash payment (without interest) in an amount
equal to the fraction of such share of Summa Common Stock to which such holder
otherwise would be entitled multiplied by the average closing price of a share
of Summa Common Stock determined as provided in Section 3.1.2(c) hereof.
3.4 Dissenting Shares. Each LexaLite Shareholder, if any, and each Summa
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Shareholder, if any, who becomes entitled, pursuant to the provisions of the
Delaware General Corporation Law or the California Corporations Code,
respectively, to the payment of the "fair value" of his shares of LexaLite
Common Stock or Summa Common Stock, as the case may be ("Perfected Dissenting
Shares"), shall receive payment therefor from Summa, but only after the value
thereof shall have been agreed upon or finally determined pursuant to such
provisions. Perfected Dissenting Shares acquired by Summa, if any, shall be
canceled.
4. SHAREHOLDER APPROVALS AND EFFECTIVE DATE.
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4.1 Approval by LexaLite Shareholders. As provided in Section 8.8 below,
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a special meeting of the LexaLite Shareholders shall be called to be held in
accordance with the Delaware General Corporation Law no later than November 6,
1996, at a time, place and date to be set by the LexaLite Board of Directors,
for the purposes of considering and voting upon a proposal to approve this
Agreement and the Merger contemplated hereby. The Board of Directors of
LexaLite has unanimously recommended that the LexaLite Shareholders approve this
Agreement and the Merger, and certain of
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the LexaLite Shareholders, who together own or have voting control over
beneficially approximately forty-six percent (46%) of the LexaLite Common Stock
currently outstanding, have expressed their present intention to vote in favor
of this Agreement and the Merger at the special meeting.
4.2 Approval by Summa Shareholders. As provided in Section 8.6 below, a
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special meeting of the Summa Shareholders shall be called to be held in
accordance with the California Corporations Code no later than November 6, 1996,
at a time, place and date to be set by the Summa Board of Directors, for the
purposes of considering and voting upon a proposal to approve this Agreement and
Merger contemplated hereby. The Summa Board of Directors has unanimously
recommended that the Summa shareholders approve this Agreement and the Merger,
and the current members of the Summa Board of Directors, who together own or
have voting control over an aggregate of approximately ten percent (10%) of the
Summa Common Stock currently outstanding, have expressed their present intention
to vote in favor of this Agreement and the Merger at the special meeting.
Summa, as the sole shareholder of Subsidiary, shall approve this Agreement and
the Merger contemplated hereby.
4.3 Effective Date and Time. Upon approval of this Agreement and the
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Merger contemplated hereby by the LexaLite Shareholders, the Summa Shareholders,
and Summa as the sole shareholder of Subsidiary, and provided that the Merger is
not thereafter terminated as provided in Section 13 hereof, the Agreement of
Merger, along with any and all other necessary documents, shall be executed by
each of LexaLite, Summa and Subsidiary, and delivered to the California
Secretary of State, in accordance with applicable provisions of the California
Corporations Code and to the Delaware Secretary of State in accordance with the
Delaware General Corporation Law. The Merger shall become effective on the date
when the Agreement of Merger, along with any and all other necessary documents,
has been duly filed with the California Secretary of State and the Delaware
Secretary of State. The date of such effectiveness is referred to herein as the
"Effective Date", and the time of such filing and effectiveness is referred to
herein as the "Effective Time." LexaLite and Summa shall agree upon the date on
which the Agreement of Merger shall be submitted for filing in the State of
California and the State of Delaware.
5. EFFECT OF MERGER.
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5.1 Cessation of Subsidiary's Existence. When the Merger becomes
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effective, the separate existence of Subsidiary shall cease, Subsidiary shall be
merged into LexaLite, as the Surviving Corporation, the Surviving Corporation,
without further action, shall succeed to and shall possess and enjoy all the
rights, privileges, immunities, powers, purposes, and franchises, both of a
public and private nature, and be subject to all restrictions, disabilities, and
duties of Subsidiary, and the Merger shall have the effects on LexaLite and
Subsidiary as provided under the California Corporations Code and the Delaware
General Corporation Law.
5.2 Property. All of Subsidiary's property, whether real, personal, or
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mixed, and all debts due to Subsidiary on whatever account, including stock
subscriptions, causes of action, and every other asset of Subsidiary, shall be
vested in the Surviving Corporation. All of such property, rights, privileges,
powers and franchises shall be thereafter as effectually the property of the
Surviving Corporation as they were of Subsidiary. Title to any real estate and
to any other property, whether by
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deed or otherwise, under the laws of the State of California or of any other
jurisdiction, that is vested in Subsidiary shall not revert or be in any way
impaired by reason of the Merger or the statutes providing therefor.
5.3 Creditor Rights. All rights of creditors and all liens upon the
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property of LexaLite existing immediately prior to the Effective Time shall be
preserved unimpaired, and all debts, liabilities, obligations, penalties, and
duties of Subsidiary shall thenceforth attach to the Surviving Corporation, and
may be enforced against it to the same extent as if they had been incurred or
contracted by it. No liability or obligation due or to become due, claim, or
demand existing against either corporation, or any shareholder, officer, or
director thereof, shall be impaired by the Merger.
5.4 Legal Actions. No action or proceeding, whether civil or criminal,
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pending on the Effective Date by or against either corporation, or any
shareholder, officer, or director thereof, shall abate or be discontinued by the
merger, but may be enforced, prosecuted, settled, or compromised as if the
merger had not occurred, or the Surviving Corporation may be substituted in such
action or special proceeding in place of Subsidiary.
5.5 Delivery of Documents. At any time, or from time to time, after the
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Effective Date, the last acting officers of Subsidiary, or the corresponding
officers of the Surviving Corporation, may, in the name of Subsidiary, execute
and deliver all such proper deeds, assignments, and other instruments and take
or cause to be taken all such further or other action as the Surviving
Corporation may deem necessary or desirable in order to vest, perfect, or
confirm in the Surviving Corporation title to and possession of all of
Subsidiary's property, rights, privileges, immunities, powers, purposes, and
franchises, and otherwise to carry out the purposes of this Agreement.
6. REPRESENTATIONS AND WARRANTIES OF LEXALITE.
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LexaLite hereby represents and warrants to, and covenants with, Summa as
follows (it being acknowledged that Summa is entering into this Agreement in
material reliance upon each of the following representations and warranties, and
that the truth and accuracy of each of which constitutes a condition precedent
to the obligations of each of Summa and Subsidiary hereunder):
6.1 Organization and Corporate Power. LexaLite is a corporation duly
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incorporated, validly existing and in good standing under the laws of the State
of Delaware, and is duly qualified and in good standing to do business as a
foreign corporation in each jurisdiction in which such qualification is required
and where the failure to be so qualified would have a materially adverse effect
upon LexaLite. LexaLite has all requisite corporate power and authority to
conduct its business as now being conducted and to own and lease the properties
which it now owns and leases. The Certificate of Incorporation as amended to
date, certified by the Delaware Secretary of State, the Bylaws of LexaLite as
amended to date, the resolutions of LexaLite's directors authorizing the
execution, delivery and performance of this Agreement, all certified by the
President and the Secretary of LexaLite, which have previously been provided to
Summa by LexaLite, are true and complete copies thereof as currently in effect.
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6.2 Capitalization.
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(a) The authorized capital stock of LexaLite consists of 2,000,000 shares
of LexaLite Common Stock and no shares of preferred stock. As of the date
hereof, there are 1,440,918 shares of LexaLite Common Stock issued and
outstanding. All of the issued and outstanding shares of LexaLite Common Stock
were validly issued and are fully paid, nonassessable and free of preemptive
rights. In addition, there are currently outstanding options to purchase from
LexaLite an aggregate of 142,540 additional shares of LexaLite Common Stock (the
"Options"). Set forth on Exhibit B attached hereto is a full and complete
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listing setting forth (i) the name, address and number of shares held, of record
and to the Knowledge of LexaLite beneficially owned, by each holder of LexaLite
Common Stock (including without limitation each beneficiary of the LexaLite
International Corporation Employee Stock Ownership Trust), and (ii) the name and
address of each holder of all Options that are outstanding as of the date
hereof, and the number of shares subject to each such Option.
(b) Except expressly set forth in Section 6.2(a) above and on Exhibit B
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attached hereto, there are no warrants, options, calls, commitments or other
rights to subscribe for or to purchase from LexaLite any capital stock of
LexaLite or any securities convertible into or exchangeable for any shares of
capital stock of LexaLite, or any other securities or agreement pursuant to
which LexaLite is or may become obligated to issue any shares of its capital
stock, nor is there outstanding any commitment, obligation or agreement on the
part of LexaLite to repurchase, redeem or otherwise acquire any of the
outstanding shares of its capital stock.
6.3 Ownership of LexaLite Stock. To LexaLite's Knowledge, each LexaLite
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Shareholder is the owner of that number of shares of LexaLite Common Stock set
forth opposite his respective name on Exhibit B attached hereto, which shares
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together constitute all of the issued and outstanding shares of the capital
stock of LexaLite; and LexaLite has no Knowledge that any of such shares of
LexaLite Common Stock are subject to (i) any lien, charge, mortgage, pledge,
conditional sale agreement, or other encumbrance of any kind or nature
whatsoever, and/or (ii) any claim as to ownership thereof or any rights, powers
or interest therein by any third party, whether legal or beneficial, and whether
based on contract, proxy or other document or otherwise.
6.4 Authorization. LexaLite has full corporate power and authority to
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enter into, execute and deliver this Agreement, to execute all attendant
documents and instruments necessary to consummate the transactions herein
contemplated, and to perform its obligations hereunder, subject to receipt of
the requisite approval of the LexaLite Shareholders. This Agreement, and each
and every other agreement, document and instrument to be executed by LexaLite
hereunder, has been effectively authorized by all necessary action on the part
of the Board of Directors of LexaLite, which authorizations remain in full force
and effect, has been duly executed and delivered by LexaLite, and no other
authorizations or proceedings on the part of LexaLite are required to authorize
this Agreement and/or the transactions contemplated hereby, except for receipt
of the requisite approval of the LexaLite Shareholders. This Agreement
constitutes the legal, valid and binding obligation of LexaLite, subject to
receipt of the requisite approval of the LexaLite Shareholders, enforceable with
respect to LexaLite in accordance with its terms, except as enforcement hereof
may be limited by bankruptcy, insolvency, reorganization, priority or other laws
or court decisions relating to or affecting generally the enforcement of
creditors' rights or affecting generally the availability of equitable remedies.
Other than
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in connection with the filing of the Agreement of Merger with the California
Secretary of State and the Delaware Secretary of State and the proceedings
contemplated by Section 8.8 hereof, no authorization, consent or approval of any
public body or authority is necessary for the consummation of LexaLite of the
transactions contemplated by this Agreement.
6.5 No Conflicts. Except as disclosed on the LexaLite Disclosure Schedule
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attached hereto as Exhibit C, neither the execution and delivery of this
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Agreement, nor the consummation by LexaLite of any of the transactions
contemplated hereby, or compliance with any of the provisions hereof, will (i)
conflict with or result in a breach of, violation of, or default under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, lease, credit agreement or other agreement, document, instrument or
obligation (including, without limitation, any of LexaLite's charter documents)
to which LexaLite is a party or by which any of its assets or properties may be
bound, or (ii) violate any judgment, order, injunction, decree, statute, rule or
regulation applicable to LexaLite or any of its officers, directors, employees,
assets or properties, excluding from the foregoing clauses (i) and (ii) any
conflicts, breaches, violations or defaults that would not have a materially
adverse affect on LexaLite or materially impair LexaLite's ability to consummate
the transactions contemplated hereby or for which LexaLite shall have received
before the Effective Time appropriate consents or waivers.
