Commission File No. 1-11642
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement
|_| Confidential for use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-12
LASER TECHNOLOGY, INC.
(Name of Registrant as Specified in its Charter)
Not applicable
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
|_| No fee required.
|X| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock, $.01 par value
(2) Aggregate number of securities to which transaction applies:
4,385,795 shares of Common Stock (includes 459,600 shares underlying
options to purchase shares of common stock)
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined): The
filing fee of $668.40 was calculated pursuant to Exchange Act Rule
0-11(c)(1) and is based on the 3,926,195 shares of Laser Technology,
Inc. common stock, which represents the maximum number of shares
that will be acquired in the merger, multiplied by the $2.06 per
share merger consideration, plus the difference between $2.06 and
the strike price of options to acquire 459,600 shares of Laser
Technology, Inc. common stock. The filing fee was then calculated by
multiplying the resulting transaction cash value of $8,262,090 by
0.00008090.
(4) Proposed maximum aggregate value of transaction: $8,262,090
(5) Total fee paid: $668.40
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date filed:
[Laser Technology, Inc. *LOGO*]
7070 South Tucson Way
Englewood, Colorado 80112-3921
September 24, 2003
Dear Shareholder:
You are cordially invited to attend a special meeting of shareholders of
Laser Technology, Inc., to be held on Thursday, November 20, 2003 at 10:00 a.m.
local time, at our corporate offices located at 7070 South Tucson Way,
Englewood, Colorado 80112, to consider the acquisition by LTI Acquisition Corp.
of 100% of Laser Technology's outstanding common stock for $2.06 per share
(subject to appraisal rights) in a merger.
At the special meeting, you will be asked to consider and vote on a
proposal to approve the Agreement and Plan of Merger dated July 31, 2003,
whereby LTI Merger Sub, Inc., a wholly-owned subsidiary of LTI Acquisition, will
merge with and into Laser Technology, with Laser Technology surviving as a
direct wholly-owned subsidiary of LTI Acquisition Corp. The shareholders of LTI
Acquisition are H. Deworth Williams, Jeremy G. Dunne, and Edward F. Cowle,
directors of Laser Technology, David Williams, former President and CEO of Laser
Technology, Pamela J. Sevy, former CFO of Laser Technology, and Kama-Tech
Corporation and Kama-Tech (HK) Ltd., all of whom are shareholders of Laser
Technology. These individuals formed LTI Acquisition and LTI Merger Sub for the
purpose of entering into this transaction. If the merger is completed you will
be entitled to receive $2.06 in cash, without interest, for each share of Laser
Technology common stock you own, which represents a 49% premium over the closing
price per share of $1.38 on July 31, 2003, the last trading day before the
Merger Agreement was signed. No merger consideration will be paid for shares
beneficially owned by the affiliates of LTI Acquisition.
In order to eliminate any conflict of interest in evaluating, negotiating
and recommending approval of the merger and adoption of the merger agreement,
our board of directors formed a special committee, composed entirely of
directors who are not officers or employees of Laser Technology and who have no
financial interest in the proposed merger different from our shareholders
generally. In connection with its evaluation of the merger, the special
committee engaged Andersen, Weinroth & Partners., L.L.C. to act as its financial
advisor. Andersen, Weinroth rendered its opinion that, based on and subject to
the assumptions, limitations and qualifications set forth in such opinion, the
cash merger consideration of $2.06 per share to be received in the merger is
fair, from a financial point of view, to Laser Technology shareholders. The
special committee then recommended to the board that it approve the merger.
After careful consideration and acting on the recommendation of the
special committee, our board of directors has determined that the merger
agreement and the transactions contemplated by it are in the best interest of
Laser Technology and its shareholders. Accordingly, the special committee and
the members of the board of directors have approved the proposals and recommend
that you vote FOR such proposals. We urge you to read the enclosed proxy
statement carefully as it sets forth details of the proposed merger and other
important information related to the merger.