6.6 Subsidiaries. LexaLite has no subsidiaries and no investments,
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directly or indirectly, or other financial interest in any other corporation or
business organization, joint venture or partnership of any kind whatsoever
except as reflected in the LexaLite Financial Statements (defined in Section 6.7
below) or shown on the LexaLite Disclosure Schedule.
6.7 Financial Statements. Attached hereto as Exhibit D are (i) the
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audited financial statements of LexaLite for each of its fiscal years ended June
30, 1993, 1994 and 1995, consisting of LexaLite's balance sheets as of such
dates, the related statements of profit and loss for the periods then ended, and
the notes thereto, certified by Arthur Andersen LLP as to the fiscal year ended
June 30, 1995 and by Smolinski, Kanine & Christman, LLP, as to the fiscal years
ended June 30, 1993 and 1994, (ii) unaudited financial statements of LexaLite
for the 11 months ended May 31, 1996, consisting of LexaLite's balance sheet as
of such date (the "LexaLite Balance Sheet"), the related statement of profit and
loss for the period then ended, and the notes thereto, certified by the Director
of Corporate Finance of LexaLite. Such financial statements (and the notes
related thereto) are herein sometimes collectively referred to as the "LexaLite
Financial Statements." The LexaLite Financial Statements (i) are derived from
the books and records of LexaLite, which books and records have been
consistently maintained in a manner which reflects, and such books and records
do fairly and accurately reflect, the assets and liabilities of LexaLite, (ii)
fairly and accurately present the financial condition of LexaLite on the
respective dates of such statements and the results of its operations for the
periods indicated, except as may be disclosed in the notes thereto, and (iii)
have been prepared in all material respects in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved (except as otherwise disclosed in the notes thereto).
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6.8 Absence of Undisclosed Liabilities. Except as and to the extent
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reflected or reserved against in the LexaLite Balance Sheet, and as to matters
arising in the ordinary course of its business since the date of the LexaLite
Balance Sheet or that are disclosed in the LexaLite Disclosure Schedule attached
hereto, LexaLite has no liability or obligation (whether accrued, to become due,
contingent or otherwise) which individually or in the aggregate could have a
materially adverse effect on the business, assets, or condition (financial or
otherwise) of LexaLite.
6.9 Absence of Certain Developments. Except as set forth in the LexaLite
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Disclosure Schedule, since the date of the LexaLite Balance Sheet there have
been (i) no declaration, setting aside or payment of any dividend or other
distribution with respect to any capital stock of LexaLite, no redemption,
purchase or other acquisition of any shares of LexaLite's capital stock, and no
split-up or other recapitalization relative to any of LexaLite's capital stock,
nor any action authorizing or obligating LexaLite to do any of the foregoing;
(ii) no loss, destruction or damage to any material property or asset of
LexaLite, whether or not insured; (iii) no acquisition or disposition of
material assets (or any contract or arrangement therefor), or any other material
transaction by LexaLite otherwise than for fair value and in the ordinary course
of business; (iv) no discharge or satisfaction by LexaLite of any lien or
encumbrance or payment of any material obligation or liability (absolute or
contingent) other than current liabilities shown on the LexaLite Balance Sheet,
or current liabilities incurred since the date thereof in the ordinary course of
business, (v) no sale, assignment or transfer by LexaLite of any of its tangible
or intangible assets including any security interest or other encumbrance, or
waiver by LexaLite of any rights of value which, in any such case, is outside
the ordinary course of business and material to the business of LexaLite; (vi)
no payment or accrual of any bonus to or change in the compensation of any
director, officer or employee, whether directly or by means of any bonus,
pension plan, contract or commitment; (vii) no write-off or material reduction
in the carrying value of any asset which is material to the business of
LexaLite; (viii) no disposition or lapse of rights as to any intangible property
which is material to the business of LexaLite; (ix) except for ordinary travel
advances, no loans or extensions of credit to shareholders, officers, directors
or employees of LexaLite, (x) no agreement to do any of the things described in
this Section 6.9, and (xi) no materially adverse change in the condition
(financial or otherwise) of LexaLite or in its assets, liabilities, properties,
or business.
6.10 Real Property. Set forth as a part of the LexaLite Disclosure
-------------
Schedule is a complete and accurate legal description of each parcel of real
property owned by or leased to and occupied by LexaLite, and LexaLite neither
owns or leases, nor occupies, any other real property. Except as would be
disclosed in a reasonably diligent inspection, to LexaLite's Knowledge, the
building and all fixtures and improvements located on such real property are in
good operating condition, ordinary wear and tear excepted. To LexaLite's
Knowledge, LexaLite is not in violation of any zoning, building or safety
ordinance, regulation or requirement or other law or regulation applicable to
the operation of owned or leased properties, the violation of which could
reasonably be expected to have a material adverse affect upon Lexalite, its
condition (financial or otherwise), assets, liabilities, properties or business,
and LexaLite has not received any notice of violation with which it has not
complied or is not taking steps to comply. LexaLite has good and marketable
title to all such real property owned by LexaLite, free and clear of all liens,
mortgages, encumbrances, easements, leases, restrictions and claims of any kind
whatsoever except for (i) those matters shown on the LexaLite Disclosure
Schedule, and (ii) liens for taxes for the current year and tax assessments not
yet due and payable. All leases of real property to which LexaLite is a party
and which are material to the business
10
of LexaLite are fully effective in accordance with their respective terms and
afford LexaLite peaceful and undisturbed possession of the subject matter of the
lease, and there exists no material default on the part of LexaLite or
termination thereof, except as may be set forth in the LexaLite Disclosure
Schedule.
6.11 Tangible Personal Property. Set forth as a part of the LexaLite
--------------------------
Disclosure Schedule hereto is a complete list of all items of tangible personal
property (including without limitation all items of tooling) owned, leased or
otherwise used by LexaLite in the current conduct of its business, wherever
located, where the original cost was in excess of $5,000.00. Except as set
forth in the LexaLite Disclosure Schedule, LexaLite has, and at the Effective
Date will have, good and marketable title to, or in the case of leased equipment
a valid leasehold interest in, and is in the possession of, all such items of
personal property owned or leased by it, free and clear of all title defects,
mortgages, pledges, security interests condition sales agreements, liens,
restrictions or encumbrances whatsoever. Included in the LexaLite Disclosure
Schedule is a list of all outstanding equipment leases and maintenance
agreements to which LexaLite is a party as lessee and which individually provide
for future lease payments in excess of $500 per month, with the identities of
the other parties to all such leases and agreements shown thereon. All leases
of tangible personal property to which LexaLite is a party and which are
material to the business of LexaLite are fully effective in accordance with
their respective terms, and there exists no material default on the part of
LexaLite or termination thereof, except as may be set forth in the LexaLite
Disclosure Schedule. Each item of capital equipment reflected in the LexaLite
Balance Sheet which is used in the current conduct of LexaLite's business is,
and on the date of the Effective Date will be, in good operating and usable
condition and repair, ordinary wear and tear excepted, and is and will be
suitable for use in the ordinary course of LexaLite's business and fit for its
intended purposes, except as may be set forth in the LexaLite Disclosure
Schedule.
6.12 Tax Matters. LexaLite has, since its inception, duly filed all
-----------
federal, state, county and local tax returns required to have been filed by it
in those jurisdictions where the nature or conduct of its business requires such
filing and where the failure to so file would be materially adverse to LexaLite.
Copies of all such tax returns have been made available for inspection by Summa
prior to the execution hereof. All federal, state, county and local taxes,
including but not limited to those taxes due with respect to LexaLite's
properties, income, gross receipts, excise, occupation, franchise, permit,
licenses, sales, payroll, and inventory due and payable as of the date of the
Effective Date by LexaLite have been paid. The amount reflected in the LexaLite
Balance Sheet as liabilities or reserves for taxes which are due but not yet
payable is sufficient for the payment of all accrued and unpaid taxes of the
types referred to hereinabove. No consent to the application of Section
341(f)(2) of the Internal Revenue Code of 1986, as amended, has been filed with
respect to LexaLite.
6.13 Accounts Receivable. The accounts receivable reflected in the
-------------------
LexaLite Balance Sheet constituted all accounts receivable of LexaLite as of the
date thereof, other than accounts receivable fully written off as uncollectible
as of such date in accordance with consistently applied prior practice. All
such accounts receivable arose from valid sales made (as opposed to
consignments) or services rendered, in the ordinary course of business, and are
not subject to any return privileges, set-off or counter-claim, except as
disclosed on the LexaLite Disclosure Schedule. Except as disclosed on the
LexaLite Disclosure Schedule, such accounts receivable have been collected in
full since the date of the LexaLite Balance Sheet or, to LexaLite's Knowledge,
are collectible at their full respective amounts (net of allowance for doubtful
accounts established in accordance with consistently applied prior
11
practice). Based upon the prior experience of LexaLite, the "allowance for
doubtful accounts" shown on the LexaLite Balance Sheet is sufficient to cover
all doubtful accounts.
6.14 Inventories. LexaLite has good and marketable title to all of its
-----------
inventories of raw materials, work-in-process and finished goods, including
models and samples, free and clear of all security interests, liens, claims and
encumbrances, except as set forth in the LexaLite Disclosure Schedule. All such
inventories consist of items that are usable and salable in the ordinary course
of business of LexaLite for an amount at least equal to the book value thereto,
plus the costs of disposition thereof, and represent quantities not in excess of
one year's requirements for its business as currently conducted, except as may
be set forth in the LexaLite Disclosure Schedule.
6.15 Contracts and Commitments. LexaLite has no contract, agreement,
-------------------------
obligation or commitment, written or oral, expressed or implied, which involves
a commitment or liability in excess of $10,000 or for a term of more than one
year or whose terms prohibit cancellation without liability on 30 days' notice
or less (other than obligations which are included in accounts payable), and no
union contracts, employee or consultant contracts, loan, credit or other
financing agreements, inventory flooring arrangements, debtor or creditor
arrangements, security agreements, licenses, franchise, manufacturing,
distributorship or dealership agreements, leases, or bonus, health or stock
option plans, except for those described in the LexaLite Disclosure Schedule,
all of which have been made available to Summa prior to the execution hereof, or
those that are not material to LexaLite. As of the date hereof, to LexaLite's
Knowledge, there exists no circumstances which would affect the validity or
enforceability of any of such contracts and other agreements in accordance with
their respective terms. Except as set forth in the LexaLite Disclosure
Schedule, LexaLite has performed and complied in all material respects with all
obligations required to be performed by it to date under, and is not in default
(without giving effect to any required notice or grace period) under, or in
breach of, the terms, conditions or provisions of any of such contracts and
other agreements. Except as set forth in the LexaLite Disclosure Schedule, the
validity and enforceability of any contract or other agreement described herein
has not been and shall not in any manner be affected by the execution and
delivery of this Agreement without any further action. Except as set forth in
the LexaLite Disclosure Schedule, LexaLite has no material contract, agreement,
obligation or commitment which requires or will require future expenditures
(including internal costs and overhead) in excess of reasonably anticipated
receipts, nor which is likely to be materially adverse to LexaLite's business,
assets or condition (financial and otherwise).
6.16 Patents, Trade Secrets and Customer Lists. LexaLite does not have
-----------------------------------------
any patents, applications for patents, trademarks, applications for trademarks,
trade names, brand names, licenses or service marks relating to the business of
LexaLite, except as set forth in the LexaLite Disclosure Schedule, nor does any
present or former shareholder, officer, director or employee of LexaLite own any
patent rights relating to any products manufactured, rented or sold by LexaLite,
except as set forth in the LexaLite Disclosure Schedule. Except as disclosed in
the LexaLite Disclosure Schedule, to the Knowledge of LexaLite, LexaLite has the
unrestricted right to use, free and clear of any claims or rights of others, all
trade secrets, customer lists, and manufacturing and secret processes,
trademarks, trade names, brand names, licenses and service marks reasonably
necessary to the manufacturing and marketing of all products made or proposed to
be made by LexaLite, and the continued use thereof by LexaLite following the
Effective Date will not conflict with, infringe upon, or otherwise violate any
12
rights of others. To LexaLite's Knowledge, LexaLite has not used and is not
making use of any confidential information or trade secrets of any present or
past employee of LexaLite that has not been assigned to LexaLite or that
LexaLite does not have the right to use.
6.17 No Pending Material Litigation or Proceedings. Except as disclosed
---------------------------------------------
in the LexaLite Disclosure Schedule, there are no actions, suits or proceedings
pending or, to LexaLite's Knowledge, threatened against or affecting LexaLite
(including actions, suits or proceedings where liabilities may be adequately
covered by insurance) at law or in equity or before or by any federal, state,
municipal or other governmental department, commission, court, board, bureau,
agency or instrumentality, domestic or foreign, or affecting any of the
shareholders, officers or directors of LexaLite in connection with the business,
operations or affairs of LexaLite, which could reasonably be expected to result
in any material adverse change in the business, properties, assets or condition
(financial or otherwise) of LexaLite, or which question or challenge the
transaction contemplated hereby. Except as disclosed in the LexaLite Disclosure
Schedule, to LexaLite's Knowledge, LexaLite has not, during the past three
years, been threatened with any action, suit, proceedings or claim (including
actions, suits, proceedings or claims where its liabilities may be adequately
covered by insurance) for personal injuries allegedly attributable to products
sold or services performed by LexaLite asserting a particular defect or
hazardous property in any of LexaLite's products, services or business practices
or methods, nor has LexaLite been a party to or threatened with proceedings
brought by or before any federal or state agency; and LexaLite has no Knowledge
of any defect or hazardous property claimed or actual in any such product,
service or business practice or method. LexaLite is not subject to any
voluntary or involuntary proceeding under the United States Bankruptcy Code and
has not made an assignment for the benefit of creditors.
6.18 Insurance. LexaLite maintains insurance with reputable insurance
---------
companies on such of its equipment, tools, machinery, inventory and properties
as are usually insured by companies similarly situated in the same geographic
location and to the extent customarily insured, and maintains products and
personal liability insurance, and such other insurance against hazards, risks
and liability to persons and property as is customary for companies similarly
situated in the same geographic location. A true and complete listing and
general description of each of LexaLite's insurance policies as currently in
force, including all policies of group medical and/or dental insurance, is set
forth in the LexaLite Disclosure Schedule, copies of all of which have
previously been provided to Summa. All such insurance policies currently are,
and at the Effective Date shall be, in full force and effect.
6.19 Arrangements with Personnel. Except as set forth in the LexaLite
---------------------------
Disclosure Schedule, no shareholder, director, officer or employee of LexaLite
is presently a party to any transaction with LexaLite, including without
limitation any contract, loan or other agreement or arrangements providing for
the furnishing of services by, the rental of real or personal property from or
to, or otherwise requiring loans or payments to, any such stockholder, director,
officer or employee, or to any member of the family of any of the foregoing, or
to LexaLite's Knowledge, to any corporation, partnership, trust or other entity
in which any stockholder, director, officer or employee or any member of the
family of any of them has a substantial interest or is an officer, director,
trustee, partner or employee. There is set forth in the LexaLite Disclosure
Schedule a list showing (i) the name, title, date and amount of last
compensation increase, and aggregate compensation, including amounts paid or
accrued pursuant to any bonus, pension, profit sharing, commission, deferred
compensation or
13
other plans or arrangements in effect as of the date of this Agreement, of each
officer or employee of LexaLite whose salary and other compensation, in the
aggregate, received from LexaLite or accrued is at an annual rate (or aggregated
for the most recently completed fiscal year) in excess of $100,000, as well as
any employment agreements relating to any such persons; (ii) a description of
any and all bonus, pension, profit sharing, commission, deferred compensation or
other plans or arrangements in effect for any of LexaLite's employees as of the
date of this Agreement; (iii) all powers of attorney from LexaLite to any person
or entity; and (iv) the name of each person or entity authorized to borrow money
or incur or guarantee indebtedness on behalf of LexaLite.
6.20 Labor Relations. LexaLite has never been a party to any collective
---------------
bargaining agreement or other contract with a labor union, or to any employment
contract or consulting agreement, or under any executive's compensation plan,
agreement or arrangement, nor, to LexaLite's Knowledge, is any union, labor
organization or group of employees of LexaLite presently seeking the right to
enter into collective bargaining with LexaLite on behalf of any of its
employees, except as set forth in the LexaLite Disclosure Schedule. LexaLite
has furnished Summa with a copy of all written personnel policies, including
without limitation vacation, severance, bonus, profit sharing and commission
policies, applicable to any of LexaLite's employees.
6.21 Bank Accounts. All bank and savings accounts, and other accounts at
-------------
similar financial institutions of LexaLite existing at date of Effective Date
are listed in the LexaLite Disclosure Schedule, with copies of all signature
cards or other documentation reflecting all individuals who are authorized to
withdraw funds from any such accounts attached thereto.
6.22 Absence of Questionable Payments. Neither LexaLite nor, to
--------------------------------
LexaLite's Knowledge, any shareholder, director, officer, agent, employee,
consultant or other person associated with or acting on behalf of any of them,
has (i) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (b)
made any direct or indirect unlawful payments to governmental officials or
others from corporate funds, engaged in any payments or activity which would be
deemed a violation of the Foreign Corrupt Practices Act or rules or regulations
promulgated thereunder, or (c) established or maintained any unlawful or
unrecorded accounts.
6.23 Compliance with Laws. To LexaLite's Knowledge, LexaLite holds all
--------------------
licenses, franchises, permits and authorizations necessary for the lawful
conduct of its business as presently conducted, has complied with all applicable
statutes, laws, ordinances, rules and regulations of all governmental bodies,
agencies and subdivisions having, asserting or claiming jurisdiction over it,
with respect to any part of the conduct of its business and corporate affairs,
where the failure to so hold or comply could reasonably be expected to have a
material adverse affect upon LexaLite's condition (financial or otherwise),
business, assets or properties.
6.24 Environmental Matters. To the Knowledge of LexaLite, except as may
---------------------
be set forth on the LexaLite Disclosure Schedule, there are no actions, claims,
demands, investigations, inquiries, notices of potential liability, notices of
violation, or other proceedings, rulings, orders, or citations pending against
LexaLite (or any predecessor or affiliate), or threatened or contemplated by any
person or entity, as the result of any actual or alleged failure of LexaLite (or
any predecessor or
14
affiliate) to comply with any requirement of federal, state, local or foreign
law, order or regulation relating to air quality, water quality, solid or
hazardous waste management, hazardous or toxic substances, or the protection of
public health or the environment.
6.25 Relationships with Customers and Suppliers. Except as set forth in
------------------------------------------
the LexaLite Disclosure Schedule, no present customer or substantial supplier to
LexaLite has indicated an intention to terminate or materially and adversely
alter its existing business relationship therewith, and LexaLite has no reason
to believe that any of the present customers of or substantial suppliers to
LexaLite intends to do so, other than, in each such case, any customer or
substantial supplier the loss of which could not reasonably be expected to
materially adversely affect LexaLite.
6.26 Brokerage. Except as set forth in the LexaLite Disclosure Schedule,
---------
LexaLite has no obligation to any person or entity for brokerage commissions,
finder's fees or similar compensation in connection with the transactions
contemplated by this Agreement.
6.27 Disclosure. Neither this Agreement nor any certificate, exhibit, or
----------
other written document or statement, furnished to Summa by or on behalf of
LexaLite in connection with the transactions contemplated by this Agreement
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact necessary to be stated in order to make the
statements contained herein or therein, in the light of the circumstances in
which they were made, not misleading. LexaLite has no Knowledge of any fact
which has not been disclosed in writing to Summa which may reasonably be
expected to materially and adversely affect the business, operations,
properties, assets, condition (financial or other), and/or results of operations
of LexaLite or the ability of LexaLite to perform all of the obligations to be
performed by LexaLite under this Agreement and/or any other agreement between
Summa and LexaLite to be entered into pursuant to any provision of this
Agreement.
7. REPRESENTATIONS AND WARRANTIES OF SUMMA.
---------------------------------------
Summa represents and warrants to LexaLite as follows (it being acknowledged
and agreed that LexaLite is entering into this Agreement in material reliance
upon each of the following representations and warranties, and that the truth
and accuracy of each of which constitutes a condition precedent to the
obligations of LexaLite hereunder):
7.1 Organization and Corporate Power. Summa is a corporation duly
--------------------------------
incorporated, validly existing and in good standing under the laws of the State
of California, and is duly qualified and in good standing to do business as a
foreign corporation in each jurisdiction in which such qualification is required
and where the failure to be so qualified would have a materially adverse effect
upon Summa. Summa has all requisite corporate power and authority to conduct
its business as now being conducted and to own and lease the properties which it
now owns and leases. The Articles of Incorporation as amended to date,
certified by the Secretary of State of California, and the Bylaws of Summa as
amended to date and resolutions of Summa's directors authorizing the execution,
delivery and performance of this Agreement all certified by the President and
the Secretary of Summa, which have previously been provided to LexaLite by
Summa, are true and complete copies thereof as currently in effect. Subsidiary
will be formed prior to the Effective Time as a California corporation, all of
whose capital stock will be issued to and owned, beneficially and of record, by
Summa.
15
7.2 Capitalization. The authorized capital stock of Summa consists of
--------------
10,000,000 shares of Summa Common Stock and 5,000,000 shares of Preferred Stock.
As of the date hereof, there are 1,603,484 shares of Summa Common Stock
outstanding, and no shares Preferred Stock have been issued or are outstanding.
In addition, there are currently outstanding options and warrants to purchase
from Summa an aggregate of 237,473 additional shares of Summa Common Stock.
Except expressly set forth hereinabove, there are no warrants, options, calls,
commitments or other rights to subscribe for or to purchase from Summa any
capital stock of Summa or any securities convertible into or exchangeable for
any shares of capital stock of Summa, or any other securities or agreement
pursuant to which Summa is or may become obligated to issue any shares of its
capital stock, nor is there outstanding any commitment, obligation or agreement
on the part of Summa to repurchase, redeem or otherwise acquire any of the
outstanding shares of its capital stock.
7.3 Authorization. Summa has full corporate power and authority to enter
-------------
into, execute and deliver this Agreement, to execute all attendant documents and
instruments necessary to consummate the transactions herein contemplated, and to
perform its obligations hereunder, subject to receipt of the requisite approval
of the Summa Shareholders. This Agreement, and each and every other agreement,
document and instrument to be executed by Summa hereunder, has been effectively
authorized by all necessary action on the part of the Board of Directors of
Summa, which authorizations remain in full force and effect, has been duly
executed and delivered by Summa, and no other authorizations or proceedings on
the part of Summa are required to authorize this Agreement and/or the
transactions contemplated hereby, except for receipt of the requisite approval
of the Summa Shareholders. This Agreement constitutes the legal, valid and
binding obligation of Summa, subject to receipt of the requisite approval of the
Summa Shareholders, enforceable with respect to Summa in accordance with its
terms, except as enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, priority or other laws or court decisions relating to or
affecting generally the enforcement of creditors' rights or affecting generally
the availability of equitable remedies. Other than in connection with the
filing of the Agreement of Merger with the California Secretary of State and the
Delaware Secretary of State, proceedings with the Securities and Exchange
Commission, and the proceedings specified in Section 8.6 below, no
authorization, consent or approval of any public body or authority is necessary
for the consummation by Summa of the transactions contemplated by this
Agreement.