Your vote is important. Whether or not you attend the special meeting in
person, please take time to vote by signing, dating and mailing the enclosed
proxy card in the accompanying reply envelope as promptly as possible. You can
also vote your shares using the Internet or the telephone. Instructions for
using these convenient services are set forth on the enclosed proxy card. If you
decide to attend the special meeting and would prefer to vote in person, please
notify the Secretary of Laser Technology that you wish to vote in person and
your proxy will not be voted. Adoption and approval of the merger agreement and
merger require the affirmative vote of the holders of at least 66 2/3% of the
outstanding shares of Laser Technology common stock, excluding shares owned by
LTI Acquisition and its affiliates, so it is very important that you vote your
shares.
On behalf of our board of directors, we thank you for your support and we
look forward to seeing you at the special meeting.
Sincerely,
Eric A. Miller
President and Chief Executive Officer
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the merger agreement or the proposed
merger, passed upon the merits of the fairness of the transaction, or passed
upon the adequacy or accuracy of the disclosure in the accompanying proxy
statement. It is illegal for anyone to tell you otherwise.
LASER TECHNOLOGY, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 20, 2003
TO OUR SHAREHOLDERS:
Notice is hereby given that a special meeting of shareholders of Laser
Technology, Inc., a Delaware corporation, will be held on Thursday, November 20,
2003, at 10:00 a.m. local time, at our corporate offices located at 7070 South
Tucson Way, Englewood, Colorado 80112, for the following purposes:
1. To consider and vote on a proposal to adopt the Agreement and Plan
of Merger, dated as of July 31, 2003, by and among LTI Acquisition
Corp., LTI Merger Sub, Inc., and Laser Technology, Inc., pursuant to
which LTI Merger Sub, Inc. will be merged with and into Laser
Technology, Inc., with Laser Technology surviving as a direct
wholly-owned subsidiary of LTI Acquisition Corp. The merger
agreement provides that upon consummation of the merger, each
outstanding share of Laser Technology common stock, excluding shares
held by LTI Acquisition and its affiliates, will be converted into
the right to receive an amount equal to $2.06 in cash; and
2. To grant our board of directors discretionary authority to adjourn
the special meeting to solicit additional votes for approval of the
merger agreement and merger; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.. .
Laser Technology's board of directors (i) approved and declared the
merger, the merger agreement and the transactions contemplated by the merger
agreement advisable, (ii) declared that it is in the best interests of our
shareholders that we enter into the merger agreement and complete the merger on
the terms and conditions in the merger agreement and (iii) recommended that you
adopt the merger agreement.
The foregoing items of business are more fully described in the proxy
statement accompanying this notice. A copy of the merger agreement is attached
as Appendix A to the proxy statement.
Only shareholders of record at the close of business on September 26, 2003
are entitled to notice of and to vote at the special meeting and at any
continuation or adjournment thereof. At the close of business on the record
date, we had outstanding and entitled to vote 5,486,217 shares of common stock.
A list of shareholders entitled to vote at the special meeting will be available
for inspection at our executive offices at least ten days prior to our special
meeting.
All shareholders are cordially invited and encouraged to attend the
special meeting in person. Holders of a majority of our outstanding voting
shares must be present, either in person or by proxy, in order for the special
meeting to be held. To assure your representation at the special meeting, and
whether or not you plan to attend in person, you are urged to mark, sign, date
and return the enclosed proxy card at your earliest convenience, or to vote by
phone or over the Internet as described in the instructions accompanying the
enclosed proxy card.
If you sign, date and return the enclosed proxy card in the reply envelope
provided without indicating how you want to vote, your proxy will count as a
vote in favor of the adoption of the merger agreement. If you fail to return
your proxy card or vote by telephone or over the Internet, your shares will not
be counted for purposes of determining whether a quorum is present at the
special meeting and will effectively be counted as a vote against adoption of
the merger agreement. If you do attend the special meeting and wish to vote in
person, you may withdraw your proxy and vote in person. The prompt return of
your proxy card or your vote by phone or over the Internet will assist us in
preparing for the special meeting.
If your shares are held in the name of your broker, bank or other nominee,
you must obtain a proxy, executed in your favor, from the holder of record to be
able to vote at the special meeting.
Laser Technology shareholders have the right to dissent from the proposed
merger and, upon compliance with procedural requirements of the Delaware General
Corporation Law, to receive "fair value" for their shares if the merger is
completed. See "The Merger- Appraisal Rights" in the accompanying proxy
statement. A copy of the relevant sections of the Delaware General Corporation
Law is attached as Appendix D to the proxy statement.
By Order of the Board of Directors
Elizabeth A. Hearty
Secretary
Englewood, Colorado
September 24, 2003
LASER TECHNOLOGY, INC.
7070 South Tucson Way
Englewood, Colorado 80112-3921
PROXY STATEMENT
FOR THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 20, 2003
This proxy statement, which is dated _____________, 2003, and will be
mailed commencing on or about September 24, 2003, to the persons entitled to
receive the accompanying Notice of Special Meeting of Shareholders, is provided
in connection with the solicitation of proxies on behalf of the board of
directors of Laser Technology, Inc., which we refer to as "Laser Technology,"
"our company," "we," "our" or "us," for use at the Special Meeting of
Shareholders to be held on November 20, 2003, and at any adjournment or
postponement thereof, for the purposes set forth in such Notice. Our executive
offices are located at 7070 South Tucson Way, Englewood, Colorado.
Any proxy may be revoked at any time before it is exercised. The casting
of a ballot at the special meeting by a shareholder who may have previously
given a proxy, or the subsequent delivery of a proxy, will have the effect of
revoking the initial proxy.
At the close of business on September 26, 2003, the record date stated in
the accompanying Notice, we had issued and outstanding 5,486,217 shares of
common stock, par value $0.01 per share, each of which is entitled to one vote
with respect to each matter to be voted on at the special meeting. We have no
class or series of stock outstanding other than common stock.
The purpose of the special meeting is to vote on a proposal to adopt the
Agreement and Plan of Merger, dated as of July 31, 2003, by and between us and
LTI Acquisition Corp. and LTI Merger Sub and the transactions contemplated
thereby, which we refer to collectively as "adoption of the merger agreement."
We refer to the Agreement and Plan of Merger as the "merger agreement" and LTI
Acquisition Corp. as "LTI Acquisition".
A majority of the number of issued and outstanding shares of our common
stock present in person or by proxy will constitute a quorum for the transaction
of business at the special meeting. Abstentions and broker non-votes will be
counted as present for the purpose of determining the presence of a quorum. A
"broker non-vote" refers to shares of common stock represented at the meeting in
person or by proxy by a broker or nominee where (i) such broker or nominee has
not received voting instructions on a particular matter from the beneficial
owners or persons entitled to vote and (ii) such broker or nominee does not have
discretionary voting power on such matter.
Under the General Corporation Law of Delaware, adoption of the merger
agreement requires the affirmative vote of 66 2/3% of the outstanding stock,
excluding shares held by LTI Acquisition and its affiliates. As of the record
date, the shareholders and affiliates of LTI Acquisition beneficially owned a
total of 1,560,022 shares of Laser Technology.
Abstentions, failures to vote and broker non-votes will have the same
effect as a vote against the adoption of the merger agreement.
TABLE OF CONTENTS
PAGE
SUMMARY..................................................................... 7
Forward-Looking Information........................................... 7
Date, Time and Place of Special Meeting............................... 7
Purpose of the Special Meeting........................................ 7
Record Date and Quorum................................................ 7
Vote Required......................................................... 8
Voting Agreements..................................................... 8
The Merger............................................................ 8
Parties to the Merger................................................. 8
Merger Consideration and Payment for Shares........................... 9
Special Committee..................................................... 9
Fairness of the Merger; Recommendation of the Special Committee
of Our Board of Directors............................................. 9
Opinion of Our Financial Advisor...................................... 10
LTI Acquisition's and Affiliates' Position Concerning Fairness........ 10
Interests of Certain Persons in the Merger............................ 10
Costs and Expenses of the Merger...................................... 10
Financing of the Merger............................................... 10
Material U.S. Federal Income Tax Consequences......................... 11
Regulatory Compliance................................................. 11
Appraisal Rights...................................................... 11
Our Stock Options..................................................... 11
Conditions to the Merger.............................................. 11
Termination of the Merger Agreement................................... 12
Termination Fee and Payment of Expenses............................... 12
No Solicitation by Laser Technology................................... 12
Market Price and Dividend Information................................. 13
Selected Financial Information........................................ 13
Pro Forma and LTI Acquisition Corporation Financial Information....... 14
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER.............. 15
RISK FACTORS................................................................ 17
THE SPECIAL MEETING......................................................... 19
Date, Time and Place of Special Meeting............................... 19
Purpose of the Special Meeting........................................ 19
Record Date; Stock Entitled to Vote; Quorum........................... 19
Vote Required......................................................... 19
Voting by Our Directors, Executive Officers and Certain Shareholders.. 19