7.4 No Conflicts. Except as disclosed on the Summa Disclosure Schedule
------------
attached hereto as Exhibit E, neither the execution and delivery of this
---------
Agreement, nor the consummation by Summa of any of the transactions contemplated
hereby, or compliance with any of the provisions hereof, will (i) conflict with
or result in a breach of, violation of, or default under any of the terms,
conditions, or provisions of any note, bond, mortgage, indenture, license,
lease, credit agreement or other agreement, document, instrument or obligation
(including, without limitation, any of Summa's charter documents) to which Summa
is a party or by which any of its assets or properties may be bound, or (ii)
violate any judgment, order, injunction, decree, statute, rule or regulation
applicable to Summa or any of its officers, directors, employees, assets or
properties, excluding from the foregoing clauses (i) and (ii) any conflicts,
breaches, violations or defaults that would not have a materially adverse affect
on Summa or materially impair Summa's ability to consummate the transactions
contemplated hereby or for which Summa shall have received before the Effective
Time appropriate consents or waivers.
16
7.5 Subsidiaries. Summa has no subsidiaries and no investments, directly
------------
or indirectly, or other financial interest in any other corporation or business
organization, joint venture or partnership of any kind whatsoever except as
reflected in the Summa Financial Statements (defined in Section 7.6 below) or
shown on the Summa Disclosure Schedule. Prior to the Effective Time, Subsidiary
will be formed as a California corporation whose capital stock is wholly-owned
by Summa.
7.6 Financial Statements. Attached hereto as Exhibit F are (i) the
-------------------- ---------
audited financial statements of Summa for each of its fiscal years ended August
31, 1993, 1994 and 1995 consisting of Summa's balance sheets as of such dates,
the related statements of profit and loss for the periods then ended, and the
notes thereto, certified by Arthur Andersen LLP, and (ii) the unaudited
financial statements of Summa as of and for the nine months ended May 31, 1996,
consisting of Summa's balance sheet as of such date (the "Summa Balance Sheet"),
the related statement of profit or loss for the period then ended, and the
respective notes thereto, in each case certified by the chief financial officer
of Summa. Such financial statements (and the notes related thereto) are herein
sometimes collectively referred to as the "Summa Financial Statements." The
Summa Financial Statements (8) are derived from the books and records of Summa,
which books and records have been consistently maintained in a manner which
reflects, and such books and records do fairly and accurately reflect, the
assets and liabilities of Summa, (ii) fairly and accurately present the
financial condition of Summa on the respective dates of such statements and the
results of its operations for the periods indicated, except as may be disclosed
in the notes thereto, and (iii) have been prepared in all material respects in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise disclosed in the notes
thereto).
7.7 Absence of Undisclosed Liabilities. Except as and to the extent
----------------------------------
reflected or reserved against in the Summa Balance Sheet, and as to matters
arising in the ordinary course of its business since the date of the Summa
Balance Sheet or that are disclosed in the Summa Disclosure Schedule attached
hereto, Summa has no liability or obligation (whether accrued, to become due,
contingent or otherwise) which individually or in the aggregate could have a
materially adverse effect on the business, assets or condition (financial or
otherwise) of Summa.
7.8 Absence of Certain Developments. Except as set forth in the Summa
-------------------------------
Disclosure Schedule, since the date of the Summa Balance Sheet there has been
(i) no declaration, setting aside or payment of any dividend or other
distribution with respect to any capital stock of Summa, no redemption, purchase
or other acquisition of any shares of Summa's capital stock, and no split-up or
other recapitalization relative to any of Summa's capital stock, nor any action
authorizing or obligating Summa to do any of the foregoing; (ii) no loss,
destruction or damage to any material property or asset of Summa, whether or not
insured; (iii) no acquisition or disposition of material assets (or any contract
or arrangement therefor), or any other material transaction by Summa otherwise
than for fair value and in the ordinary course of business; (iv) no discharge or
satisfaction by Summa of any lien or encumbrance or payment of any material
obligation or liability (absolute or contingent) other than current liabilities
shown on the Summa Balance Sheet, or current liabilities incurred since the date
thereof in the ordinary course of business, (v) no sale, assignment or transfer
by Summa of any of its tangible or intangible assets including any security
interest or other encumbrance, or waiver by Summa of any rights of value which,
in any such case, is outside the ordinary course of business and material to the
business of Summa; (vi) no payment of any bonus to or change in the compensation
of any
17
director, officer or employee, whether directly or by means of any bonus,
pension plan, contract or commitment; (vii) no write-off or material reduction
in the carrying value of any asset which is material to the business of Summa;
(viii) no disposition or lapse of rights as to any intangible property which is
material to the business of Summa; (ix) except for ordinary travel advances, no
loans or extensions of credit to shareholders, officers, directors or employees
of Summa, (x) no agreement to do any of the things described in this Section
7.8, and (xi) no materially adverse change in the condition (financial or
otherwise) of Summa or in its assets, liabilities, properties or business.
7.9 Real Property. Set forth as a part of the Summa Disclosure Schedule
-------------
is a complete and accurate legal description of each parcel of real property
owned by or leased to and occupied by Summa, and Summa neither owns or leases,
nor occupies, any other real property. Except as would be disclosed in a
reasonably diligent inspection, to Summa's Knowledge, the building and all
fixtures and improvements located on such real property are in good operating
condition, ordinary wear and tear excepted. To Summa's Knowledge, Summa is not
in violation of any zoning, building or safety ordinance, regulation or
requirement or other law or regulation applicable to the operation of owned or
leased properties, the violation of which could reasonably be expected to have a
material adverse affect upon Summa, its condition (financial or otherwise),
assets, liabilities, properties or business, and Summa has not received any
notice of violation with which it has not complied or is not taking steps to
comply. Summa has good and marketable title to all such real property owned by
Summa, free and clear of al liens, mortgages, encumbrances, easements, leases,
restrictions and claims of any kind whatsoever except for (i) those matters
shown on the Summa Disclosure Schedule; (ii) liens for taxes for the current
year and tax assessments not yet due and payable; and (iii) mechanics' or
similar liens for materials or services furnished or to be furnished after the
date hereof. All leases of real property to which Summa is a party and which
are material to the business of Summa are fully effective in accordance with
their respective terms and afford Summa peaceful and undisturbed possession of
the subject matter of the lease, and there exists no material default on the
part of Summa or termination thereof, except as may be set forth in the Summa
Disclosure Schedule.
7.10 Tangible Personal Property. Set forth as a part of the Summa
--------------------------
Disclosure Schedule hereto is a complete list of all items of tangible personal
property owned or leased and used by Summa in the current conduct of its
business, where the original cost was in excess of $1,000. Except as set forth
in the Summa Disclosure Schedule, Summa has, and at the Effective Date will
have, good and marketable title to, or in the case of leased equipment a valid
leasehold interest in, and is in possession of, all such items of personal
property owned or leased by it, free and clear of all title defects, mortgages,
pledges, security interests, conditional sales agreements, liens, restrictions
or encumbrances whatsoever. Included in the Summa Disclosure Schedule is a list
of all outstanding equipment leases and maintenance agreements to which Summa is
a party as lessee and which individually provide for future lease payments in
excess of $500 per month, with the identities of the other parties to all such
leases and agreements shown thereon. All leases of tangible personal property
to which Summa is a party and which are material to the business of Summa are
fully effective in accordance with their respective terms, and there exists no
material default on the part of Summa or termination thereof, except as may be
set forth in the Summa Disclosure Schedule.
18
7.11 Tax Matters. Summa has, since its inception, duly filed all federal,
-----------
state, county and local tax returns required to have been filed by it in those
jurisdictions where the nature or conduct of its business requires such filing
and where the failure to so file would be materially adverse to Summa. All
federal, state, county and local taxes, including but not limited to those taxes
due with respect to Summa's properties, income, gross receipts, excise,
occupation, franchise, permit, licenses, sales, payroll, and inventory due and
payable as of the date of the Effective Date by Summa have been paid. The
amount reflected in the Summa Balance Sheet as liabilities or reserves for taxes
which are due but not yet payable is sufficient for the payment of all accrued
and unpaid taxes of the types referred to hereinabove. No consent to the
application of Section 341(f)(2) of the Internal Revenue Code of 1986, as
amended, has been filed with respect to Summa.
7.12 Accounts Receivable. The accounts receivable reflected in the Summa
-------------------
Balance Sheet constituted all accounts receivable of Summa as of the date
thereof, other than accounts receivable fully written off as uncollectible as of
such date in accordance with consistently applied prior practice. All such
accounts receivable arose from valid sales made (as opposed to consignments) or
services rendered in the ordinary course of business, and are not subject to any
set-off or counter-claim, except as disclosed on the Summa Disclosure Schedule.
Except as disclosed in the Summa Disclosure Schedule, such accounts receivable
have been collected in full since the date of the Summa Balance Sheet or, to
Summa's Knowledge, are collectible at their full respective amounts (net of
allowance for doubtful accounts established in accordance with consistently
applied prior practice). Based upon the prior experience of Summa, the
"allowance for doubtful accounts" shown on the Summa Balance Sheet is sufficient
to cover all doubtful accounts.
7.13 Inventories. Summa has good and marketable title to all of its
-----------
inventories of raw materials, work-in-process and finished goods, including
models and samples, free and clear of all security interests, liens, claims and
encumbrances, except as set forth in the Summa Disclosure Schedule. All such
inventories consist of items that are usable and salable in the ordinary course
of business of Summa for an amount at least equal to the book value thereto,
plus the costs of disposition thereof, and represent quantities not in excess of
one year's requirements for its business as currently conducted, except as may
be set forth in the Summa Disclosure Schedule.
7.14 Contracts and Commitments. Summa has no contract, agreement,
-------------------------
obligation or commitment, written or oral, expressed or implied, which involves
a commitment or liability in excess of $10,000 or for a term of more than one
year or whose terms prohibit cancellation without liability on 30 days' notice
or less (other than obligations which are included in accounts payable), and no
union contracts, employee or consulting contracts, financing agreements, debtor
or creditor arrangements, licenses, franchise, manufacturing, distributorship or
dealership agreements, leases, or bonus, health or stock option plans, except as
described in the Summa Disclosure Schedule, all of which have been made
available to LexaLite prior to the execution hereof, or those that are not
material to Summa. As of the date hereof, to Summa's Knowledge, there exists no
circumstances which would affect the validity or enforceability of any of such
contracts and other agreements in accordance with their respective terms.
Except as set forth in the Summa Disclosure Schedule, Summa has performed and
complied in all material respects with all obligations required to be performed
by it to date under, and is not in default (without giving effect to any
required notice or grace period) under, or in breach of, the terms, conditions
or provisions of any of such contracts and other agreements. Except as set
forth
19
in the Summa Disclosure Schedule, the validity and enforceability of any
contract or other agreement described herein has not been and shall not in any
manner be affected by the execution and delivery of this Agreement without any
further action. Except as set forth in the Summa Disclosure Schedule, Summa has
no material contract, agreement, obligation or commitment which requires or will
require future expenditures (including internal costs and overhead) in excess of
reasonably anticipated receipts, nor which is likely to be materially adverse to
Summa's business, assets or condition (financial and otherwise).