Voting of Common Stock................................................ 19
Appraisal Rights...................................................... 20
Solicitation of Proxies............................................... 20
THE COMPANIES............................................................... 21
Laser Technology, Inc................................................. 21
LTI Acquisition Corp.................................................. 22
LTI Merger Sub, Inc................................................... 22
THE MERGER.................................................................. 22
Background of the Merger.............................................. 22
Fairness of the Merger; Recommendation of the Special Committee of
our Board of Directors................................................ 27
Opinion of Andersen, Weinroth & Partners, L.L.C....................... 29
LTI Acquisition's and Affiliates' Position as to the Fairness
of the Merger......................................................... 33
Interests of Certain Persons in the Merger............................ 35
Fees and Expenses of the Merger....................................... 36
Financing of the Merger............................................... 36
Appraisal Rights...................................................... 37
Merger Consideration.................................................. 38
Payment of Shares..................................................... 39
5
Effect on Stock Options and Warrants.................................. 39
Effective Time of the Merger.......................................... 40
Delisting and Deregistration of Our Common Stock...................... 41
Material U.S. Federal Income Tax Consequences......................... 41
Accounting Treatment.................................................. 41
Regulatory Matters.................................................... 41
THE MERGER AGREEMENT........................................................ 42
Terms of the Merger................................................... 42
Merger Consideration.................................................. 42
Treatment of Stock Options............................................ 42
Appraisal Rights...................................................... 42
Representations and Warranties........................................ 43
Covenants Under the Merger Agreement.................................. 44
No Solicitation by Laser Technology................................... 45
Conditions to the Merger.............................................. 46
Additional Agreements................................................. 47
Amendment; Waiver of Conditions....................................... 49
Termination........................................................... 49
VOTING AGREEMENTS........................................................... 50
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.............. 51
INDEPENDENT PUBLIC ACCOUNTANTS.............................................. 52
OTHER MATTERS............................................................... 52
FUTURE SHAREHOLDER PROPOSALS................................................ 53
ADJOURNMENTS................................................................ 53
WHERE YOU CAN FIND MORE INFORMATION......................................... 53
APPENDIX A AGREEMENT AND PLAN OF MERGER
APPENDIX B OPINION OF ANDERSEN, WEINROTH & Partners, L.L.C.
APPENDIX C SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
APPENDIX D FORM OF VOTING AGREEMENT SIGNED BY DIRECTORS AND
EXECUTIVE OFFICERS
6
SUMMARY
This summary highlights selected information from this proxy statement and
may not contain all of the information that is important to you. To understand
the merger fully and for a more complete description of the legal terms of the
merger, you should read carefully this entire proxy statement and the
accompanying documents to which we refer. See "Where You Can Find More
Information." The merger agreement is attached as Appendix A to this proxy
statement. We encourage you to read the merger agreement as it is the legal
document that governs the merger. We have included page references in
parentheses to direct you to a more complete description of the topics presented
in this summary.
Forward-Looking Information
This proxy statement contains certain forward-looking statements relating
to, among other things, the closing of the merger agreement and our future
financial performance or future events, and are made pursuant to the safe harbor
provisions of the private Securities Litigation Reform Act of 1995. In some
cases, you can identify forward-looking statements by terminology such as "may,"
"will" "should," "expects," "intends," "plans," "anticipates," "believes,"
"estimates," "predicts," "potential," "continue," or the negative of these terms
or other comparable terminology. Such statements are subject to numerous known
and unknown risks, uncertainties, assumptions and other factors, including those
set forth in this proxy statement, that could cause actual future events or
results to differ materially from historical results, or those described in the
forward-looking statement. The forward-looking statements contained in this
proxy statement should be considered in light of these factors. Although we
believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this proxy
statement.
Except as required under federal securities laws and the rules and
regulations of the SEC, we and LTI Acquisition do not undertake to update
forward-looking information contained herein or elsewhere to reflect actual
results, changes in assumptions or changes in other factors affecting such
forward-looking information. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those indicated in, contemplated by or implied by such
statements.
For a detailed discussion of these and other risk factors, please refer to
our filings on Forms 10-KSB, 10-QSB and 8-K. You can obtain copies of these
reports and other filings for free at the SEC's Web site at www.sec.gov or from
commercial document retrieval services.
Date, Time and Place of the Special Meeting
Our special meeting of shareholders will be held at our corporate offices
located at 7070 South Tucson Way, Englewood, Colorado on Thursday, November 20,
2003, at 10:00 a.m. local time.
Purpose of the Special Meeting (Page 19)
Our special meeting is being held to consider an acquisition by LTI
Acquisition of 100% of Laser Technology's outstanding common stock for $2.06 in
cash per share (subject to appraisal rights) in a merger.
At the special meeting, our shareholders will consider and vote on the
transaction by which LTI Merger Sub will be merged with and into Laser
Technology, pursuant to the Agreement and Plan of Merger dated as of July 31,
2003, by and among LTI Acquisition, LTI Merger Sub, and Laser Technology, with
Laser Technology surviving as a direct wholly-owned subsidiary of LTI
Acquisition, and to approve and adopt the merger agreement. Upon completion of
the merger, you will be entitled to receive $2.06 in cash, without interest, for
each share of Laser Technology common stock you own. Affiliates of LTI
Acquisition who hold shares of Laser Technology, will not be entitled to receive
any cash or consideration for their shares.
Record Date and Quorum (Page 19)
Our board of directors has fixed the close of business on September 26,
2003 as the record date for the determination of shareholders entitled to notice
of, and to vote at, our special meeting and any adjournment or
7
postponement of such special meeting. Each shareholder of record at the close of
business on such record date is entitled to one vote for each share then held on
each matter submitted to a vote. At the record date, there were 5,486,217 shares
of our common stock outstanding. The holders of a majority of the outstanding
shares entitled to vote at our special meeting must be present in person or
represented by proxy to constitute a quorum for the transaction of business.
Shares held by LTI Acquisition and its affiliates, which may not be counted on
the proposal to adopt the merger agreement, may be counted for the purpose of
establishing a quorum.
Vote Required (Page 19)
Under Delaware law, the affirmative vote of at least 66 2/3% of the
outstanding shares of our common stock entitled to vote at our special meeting,
excluding shares held by persons associated with LTI Acquisition, is required to
approve the merger. Accordingly, a failure to vote or an abstention will have
the same legal effect as a vote cast against approval of the merger. In
addition, brokers who hold shares of our common stock as nominees will not have
discretionary authority to vote such shares in the absence of instructions from
the beneficial owners. Thus, if no instructions are provided, such "broker
non-votes" will have the same legal effect as a vote cast against approval of
the merger.
Voting Agreements (Page 19)
All persons deemed affiliates of Laser Technology have agreed in writing
to vote for approval of the merger pursuant to voting agreements, a form of
which is attached hereto as Appendix D. However, those affiliates that are also
affiliates of LTI Acquisition will not have their votes counted at the special
meeting. Accordingly, only 58,500 shares, or approximately 1.1% of the
outstanding shares held by our affiliates will vote at the meeting to approve
the merger.
The Merger (Page 22)
We have agreed to be acquired by LTI Acquisition under the terms of the
merger agreement described in this proxy statement. We have attached the merger
agreement as Appendix A to this proxy statement. We encourage you to read the
merger agreement in its entirety. Under the terms of the merger agreement, LTI
Acquisition's wholly-owned subsidiary, LTI Merger Sub, will be merged with and
into Laser Technology, after which we will be the surviving corporation as a
privately held, wholly-owned subsidiary of LTI Acquisition. Accordingly, the
outstanding shares of our common stock will be converted into the right to
receive an amount equal to $2.06 in cash per share. Persons associated with LTI
Acquisition, who hold a total of 1,560,022 shares of Laser Technology, will not
be entitled to convert their shares to cash or receive any consideration, and
their shares will be cancelled upon completion of the merger. Following the
completion of the proposed merger, we will be a privately owned entity and our
shares will no longer be traded in the public market. Laser Technology stock
will be delisted from the American Stock Exchange and the sole shareholder of
Laser Technology shares will be LTI Acquisition. In addition, the registration
of Laser Technology common stock and our reporting obligations under the
Exchange Act, will be terminated upon application to the SEC after the merger.