7.15 Patents, Trade Secrets and Customer Lists. Summa does not have any
-----------------------------------------
patents, applications for patents, trademarks, applications for trademarks,
trade names, licenses or service marks relating to the business of Summa, except
as set forth in the Summa Disclosure Schedule, nor does any present or former
shareholder, officer, director or employee of Summa own any patent rights
relating to any products manufactured, rented or sold by Summa, except as set
forth on the Summa Disclosure Schedule. Except as disclosed in the Summa
Disclosure Schedule, to the Knowledge of Summa, Summa has the unrestricted right
to use, free and clear of any claims or rights of others, all trade secrets,
customer lists, and manufacturing and secret processes reasonably necessary to
the manufacture and marketing of all products made or proposed to be made by
Summa, and the continued use thereof by Summa following the Effective Date will
not conflict with, infringe upon, or otherwise violate any rights of others. To
Summa's Knowledge, Summa has not used and is not making use of any confidential
information or trade secrets of any present or past employee of Summa that has
not been assigned to Summa or that Summa does not have the right to use.
7.16 No Pending Material Litigation or Proceedings. Except as disclosed
---------------------------------------------
in the Summa Disclosure Schedule, there are no actions, suits or proceedings
pending or, to Summa's Knowledge, threatened against or affecting Summa
(including actions, suits or proceedings where liabilities may be adequately
covered by insurance) at law or in equity or before or by any federal, state,
municipal or other governmental department, commission, court, board, bureau,
agency or instrumentality, domestic or foreign, or affecting any of the
shareholders, officers or directors of Summa in connection with the business,
operations or affairs of Summa, which could reasonably be expected to result in
any material adverse change in the business, properties or assets, or in the
condition (financial or otherwise) of Summa, or which question or challenge the
transaction contemplated hereby. Except as disclosed in the Summa Disclosure
Schedule, to Summa's Knowledge, Summa has not, during the past three years, been
threatened with any action, suit, proceedings or claim (including actions,
suits, proceedings or claims where its liabilities may be adequately covered by
insurance) for personal injuries allegedly attributable to products sold or
services performed by Summa asserting a particular defect or hazardous property
in any of Summa's products, services or business practices or methods, nor has
Summa been a party to or threatened with proceedings brought by or before any
federal or state agency; and Summa has no Knowledge of any defect or hazardous
property claimed or actual in any such product, service or business practice or
method. Summa is not subject to any voluntary or involuntary proceeding under
the United States Bankruptcy Code and has not made an assignment for the benefit
of creditors.
7.17 Insurance. Summa maintains insurance with reputable insurance
---------
companies on such of its equipment, tools, machinery, inventory and properties
as are usually insured by companies similarly situated in the same geographic
location and to the extent customarily insured, and maintains products and
personal liability insurance, and such other insurance against hazards, risks
and liability
20
to persons and property as is customary for companies similarly situated in the
same geographic location. All such insurance currently is, and at the
Effective Date shall be, in full force and effect.
7.18 Arrangements with Personnel. Except as set forth in the Summa
---------------------------
Disclosure Schedule, no stockholder, director, officer or employee of Summa is
presently a party to any transaction with Summa, including without limitation
any contract, loan or other agreement or arrangement providing for the
furnishing of services by, the rental of real or personal property from or to,
or otherwise requiring loans or payments to, any such shareholder, director,
officer or employee, or to any member of the family of any of the foregoing, or,
to Summa's Knowledge, to any corporation, partnership, trust or other entity in
which any shareholder, director, officer or employee, or any member of the
family of any of them has a substantial interest or is an officer, director,
trustee, partner or employee. There is set forth in the Summa Disclosure
Schedule a list showing (i) the name, title, date and amount of last
compensation increase, and aggregate compensation, including amounts paid or
accrued pursuant to any bonus, pension, profit sharing, commission, deferred
compensation or other plans or arrangements in effect as of the date of this
Agreement, of each officer or employee of Summa whose salary and other
compensation, in the aggregate, received from Summa or accrued is at an annual
rate (or aggregated for the most recently completed fiscal year) in excess of
$100,000, as well as any employment agreements relating to any such persons;
(ii) all powers of attorney from Summa to any person or entity; and (iii) the
name of each person or entity authorized to borrow money or incur or guarantee
indebtedness on behalf of Summa.
7.19 Labor Relations. Summa has no obligations under any collective
---------------
bargaining agreement or other contract with a labor union, under any employment
contract or consulting agreement, or under any executive's compensation plan,
agreement or arrangement, nor, to Summa's Knowledge, is any union, labor
organization or group of employees of Summa presently seeking the right to enter
into collective bargaining with Summa on behalf of any of its employees, except
as set forth in the Summa Disclosure Schedule. Summa has furnished LexaLite
with a copy of all written personnel policies, including without limitation
vacation, severance, bonus, pension, profit sharing and commission policies,
applicable to any of Summa's employees.
7.20 Bank Accounts. All bank and savings accounts, and other accounts at
-------------
similar financial institutions, of Summa existing at the time of the Effective
Date are listed in the Summa Disclosure Schedule.
7.21 Absence of Questionable Payments. Neither Summa nor, to Summa's
--------------------------------
Knowledge, any shareholder, director, officer, agent, employee, consultant or
other person associated with or acting on behalf of any of them, has (a) used
any corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, (b) made any direct or
indirect unlawful payments to governmental officials or others from corporate
funds, engaged in any payments or activity which would be deemed a violation of
the Foreign Corrupt Practices Act or rules or regulations promulgated
thereunder, or (c) established or maintained any unlawful or unrecorded
accounts.
21
7.22 Compliance with Laws. To Summa's Knowledge, Summa holds all
--------------------
licenses, franchises, permits and authorizations necessary for the lawful
conduct of its business as presently conducted, has complied with all applicable
statutes, laws, ordinances, rules and regulations of all governmental bodies,
agencies and subdivisions having, asserting or claiming jurisdiction over it,
with respect to any part of the conduct of its business and corporate affairs,
where the failure to so hold or comply could reasonably be expected to have a
material adverse affect upon Summa's condition (financial or otherwise),
business, assets or properties.
7.23 Environmental Matters. To the Knowledge of Summa, except as may be
---------------------
set forth on the Summa Disclosure Schedule, there are no actions, claims,
demands, investigations, inquiries, notice of potential liability, notices of
violation, or other proceedings, rulings, orders, or citations pending against
Summa (or any predecessor or affiliate), or threatened or contemplated by any
person or entity, as the result of any actual or alleged failure of Summa (or
any predecessor or affiliate) to comply with any requirement of federal, state,
local or foreign law, order or regulation relating to air quality, water
quality, solid or hazardous waste management, hazardous or toxic substances, or
the protection of public health or the environment.
7.24 Relationships with Customers and Suppliers. Except as may be set
------------------------------------------
forth on the Summa Disclosure Schedule, no present customer or substantial
supplier to Summa has indicated an intention to terminate or materially and
adversely alter its existing business relationship therewith, and Summa has no
reason to believe that any of the present customers of or substantial suppliers
to Summa intends to do so, other than, in each such case, any customer or
substantial supplier the loss of which could not reasonably be expected to
materially adversely affect Summa.
7.25 Brokerage. Except as set forth in the Summa Disclosure Schedule,
---------
Summa has no obligation to any person or entity for brokerage commissions,
finder's fees or similar compensation in connection with the transactions
contemplated by this Agreement.
7.26 Reports Under the Exchange Act. The Summa Common Stock is registered
------------------------------
under Section 12(g) of the Exchange Act. Accordingly, Summa is subject to the
information requirements of the Exchange Act, and in accordance therewith files
reports and other information with the Commission. Since January 1, 1990, Summa
has filed with the Commission on a timely basis all such reports which Summa has
been required to file under the Exchange Act. Summa has provided to LexaLite
accurate and complete copies of each registration statement, report, proxy
statement, information statement or schedule, together with all amendments
thereto, that were required to be filed with the SEC by Summa since January 1,
1993 (the "SEC Documents"). As of their respective dates, the SEC Documents
complied in all material respects with the applicable requirements of the
Securities Act and the Exchange Act, as the case may be, and none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were or are
made, not misleading.
7.27 Disclosure. Neither this Agreement, nor any certificate, exhibit, or
----------
other written document or statement, furnished to Summa by or on behalf of Summa
in connection with the transactions contemplated by this Agreement contained or
contains any untrue statement of a material fact or omitted or omits to state a
material fact necessary to be stated in order to make the statements contained
herein or therein, in the light of the circumstances in which they were made,
not misleading. Summa has no Knowledge of any fact which has not been disclosed
in writing to LexaLite which may
22
reasonably be expected to materially and adversely affect the business,
properties, assets, condition (financial or other) and/or results of operations
of Summa or the ability of Summa to perform all of the obligations to be
performed by Summa under this Agreement and/or any other agreement between Summa
and LexaLite to be entered into pursuant to any provision of this Agreement.
8. COVENANTS OF THE PARTIES PRIOR TO THE EFFECTIVE DATE.
----------------------------------------------------
Each of LexaLite and Summa hereby covenants to and agrees with the other
that between the date hereof and the Effective Date:
8.1 Access to Properties and Records. Each party shall give to the other
--------------------------------
and its authorized representatives full access, during reasonable business
hours, in such a manner as not unduly to disrupt normal business activities, to
any and all of its premises, properties, contracts, books, records and affairs,
and will cause its officers to furnish any and all data and information
pertaining to its business that the other may from time to time reasonably
require. Unless and until the transactions contemplated by this Agreement have
been consummated, each party and its representatives shall hold in confidence
all information so obtained and will use such information solely for the
purposes intended by this Agreement. If the transactions contemplated hereby
are not consummated, each party will return all documents hereinabove referred
to and obtained therefrom. Such obligation of confidentiality shall not extend
to any information which is shown to have been previously (i) known to the party
receiving it, (ii) generally known to others engaged in the trade or business of
the disclosing party, (iii) part of public knowledge or literature, or (iv)
lawfully received from a third party. Without limiting the generality of the
foregoing, it is understood and agreed that certain information disclosed by
Summa to LexaLite or its representatives may constitute "material inside
information" that has not previously been disclosed to the public generally.
LexaLite acknowledges that LexaLite and its representatives are aware of the
restrictions on the use of such information imposed by federal and state
securities laws, agrees to comply and cause its representatives to comply with
such restrictions, and agrees to indemnify and hold Summa and each of its
directors, officers and employees free and harmless from any and all liability,
cost or expense that any of them may incur or suffer by reason of any breach by
LexaLite or any of its authorized representatives of any of such restrictions.
From and after the date hereof and until the Effective Date, neither LexaLite
nor any of its representatives shall purchase, directly or indirectly, in the
public marketplace or otherwise, any of Summa's securities.
8.2 Corporate Existence, Rights and Franchises. Each party shall take all
------------------------------------------
necessary actions to maintain in full force and effect its corporate existence,
rights, franchises and good standing. No change shall be made to the Articles
of Incorporation or Bylaws of either party.
8.3 Insurance. Each party shall take all necessary actions to maintain in
---------
force all of its existing insurance policies, subject only to variations in
amounts required by the ordinary operation of its business.