Parties to the Merger Agreement
Laser Technology, Inc.
7070 South Tucson Way
Englewood, Colorado 80112-3921
Telephone: (303) 649-1000
We design, develop, manufacture and market laser-based measurement
instruments that employ proprietary technology developed by us. Our proprietary
technology permits a laser to measure to a non-cooperative, or low reflective
surface, using a very low power source. As a result, our products operate within
the requirements of eye safety promulgated by the United States Food and Drug
Administration. Despite a very low power source, our laser instruments measure
more rapidly and at longer ranges than corresponding conventional devices. We
have also developed proprietary software and circuitry integral to each of our
products.
Historically, our primary product lines have been the Marksman Laser Speed
Detection Systems and Criterion Series of Survey Lasers. Since fiscal 1995, we
have expanded these product lines through new product development including the
introduction of second generation instrumentation. Because of
8
enhancements to our existing products, new product development and expanding
markets for our technology, we currently organize and market our products in
four categories: Traffic Safety, Professional Measurement, Industrial Control
and Consumer products.
LTI Acquisition
4875 DTC Boulevard #5-203
Denver, CO 80237
Telephone: (801) 551-0670
LTI Acquisition is a Delaware corporation organized in July 2003, for the
purpose of entering into the merger agreement and the merger with us. LTI
Acquisition has not engaged in any business except in furtherance of the merger.
The shareholders of LTI Acquisition are: H. Deworth Williams, Jeremy G. Dunne
and Edward F. Cowle, directors of Laser Technology, David Williams, our former
President and CEO, Pamela J. Sevy, our former CFO, and Kama-Tech Corporation and
Kama-Tech (HK) Ltd., all of whom are shareholders of Laser Technology. The
shareholders of LTI Acquisition own collectively a total of 1,560,022 shares of
our stock.
LTI Merger Sub
4875 DTC Boulevard #5-203
Denver, CO 80237
Telephone: (801) 551-0670
LTI Merger Sub is a Delaware corporation organized in July 2003, as a
wholly-owned subsidiary of LTI Acquisition, for the purpose of effectuating the
merger. It has not engaged in any operations, except for entering into the
merger agreement.
Merger Consideration and Payment for Shares (Page 38)
If you are a shareholder of Laser Technology (and not an affiliate of LTI
Acquisition) and do not validly exercise rights of appraisal under Delaware law,
then, upon effectiveness of the merger, each of your shares of our common stock
will be converted into the right to receive a cash payment of $2.06, without
interest. Although you will have the right to receive the cash payment pursuant
to the merger agreement, you will no longer have any rights as a Laser
Technology shareholder. Shareholders will receive the cash payment after
exchanging their stock certificates in accordance with the instructions
contained in the letter of transmittal, to be sent to shareholders shortly after
completion of the merger.
SHAREHOLDERS SHOULD NOT SEND ANY SHARE CERTIFICATES TO LASER TECHNOLOGY AT
THIS TIME. If the merger is consummated, you will be sent instructions regarding
the surrender of your certificates.
Special Committee (Page 27)
The special committee is a committee of our board of directors, consisting
of three non-employee, non-officer directors. The special committee was formed
to eliminate any conflict of interest in evaluating, negotiating and
recommending the merger proposal, including the terms of the merger agreement
with LTI Acquisition. The special committee consists solely of directors who are
not officers or employees of Laser Technology and who have no financial interest
in the proposed merger different from our public shareholders. The members of
the special committee are Walter R. Keay, William P. Behrens and Nicholas J.
Cooney.
Fairness of the Merger; Recommendation of the Special Committee of Our Board of
Directors (Page 27)
Following receipt of the initial interest to acquire our company, our
board of directors in September 2002 named a special committee of
non-participating directors to review the proposal and determine the merits and
feasibility of the proposed acquisition. The special committee retained
independent counsel and an independent investment banker to assist in its
review. Upon the recommendation of the special committee to the board, the
members of our board of directors present at the meeting held to consider the
merger determined that the merger is advisable and fair to, and in the best
interest of, our shareholders and recommended that our shareholders vote to
approve the merger. In reaching these conclusions, our board of directors was
favorably influenced by numerous factors, including, among others, the fairness
opinion presented by Anderson,
9
Weinroth & Partners, L.L.C.., Accordingly, our Board of Directors recommends
that you vote "FOR" the proposal to adopt the merger agreement.
For a discussion of the material factors considered by the special
committee and the board of directors in reaching their conclusions and the
reasons why the special committee and the board of directors determined that the
merger is fair, see "THE MERGER-Fairness of the Merger: Recommendation of the
Special Committee of Our Board of Directors.".
Opinion of Our Financial Advisor (Page 29)
The special committee retained Andersen, Weinroth & Partners., L.L.C.
("AWP"), to act as our exclusive financial advisor in connection with a possible
transaction and to render its opinion to our board of directors as to the
fairness from a financial point of view, of any proposed transaction. AWP
provided to the special committee an opinion on July 31, 2003 that the
consideration to be received by our shareholders under the merger agreement is
fair to such shareholders from a financial point of view and subsequently
confirmed the opinion in writing. The full text of AWP's written opinion, which
sets forth a description of assumptions made, matters considered and limitations
on the review undertaken by AWP, is attached as Appendix B to this proxy
statement. Shareholders are urged to read such opinion carefully in its
entirety.
LTI Acquisition's And Affiliates Position Concerning Fairness (Page 33)
Although neither LTI Acquisition nor its affiliates has performed, or
engaged a financial advisor to perform, any valuation analysis in order to
assess the fairness of the merger to the holders of our common stock other than
such LTI Acquisition affiliates, LTI Acquisition and its affiliates believe that
the merger is substantively and procedurally fair to our unaffiliated
shareholders. LTI Acquisition and its affiliates believe this conclusion is
supported by the factors described under "THE MERGER--Fairness of the Merger:
Recommendation of the Special Committee of Our Board of Directors." For a
discussion of the material factors considered by LTI Acquisition and its
affiliates in reaching this conclusion, see "THE MERGER-- LTI Acquisition's and
Affiliates' Positions as to the Fairness of the Merger."
Interests of Certain Persons in the Merger (Page 35)
In considering the recommendation of our board of directors with respect
to the merger, shareholders should be aware that three of our current directors,
Jeremy G. Dunne, H. Deworth Williams and Edward F. Cowle are principal
shareholders of LTI Acquisition and have interests in connection with the merger
which may present them with actual or potential conflicts of interest. Also, if
the merger is consummated certain indemnification arrangements for directors and
officers will be extended.
Costs and Expenses of Merger (Page 36)
All fees and expenses in connection with the merger will be paid by the
party incurring these fees and expenses, except that we will pay the expenses
related to the preparation, printing and mailing of the proxy statement and all
filing and other fees paid to the SEC in connection with the merger. The total
fees and expenses in connection with the merger are estimated to be
approximately $639,829, which consists of legal and professional fees, including
fees to AWP, printing, proxy solicitation and mailing costs, special committee
fees and expenses, and miscellaneous expenses. In addition LTI Acquisition
estimates legal and other professional fees in connection with the merger of
$110,000.
Financing of the Merger; (Page 36)
We and LTI Acquisition estimate that approximately $8,262,090 will be
required to complete the purchase of the shares pursuant to the merger
(excluding fees and expenses described above). We and LTI Acquisition expect
this amount to be paid out of available funds of LTI Acquisition at the
effective time of the merger.
LTI Acquisition currently has a total of $3,631,708 in an account at Wells
Fargo Bank, Greenwood Village, Colorado, representing deposits from LTI
Acquisition shareholders as follows: H. Deworth Williams - $750,000; Edward F.
Cowle - $944,474; Kama-Tech Corporation - $590,125; and Kama-Tech (HK) Ltd. -
$1,347,109. In addition, on July 29, 2003, Sumitomo Mitsui Banking Corporation
("Sumitomo") issued a
10
written commitment to Kama-Tech (HK) Ltd., with LTI Acquisition as beneficiary,
pursuant to which Sumitomo has provided letter of credit financing of up to
$4,630,000 to assist in financing the merger.