8.4 Conduct of Business in the Ordinary Course. Except as otherwise
------------------------------------------
expressly provided in this Agreement, neither party shall permit to be done any
act which would result in a material breach of any of the covenants of such
party contained herein or which would cause the representations and warranties
of such party contained herein to become untrue or inaccurate in any material
respect as of any date subsequent to the date hereof. Without limiting the
generality of the foregoing, each party shall take all reasonably necessary
actions to (i) operate its business diligently in
23
the ordinary course of business as an ongoing concern, and will use its best
business efforts to preserve intact its organization and operations at current
levels and to make available to the Surviving Corporation the services of its
present employees and to preserve for the Surviving Corporation its
relationships with its suppliers and customers and others having business
relationships with it; (ii) maintain in good operating condition, ordinary wear
and tear excepted, all of its assets and properties which are in such condition
as of the date hereof; (iii) maintain its books, accounts and records in the
usual, regular and ordinary manner, on a basis consistent with past practice in
recent periods; (iv) refrain from entering into any contract, agreement, lease,
capital expenditure or other commitment of a value in excess of $250,000 (other
than purchases and sales of inventory, including sales orders, in the ordinary
course of business), or from modifying, amending, canceling or terminating any
of such contracts, agreements, leases or other commitments presently in force,
except as expressly contemplated by this Agreement, without the prior approval
of the other party (which approval shall not be unreasonably withheld and which
may be verbal to be promptly followed by written confirmation); (v) refrain from
paying any bonus to any employee, officer or director, other than pursuant to
any contract, agreement or arrangement existing on the date of this Agreement,
and from declaring or paying any dividend, or making any other distribution in
respect of, or from redeeming, any of its capital stock; and (vi) refrain from
issuing any capital stock or other securities convertible into or exercisable to
purchase capital stock.
8.5 Consents. Each of the parties shall use its best business efforts to
--------
obtain any and all necessary permits, approvals, qualifications, consents or
authorizations from third parties and governmental authorities which are
required to be obtained prior to the Effective Date, and shall use its best
efforts to make or complete all filings, proceedings and waiting periods
required to be made or completed prior to the Effective Date.
8.6 Approval of Summa Shareholders. A special meeting of the Summa
------------------------------
Shareholders shall be called to be held in accordance with the California
Corporations Code no later than November 6, 1996, at a time, place and date to
be set by the Summa Board of Directors, for the purposes of considering and
voting upon a proposal to approve this Agreement and the transactions
contemplated hereby. The Summa Board of Directors has unanimously recommended
that the Summa Shareholders approve this Agreement and the transactions
contemplated hereby, and the current members of the Summa Board of Directors,
who together own or have voting control over an aggregate of approximately ten
percent (10%) of the Summa Common Stock currently outstanding, have agreed to
vote in favor of this Agreement at the special meeting. Summa shall prepare and
mail, or cause to be prepared and mailed to the Summa Shareholders, at least 30
days prior to the special meeting, an appropriate notice of the meeting,
together with a copy of the Joint Proxy Statement/Prospectus in Section 8.7
below.
8.7 Registration Statement and Proxy Statement.
------------------------------------------
(a) Summa and LexaLite shall cooperate in preparing the Registration
Statement (including any amendments or supplements thereto) and the Joint Proxy
Statement/Prospectus to be included therein and each shall furnish to the other
for inclusion therein all such information relating to it as the other party or
its counsel reasonably requests. Summa shall file the Registration Statement
with the Commission promptly after completion, and LexaLite and Summa shall use
all reasonable efforts to respond to any comments of the Commission staff and to
have the Registration Statement declared effective as promptly as practicable
and thereafter to maintain such effectiveness
24
through the Effective Time. Summa agrees to provide to LexaLite the opportunity
to review and comment on the Registration Statement, each amendment or
supplement to the Registration Statement, each responsive correspondence to be
sent to the Commission, and each form of the Joint Proxy Statement/Prospectus at
a reasonable time before filing. Summa shall (i) include in the Registration
Statement and each amendment and supplement information relating to LexaLite,
its business and financial condition only as authorized by LexaLite, and (ii)
promptly provide to LexaLite copies of all correspondence received from the
Commission with respect to the Registration Statement and its amendments or
supplements and copies of all responsive correspondence to the Commission.
Summa agrees to notify LexaLite of any stop orders or threatened stop orders
with respect to the Registration Statement. Summa also may file the Joint Proxy
Statement/Prospectus with the Commission as preliminary proxy material under
Regulation 14A of the Exchange Act, if Summa so determines.
(b) LexaLite and Summa shall not furnish to their respective shareholders
any proxy materials relating to this Agreement or the Merger until the
Registration Statement has become effective. LexaLite and Summa each shall mail
to its shareholders (i) as promptly as practicable after the Registration
Statement becomes effective, the Joint Proxy Statement/Prospectus (the date of
such mailing hereinafter being referred to as the "Mailing Date"), (ii) as
promptly as practicable after receipt thereof, any supplemental or amended Joint
Proxy Statement/Prospectus, and (iii) such other supplementary proxy materials
as may be necessary, in light of the circumstances arising after the mailing of
the Joint Proxy Statement/Prospectus, to make the Joint Proxy
Statement/Prospectus, as theretofore supplemented or amended, complete and
correct. The Joint Proxy Statement/Prospectus and all amendments and
supplements thereto shall comply with applicable law and shall be in form and
substance satisfactory to Summa and LexaLite.
(c) Summa and LexaLite each shall advise the other if, at any time before
the effective date of the Registration Statement, the date of the special
meeting of Summa Shareholders to be held pursuant to Section 8.6 hereof, the
date of the special meeting of LexaLite Shareholders to be held pursuant to
Section 8.8 hereof, or the Effective Time, the Registration Statement or the
Joint Proxy Statement/Prospectus contains an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements contained therein, in the light of the circumstances under
which they were made, not misleading. In such event, Summa or LexaLite, as the
case may be, shall provide the other with the information needed to correct such
misstatement or omission.
8.8 Approval by LexaLite Shareholders. A special meeting of the LexaLite
---------------------------------
Shareholders shall be called to be held in accordance with the Delaware General
Corporation Law no later than November 6, 1996, at a time, place and date to be
set by the LexaLite Board of Directors, for the purposes of considering and
voting upon a proposal to approve this Agreement and the transactions
contemplated hereby. The LexaLite Board of Directors has unanimously
recommended that the LexaLite Shareholders approve this Agreement and the
transactions contemplated hereby, and current members of the LexaLite Board of
Directors, who together own or have voting control over an aggregate of
approximately Forty-six Percent (46%) of the LexaLite Common Stock currently
outstanding, have expressed their intention to vote in favor of this Agreement
at the special meeting. LexaLite shall prepare and mail, or cause to be
prepared and mailed to the LexaLite Shareholders, at least 30 days prior to the
special meeting, appropriate notice of the meeting, together with a copy of the
Joint Proxy Statement/Prospectus prepared as provided in Section 8.7 above.
25
8.9 No Equitable Conversion. Prior to the Effective Time, neither the
-----------------------
execution of this Agreement nor the performance of any provision contained
herein shall cause either Summa, on the one hand, or LexaLite, on the other
hand, to be or become liable for or in respect of the operations or business of
the other, for the cost of any labor or materials furnished to or purchased by
the other, for compliance with any laws, requirements or regulations of, or
taxes, assessments or other charges now or hereafter due to, any governmental
authority, or for any other charges or expenses whatsoever pertaining to the
conduct of the business or the ownership, title, possession, use or occupancy of
the property of the other.
8.10 Standstill Agreements.
--------------------
(a) Prior to the Effective Time, unless this Agreement is sooner
terminated as expressly provided herein, neither party shall entertain,
negotiate, or discuss with any third party, directly or indirectly, with respect
to any possible business combination, sale or assets or stock, or other
transaction which is in any way inconsistent with the transactions contemplated
hereby.
(b) If this Agreement is terminated by either party, then for a period of
three (3) full years from the date of such termination, neither party shall,
directly or indirectly, except as may expressly be permitted in writing by the
Board of Directors of the other party: (i) acquire or agree, offer, seek or
propose to acquire, or cause to be acquired, ownership of any of the assets or
businesses or voting securities of the other party, or any other rights or
options to acquire any such ownership (including from a third party); (ii) seek
or propose to influence or control the management or policies of the other
party; or (iii) enter into any discussions, negotiations, arrangements or
understandings with any third party with respect to any of the foregoing.
9. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY.
-------------------------------------------
The respective obligations of the parties hereto to consummate the
transactions contemplated hereby shall be subject to the fulfillment, at or
prior to the Effective Date, of the following conditions:
9.1 Regulatory Approvals. There shall have been obtained any and all
--------------------
permits, approvals and qualifications of, and there shall have been made or
completed all filings, proceedings and waiting periods, required by any
governmental body, agency or regulatory authority which, in the reasonable
opinion of counsel to the parties, are required for the consummation of the
transactions contemplated hereby.
9.2 No Action or Proceeding. No claim, action, suit, investigation or
-----------------------
other proceeding shall be pending or threatened before any court or governmental
agency, and no statute, rule or regulation shall have enacted or entered by a
governmental body of competent jurisdiction, which presents a substantial risk
of the restraint or prohibition of the transactions contemplated by this
Agreement or the obtaining of material damages or other relief in connection
therewith.
26
9.3 Certain Actions or Events. There must not have occurred and be
-------------------------
continuing (a) any general suspension of, or limitation on prices for, trading
in securities on any national securities exchange or the over-the-counter
market, (b) any declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States (whether or not mandatory),
(c) the commencement of a war, armed hostilities or other international or
national calamity directly involving the United States, or (d) from the date of
this Agreement through the Effective Time, a decline of more than 25 percent in
the Standard & Poor's 500 Index.
9.4 Tax Matters. Nothing shall have come to the attention of either party
------------
which has led such party reasonably to believe that the Merger will not qualify
as a tax-free reorganization under Section 368(a) of the Internal Revenue Code
of 1968, as amended.
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF SUMMA AND SUBSIDIARY.
-----------------------------------------------------------
The obligation of each of Summa and Subsidiary to consummate the Merger
provided for by this Agreement is expressly subject to the satisfaction, on or
before the Effective Date, of each of the further conditions set forth below,
any or all of which may be waived by Summa in whole or in part without prior
notice; provided, however, that no such waiver of a condition shall constitute a
-----------------
waiver by Summa of any other condition or of any of its rights or remedies, at
law or in equity, if LexaLite shall be in default or breach any of the
representations, warranties or covenants of LexaLite under this Agreement:
10.1 Shareholder Approval. The Summa Shareholders, Summa, as the sole
--------------------
shareholder of Subsidiary, and the LexaLite Shareholders shall have approved by
the requisite vote the adoption of this Agreement and the transactions
contemplated hereby.
10.2 Proceedings. All corporate and other proceedings taken or to be
-----------
taken in connection with the transactions contemplated hereby to be consummated
at the Effective Date and all documents incident thereto or required to be
delivered prior or at closing will be satisfactory in form and substance to
Summa and its special counsel (including but not limited to, the recordation of
the Agreement of Merger) as may be required to consummate the transactions
contemplated in the Agreement.
10.3 Performance of Agreement; Accuracy of Representations and Warranties.
--------------------------------------------------------------------
LexaLite shall have performed in all material respects the agreements and
covenants required to be performed by LexaLite under this Agreement prior to the
Effective Date, there shall have been no material adverse change in the
condition (financial or otherwise), assets, liabilities, earnings or business of
LexaLite since the date hereof, and the representations and warranties of
LexaLite contained herein shall, except as contemplated or permitted by this
Agreement or as qualified in a writing dated as of the Effective Date and
delivered by LexaLite to Summa with the approval of Summa indicated thereon
(which writing is to be attached hereto as Exhibit G), be true in all material
---------
respects on and as of the Effective Date as if made on and as of such date, and
Summa shall have received certificates, dated as of the Effective Date, signed
by the President and Chief Financial Officer of LexaLite, on behalf of LexaLite,
reasonably satisfactory to Summa and its counsel, to such effect.
27
10.4 Opinion of Counsel of LexaLite Summa and its special counsel shall
------------------------------
have received an opinion dated as of the Effective Date from Pointner, Joseph &
Corcoran, P.C., Attorneys at Law, counsel to LexaLite, in form and substance
satisfactory to Summa and its special counsel, substantially to the effect that:
10.4.1 LexaLite is a duly incorporated and validly existing corporation in
good standing under the laws of Delaware, and has the corporate power to enter
into this Agreement and consummate the transactions herein;
10.4.2 This Agreement has been duly authorized, executed and delivered by
LexaLite and constitutes the legal, valid and binding obligation of LexaLite,
except as the same may be limited by bankruptcy, insolvency, or other similar
laws relating to or affecting the enforcement of creditors' rights or by general
principles of equity, whether considered in a proceeding at law or in equity;
10.4.3 To the best of LexaLite's counsel's knowledge, to the extent that
the approval or consent of any governmental agency or body is required for the
legal and valid execution and delivery of this Agreement or the performance of
any obligation of LexaLite under any provision hereof, such consent has been
validly procured;
10.4.4 Except as set forth in the LexaLite Disclosure Schedule, LexaLite's
counsel is unaware of any litigation or investigation of the nature described in
Section 6.17 hereof pending or threatened against LexaLite;
10.4.5 To the best of counsel's knowledge, neither the execution of this
Agreement nor the performance by LexaLite of any of its obligations hereunder
will violate the Certificate of Incorporation, or the Bylaws of LexaLite or any
unwaived provision of any indenture, agreement or other instrument to which
LexaLite is a party, the violation of which could reasonably be expected to have
a material adverse effect on LexaLite;
10.4.6 The authorized capital stock of LexaLite is as is set forth in
Section 6.2 above;
10.4.7 To the best of counsel's knowledge, LexaLite is qualified to do
business in all jurisdictions in which the ownership of or leasing of its
property requires such qualification, except where any failure to so qualify
would not reasonably be expected to have a material adverse effect on LexaLite;
10.4.8 As to such other matters incident to the transactions herein
contemplated as Summa or its counsel may reasonably request.
10.5 Financial Data. If additional financial information concerning
--------------
LexaLite is required by the Commission in order to accomplish the registration
of Summa Common Stock provided for in Section 12 hereof, LexaLite shall have
supplied such information.
28
10.6 Accuracy of Information in Joint Proxy Statement/Prospectus. None of
-----------------------------------------------------------
the information which shall have been furnished by or on behalf of LexaLite or
its management for inclusion in the Joint Proxy Statement/Prospectus shall
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
10.7 Exchange of LexaLite Options. Each holder of outstanding Options
----------------------------
shall have entered into a written agreement with LexaLite to cancel all such
Options owned beneficially and of record by such holder effective as of the
Effective Time, in consideration of the execution by each such holder of a
standard Summa stock option agreement (the form of which has been provided to
LexaLite prior to the execution and delivery hereof) with Summa effective as of
the Effective Time, pursuant to which such holders would be entitled to purchase
shares of Summa Common Stock on the basis set forth in Section 3.1.2(b) above.
10.8 Settlement with Brokers. Any and all persons or entities asserting
-----------------------
any claim against either LexaLite or Summa for brokerage commissioners, finder's
fees or similar compensation in connection with the transactions contemplated by
this Agreement shall have entered into an agreement with each of LexaLite and
Summa to settle and discharge such claim on a basis that is reasonably
acceptable to Summa.
10.9 Dissenters' Rights. The number of shares of either LexaLite Common
---- ------------------
Stock or Summa Common Stock which constitute "Perfected Dissenting Shares" as
defined in Section 3.4 hereof does not exceed two percent (2%) of the total
number of shares of LexaLite Common Stock or Summa Common Stock, as the case may
be, outstanding on the respective record dates of the meetings of the LexaLite
Shareholders and the Summa Shareholders referred to in Sections 4.1 and 4.2.
10.10 Employment. Josh T. Barnes shall have entered into an employment
----------
agreement with the Surviving Corporation in form and substance mutually
acceptable to Mr. Barnes and Summa.
10.11 Fairness Opinion. An investment banking firm mutually acceptable to
----------------
Summa and LexaLite shall have rendered an opinion, not subsequently withdrawn,
to the Board of Directors of each of Summa and LexaLite, by no later than five
business days prior the date on which the Joint Proxy Statement/Prospectus is to
be mailed to the Summa Shareholders and the LexaLite Shareholders as provided in
Sections 8.6 and 8.8 hereof, to the effect that the transactions contemplated by
this Agreement are fair from a financial point of view to the Summa Shareholders
and to the LexaLite Shareholders. The cost of obtaining such opinion shall be
borne equally by Summa and LexaLite.
29
11. CONDITIONS PRECEDENT TO LEXALITE'S OBLIGATIONS.
----------------------------------------------
Lexalite's obligation to consummate the Merger provided for by this
Agreement is expressly subject to the satisfaction, on or before the Effective
Date, of each of the further conditions set forth below, any or all of which may
be waived by LexaLite in whole or in part without prior notice; provided,
---------
however, that no such waiver of a condition shall constitute a waiver by
- -------
LexaLite of any other condition or of any of its rights or remedies, at law or
in equity, if Summa shall be in default or breach any of the representations,
warranties or covenants of Summa under this Agreement:
11.1 Shareholder Approval. The LexaLite Shareholders, the Summa
--------------------
Shareholders and Summa, as sole the shareholder of Subsidiary, shall have
approved by the requisite vote the adoption of this Agreement and the
transactions contemplated hereby.
11.2 Proceedings. All corporate and other proceedings taken or to be
-----------
taken in connection with the transactions contemplated hereby to be consummated
at the Effective Date and all documents incident thereto or required to be
delivered prior or at closing will be satisfactory in form and substance to
LexaLite and its counsel (including but not limited to, the recordation of the
Agreement of Merger) as may be required to consummate the transactions
contemplated in the Agreement.
11.3 Performance of Agreement; Accuracy of Representations and Warranties.
--------------------------------------------------------------------
Summa shall have performed the agreements and covenants required to be performed
by Summa under this Agreement prior to the Effective Date, there shall have been
no material adverse change in the condition (financial or otherwise), assets,
liabilities, earnings or business of Summa since the date hereof, and the
representations and warranties of Summa contained herein shall, except as
contemplated or permitted by this Agreement or as qualified in a writing dated
as of the Effective Date and delivered by Summa to LexaLite with the approval of
LexaLite indicated thereon (which writing is to be attached hereto as Exhibit
-------
H), be true in all material respects on and as of the Effective Date as if made
on and as of such date, and LexaLite shall have received certificates, dated as
of the Effective Date, signed by the President and Chief Financial Officer of
Summa, on behalf of Summa, reasonably satisfactory to LexaLite and its counsel,
to such effect.
11.4 Opinion of Counsel for Summa. LexaLite and its counsel shall have
----------------------------
received an opinion, dated as of the Effective Date, from Phillips & Haddan,
special counsel to Summa, in form and substance satisfactory to LexaLite and its
counsel, substantially to the effect that:
11.4.1 Each of Summa and Subsidiary is a duly incorporated and validly
existing corporation in good standing under the laws of California, and has the
corporate power to enter into this Agreement and consummate the transactions
herein;
11.4.2 This Agreement has been duly authorized, executed and delivered by
Summa and constitutes the legal, valid and binding obligation of each of Summa
and Subsidiary, except as the same may be limited by bankruptcy, insolvency, or
other similar laws relating to or affecting the enforcement of creditors rights
or by general principles of equity, whether considered in a proceeding at law or
in equity;
30
11.4.3 The issuance of Summa Common Stock to be issued as a consequence
of the Merger has been duly authorized by all necessary corporate action on the
part of Summa; and that such shares of Summa Common Stock will be validly issued
and nonassessable;
11.4.4 To the best of such counsel's knowledge, to the extent that the
approval or consent of any governmental agency or body is required for the legal
and valid execution and delivery by Summa of this Agreement, the issuance of
Summa Common Stock, or the performance of any obligation of Summa or Subsidiary
under any provision hereof, such consent has been validly procured;
11.4.5 Except as set forth in the Summa Disclosure Schedule, such counsel
is unaware of any litigation or investigation of the nature described in Section
7.16 hereof pending or threatened against either Summa or Subsidiary;
11.4.6 To the best of such counsel's knowledge, neither the execution of
this Agreement or the performance by either Summa or Subsidiary of any of its
obligations hereunder, will violate the Articles of Incorporation or the Bylaws
of either Summa or Subsidiary, or any unwaived provision of any indenture,
agreement or other instrument to which Summa is a party, the violation of which
could reasonably be expected to have a material adverse effect, on Summa;
11.4.7 The authorized capital stock of Summa is as set forth in Section
7.2 above;
11.4.8 To the best of such counsel's knowledge, Summa is qualified to do
business in all jurisdictions in which the ownership of or leasing of its
property requires such qualification, except where any failure to so qualify
would not reasonably be expected to have a material adverse effect on Summa;
11.4.9 The Registration Statement has become effective under the Act and,
to counsel's knowledge, no stop order suspending its effectiveness has been
issued and no proceedings for that purpose are pending before or are
contemplated by the Commission;
11.4.10 As to such other matters incident to the transactions herein
contemplated as LexaLite or its counsel may reasonably request.
11.5 Registration of Shares. All shares of Summa Common Stock issuable to
----------------------
LexaLite Shareholders as a consequence of the Merger shall have been duly
registered under the Securities Act pursuant to the provisions of Section 12
hereof, and such registration shall be effective and no stop order shall have
been issued.
11.6 Accuracy of Information in Joint Proxy Statement/Prospectus. None of
-----------------------------------------------------------
the information which shall have been furnished by or on behalf of Summa or its
management for inclusion in the Joint Proxy Statement/Prospectus shall contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
31
11.7 Addition to Summa Board of Directors. Josh T. Barnes shall have been
------------------------------------
elected to the Board of Directors of Summa, effective as of the Effective Time,
to serve in such capacity from and after the Effective Time until changed in
accordance with applicable law and the Articles of Incorporation and Bylaws of
Summa.
11.8 Nasdaq Listing. The shares of Summa Common Stock to be issued to the
--------------
LexaLite Shareholders in connection with the Merger shall have been listed on
The Nasdaq National Market.
11.9 Employment Agreement. Josh T. Barnes shall have entered into the
--------------------
employment agreement specified in Section 10.10 above.
11.10 Fairness Opinion. The Board of Directors of Summa shall have
----------------
received the "fairness opinion" specified in Section 10.11 hereof, and such
opinion subsequently shall not have been withdrawn.
12. REGISTRATION OF SHARES.
----------------------
12.1 Registration. Summa shall use its best efforts, with the cooperation
------------
and participation of LexaLite as provided in Section 8.7 hereof, to cause all of
the shares of Summa Common Stock issuable to the LexaLite Shareholders as a
consequence of the Merger to be duly registered in accordance with Section 12.2
under the Securities Act, and qualified under the Blue Sky laws of each state
with jurisdiction over the transaction, as same may be required. Such
registration under the Securities Act shall be effected pursuant to the
Registration Statement which shall become and remain effective under the
Securities Act as of the Effective Date, and in the case of those LexaLite
Shareholders who are not or do not become "Affiliates," as that term is defined
in Rule 405, the shares of Summa Common Stock to be received by them as a
consequence of the Merger will not require further registration. As provided in
Section 11.8 hereof, Summa shall take all necessary actions to obtain the
listing of the Summa Common Stock to be issued in the Merger and on The Nasdaq
National Market.
12.2 Timing. The registration of the shares of Summa Common Stock
------
issuable to the LexaLite Shareholders as a consequence of the Merger, including
the shares underlying any options converted pursuant to this Agreement, shall be
completed on or before the Effective Date.
12.3 Expenses. All registration and filing fees, fees and disbursements
--------
of counsel for Summa, expenses of any audits of Summa incident to or required by
any such registration and expenses of Summa's proxy solicitation and expenses of
complying with the securities or blue sky laws of any jurisdictions pursuant to
Section 12.1 hereof shall be borne and paid by Summa at Summa's sole cost and
expense. All expenses of printing and distributing the Joint Proxy
Statement/Prospectus to and soliciting proxies from the LexaLite Shareholders,
all fees and disbursements of counsel for LexaLite, and the expenses of any
audits of LexaLite incident to or required by any such registration, shall be
borne and paid by LexaLite at LexaLite's sole cost and expense.
32
13. TERMINATION, AMENDMENT AND WAIVER.
---------------------------------
13.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Effective Date, whether before or after approval by either or both of the
Summa Shareholders or the LexaLite Shareholders:
13.1.1 By mutual consent of LexaLite and Summa;
13.1.2 By either LexaLite or Summa as provided in Section 3.1.2(c) hereof;
13.1.3 By either LexaLite or Summa, if the Merger shall not have been
consummated on or before January 31, 1997 (the "Termination Date"), except that
the right to terminate under this Section 13.1.3 shall not be available to any
party whose failure to perform any covenant herein or satisfy any condition
hereof within the control of such party has been the proximate cause of or
resulted in the failure of the Merger to be consummated on or before the
Termination Date;
13.1.4 Unilaterally by either LexaLite or Summa (i) if the other fails to
perform any covenant in any material respect in this Agreement, unless the
failure is capable of being and has been cured in all material respects within
30 business days after the terminating party has delivered written notice of the
alleged failure, or (ii) if any condition to the obligations of that party is
not satisfied (other than by reason of a breach by that party of its obligations
hereunder), and it reasonably appears that the condition cannot be satisfied
prior to the Termination Date, unless the party has earlier waived such
condition;
13.1.5 By either LexaLite or Summa if any of the conditions to such
party's performance remain unsatisfied for a period of 40 days after the
Commission shall have indicated its willingness to accelerate the effectiveness
of the Registration Statement to be filed by Summa as provided in Section 12
hereof.
13.1.6 By either LexaLite or Summa, if the Board of Directors of such
party has determined that consummation of the transactions contemplated by this
Agreement could reasonably be expected to cause the directors of such party to
violate their fiduciary duties under applicable law, upon the payment by the
terminating party to the other party of the sum of $500,000, as liquidated
damages in respect of the loss of the non-terminating party's prospective
economic opportunity, plus reimbursement of all out-of-pocket expenses
reasonably incurred by the non-terminating party through the date of such
termination.
13.2 Effect of Termination. In the event of termination of this Agreement
---------------------
by either Summa or LexaLite as provided in Section 13.1, this Agreement shall
forthwith become void and there shall be no further obligation on the part of
either LexaLite or Summa, or their respective officers or directors (except as
set forth in this Section 13.2 and in Sections 8.1, 8.10, 12.3, 13.1.6, 14.8,
14.9 and 14.10 which shall survive the termination). Nothing in this Section
13.2 shall relieve any party from liability for any breach of this Agreement.
33
13.3 Amendment. This Agreement may not be amended or modified except by
---------
an instrument in writing signed on behalf of each of the parties hereto and in
compliance with applicable law.
13.4 Waiver. At any time prior to the Effective Time, the parties hereto
------
may (a) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant thereto, and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
14. MISCELLANEOUS.
-------------
14.1 Other Documents. Each of the parties hereto shall execute and
---------------
deliver such other and further documents and instruments, and take such other
and further actions, as may be reasonably requested of them for the
implementation and consummation of this Agreement and the transactions herein
contemplated.
14.2 Parties in Interest. This Agreement shall be binding upon and inure
-------------------
to the benefit of the parties hereto, and their respective successors and
assigns, but shall not confer, expressly or by implication, any rights or
remedies upon any other party.
14.3 Governing Law. Except with respect to matters controlled by the
-------------
Delaware General Corporation Law, this Agreement is made and shall be governed
in all respects, including validity, interpretation and effect, by the laws of
the State of California.
14.4 Notices. All notices, requests or demands and other communications
-------
hereunder must be in writing and shall be deemed to have been duly made if
personally delivered or mailed, postage prepaid, to the parties as follows:
(a) If to LexaLite, to: Thomas M. Phillips
LexaLite International Corporation
10163 US 31 North
Charlevoix, MI 49720-0498
With copies to: Thomas D. Pointner, Esq.
Pointner, Joseph & Corcoran, P.C.
203 Mason Street
Charlevoix, MI 49720
Stephen R. Kretschman, Esq.
Warner Norcross & Judd LLP
900 Old Kent Bank Building
111 Lyon Street, N.W.
Grand Rapids, MI 49503
34
(b) If to Summa, to: James R. Swartwout
Summa Industries
1600 West Commonwealth Avenue
Fullerton, CA 93833
With copies to: James M. Phillips, Jr., Esq.
Phillips & Haddan
4695 MacArthur Court, Suite 840
Newport Beach, CA 92660
Any party hereto may change its address by written notice to the other party
given in accordance with this Section 14.4.
14.5 Entire Agreement. This Agreement, together with the Agreement of
----------------
Merger and each of the other exhibits and schedules attached hereto, contains
the entire agreement between the parties and supersedes all prior agreements,
understandings and writings between the parties with respect to the subject
matter hereof. Each party hereto acknowledges that no representations,
inducements, promises or agreements, oral or otherwise, have been made by any
party, or anyone acting with authority on behalf of any party, which are not
embodied herein or in the Agreement of Merger or in an exhibit or schedule
hereto, and that no other agreement, statement or promise may be relied upon or
shall be valid or binding.
14.6 Headings. The captions and headings used herein are for convenience
--------
only and shall not be construed as a part of this Agreement. In this Agreement,
the term "including" and terms of similar import shall mean "including without
limitation" unless the context requires otherwise.
14.7 Attorneys' Fees. In the event of any litigation between LexaLite and
---------------
Summa, the non-prevailing party shall pay the reasonable expenses, including the
attorneys' fees, of the prevailing party in connection therewith.
14.8 Expenses. Except as otherwise expressly provided hereunder, each
--------
party hereto agrees to pay all of its own expenses and to save the other party
harmless against liability for the payment of any such expenses arising in
connection with the negotiation, execution and consummation of the transactions
contemplated by this Agreement.
14.9 Indemnification of LexaLite. Except with respect to those costs and
---------------------------
expenses expressly to be borne by Lexalite as provided hereunder, Summa shall
indemnify, defend and hold LexaLite and all of LexaLite's officers, directors,
shareholders, agents and employees harmless against and in respect to any and
all claims, demands, losses, costs, expenses, obligations, liabilities, damages,
recoveries and deficiencies, including interest, penalties and reasonable
attorneys' fees, that any of them shall incur or suffer, which arise or result
from, or relate to any breach of, or failure by, Summa to perform any of its
representations, warranties, covenants, exhibits, or other instruments furnished
or to be furnished by Summa under this Agreement.
35
14.10 Indemnification of Summa and Subsidiary. Except with respect to
---------------------------------------
those costs and expenses expressly to be borne by Summa as provided hereunder,
LexaLite shall indemnify, defend and hold each of Summa and Subsidiary, and all
of their respective officers, directors, shareholders, agents and employees
harmless against and in respect of any and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties and reasonable attorneys' fees, that any of them
shall incur or suffer, which arise or result from, or relate to any breach of,
or failure by, LexaLite to perform any of its representations, warranties,
covenants, exhibits, or other instruments furnished or to be furnished by
LexaLite under this Agreement.
14.11 Public Announcements. Before issuing any press release or otherwise
--------------------
making any public statements with respect to this Agreement or the Merger, Summa
and LexaLite shall consult with each other as to its form and substance and will
not issue the press release or make the public statement before such
consultation, except in either case as may be required by applicable law.
14.12 Survival. The representations and warranties of the parties
--------
contained herein and in any other document or instrument delivered pursuant
hereto shall survive any investigations made by or on behalf of any other party
made prior to the Effective Time, but shall not survive beyond the Effective
Time. Nothing contained in this Section 14.12 shall in any way affect any
obligations of any party under this Agreement that are to be performed, in whole
or in part, after the Effective Date, nor shall it prevent or preclude any party
from pursuing any and all available remedies at law or in equity for actual
fraud against any party or parties guilty of such fraud.
14.13 Counterparts. This Agreement may be executed in counterparts, each
------------
of which shall be deemed an original but all of which taken together shall
constitute but one and the same document.
14.14 Assignment. Neither this Agreement, the Agreement of Merger nor any
----------
of the rights, interests or obligations hereunder or thereunder may be assigned
by either party without the prior written consent of the other party.
14.15 LexaLite Employee Stock Purchase Plan.
-------------------------------------
(a) At the meeting of Summa Shareholders to be held as provided in Section
8.6 above, the Summa Shareholders will be asked to adopt and approve an Employee
Stock Ownership Plan which will (i) incorporate the LexaLite ESOP, modified as
contemplated in Section 14.15(b) below, (ii) permit participation by the
employees of Summa and of each of the other consolidated subsidiaries of Summa
(in accordance with separate provisions for contribution adopted by each
participating corporation), and (iii) permit Summa to make contributions thereto
either in cash or in shares of its Common Stock.
(b) In the event that the Summa Shareholders decline to approve the
adoption of a Summa Employee Stock Ownership Plan as provided in Section
14.15(a) above, Summa agrees that LexaLite will modify the LexaLite
International Corporation Amended and Restated Employee Stock Ownership Plan
(the "LexaLite ESOP") to provide that a Participant or Beneficiary (as those
terms are defined in the LexaLite ESOP) entitled to a distribution of benefits
from the LexaLIte ESOP owing to
36
the happening of a Distributive Event (as that term is defined in the LexaLite
ESOP) occurring at any time within three (3) full years following the Effective
Date shall have the right to a put to the LexaLIte ESOP pursuant to which the
LexaLite ESOP would repurchase all or any portion of the shares of Summa Common
Stock issuable as a consequence of the Merger at a price determined in
accordance with the formula for repurchases of LexaLite Common Stock upon
exercise of the put currently in effect and on such other terms and conditions
that are mutually acceptable to Summa and LexaLite.
14.16 Certain Corporate Matters. It is the intention of Summa that the
--------------------------
Surviving Corporation's corporate headquarters will remain in Charlevoix,
Michigan and that the Surviving Corporation will continue to operate under and
to use in its business the name "LexaLite International Corporation." The
foregoing constitutes a statement of intention only, nor shall it create rights
in favor of any third party.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day and year first above written.
SUMMA INDUSTRIES LEXALITE INTERNATIONAL CORPORATION
By: _____________________________ By: ____________________________________
James R. Swartwout Josh T. Barnes
Chief Executive Officer Chief Executive Officer
37
LIST OF EXHIBITS
Exhibit No. Description To be Provided by:
- -------------- -------------------------------- ------------------
A Agreement of Merger Summa/LexaLite
B Listing of LexaLite Shareholders LexaLite
C LexaLite Disclosure Schedule LexaLite
D LexaLite Financial Statements LexaLite
E Summa Disclosure Schedule Summa
F Summa Financial Statements Summa
G Closing Exceptions to LexaLite
Representations and Warranties LexaLite
H Closing Exceptions to Summa
Representations and Warranties Summa
38