The merger agreement requires that LTI Acquisition have financial
arrangements in place to complete the merger. In connection with the signing of
the merger agreement, Laser Technology and LTI Acquisition entered into a
funding agreement, under the terms of which LTI Acquisition has established the
bank account and letter of credit, and agreed that the funds in the bank account
and letter of credit will be maintained and used solely for the closing of the
merger.
Material U.S. Federal Income Tax Consequences (Page 41)
The receipt of cash in connection with the surrender of each share of our
common stock pursuant to the merger will be a taxable transaction for U.S.
federal income tax purposes. Generally you will recognize gain or loss as a
result of the merger measured by the difference, if any, between the amount of
cash received in connection with the surrender of each share of common stock and
your adjusted tax basis in that share.
You should read "The Merger -- Material U.S. Federal Income Tax
Consequences" beginning on page 41 for a more complete discussion of the
federal income tax consequences of the merger. Tax matters can be complicated,
and the tax consequences of the merger to you will depend on your particular tax
situation. We urge you to consult your tax advisor on the tax consequences of
the merger to you.
Regulatory Compliance (Page 41)
There are no federal or state regulatory requirements to be complied with
in order to complete the merger, other than the filing of the certificate of
merger with the Secretary of State of the State of Delaware.
Appraisal Rights (Page 37)
Our shareholders have the right under Delaware law to demand appraisal of
their shares in connection with the merger and, upon compliance with statutory
procedures, to receive payment in cash for the "fair value" of their shares of
our common stock determined in accordance with Delaware law in lieu of the
merger consideration. The fair value of shares of our common stock as determined
in accordance with Delaware law may be more or less than the merger
consideration to be paid to non-dissenting shareholders of Laser Technology in
the merger. To preserve their rights, shareholders who wish to exercise
appraisal rights must not vote in favor of the merger and must follow specific
procedures. Such shareholders must precisely follow these specific procedures to
exercise appraisal rights, or their appraisal rights may be lost. These
procedures are described in this proxy statement and the provisions of Delaware
law that grant appraisal rights and govern such procedures are attached as
Appendix C. We encourage all of our shareholders to read these provisions
carefully and in their entirety.
Our Stock Options (Page 39)
Prior to completion of the merger and upon at least 30 days notice to the
option holders, each outstanding stock option under our stock incentive plans
will become vested and exercisable in full. If the merger is completed, all
options to purchase our common stock under our stock option plans remaining
outstanding and unexercised, will be cancelled and converted into the right to
receive a per share cash payment (net of applicable taxes) equal to an amount,
if any, that the $2.06 per share cash merger consideration exceeds the per share
exercise price of the options. In the event that the exercise price of such
option is equal to or greater than the $2.06 per share cash merger
consideration, such option will be cancelled and no cash compensation will be
paid. Those option holders that are affiliates of LTI Acquisition will have
their options cancelled and will not be entitled to any consideration upon
completion of the merger.
Conditions to the Merger (Page 46)
Completion of the merger depends on a number of conditions being met,
including, but not limited to, receipt of the required approvals from
shareholders holding 66 2/3% of our outstanding shares, excluding shares held by
LTI Acquisition or its affiliates, the absence of legal restraint or prohibition
preventing the completion of the merger, and all approvals, waivers and consents
having been obtained from appropriate government entities, if required.
11
Our obligations to complete the merger are subject to the representations
and warranties of LTI Acquisition and LTI Merger Sub being true and correct,
their performing all of their obligations under the merger agreement including
delivery to us of certain compliance certificates and opinions, and LTI
Acquisition must not have suffered a material adverse effect.
LTI Acquisition and LTI Merger Sub's obligations to complete the merger
are also subject to our representations and warranties being true and correct
and our performing all of our obligations under the merger agreement. We must
also deliver to LTI Acquisition and LTI Merger Sub certain compliance
certificates, opinions and voting agreements together with all necessary
consents, waivers, approvals or authorizations from any requisite government
entity or third party. Further, we must not have suffered a material adverse
event.
Termination of the Merger Agreement (Page 49)
Either we or LTI Acquisition, by action of our respective boards of
directors, may terminate the merger agreement and abandon the merger at any time
prior to the closing of the merger:
o by mutual consent of the parties;
o if the merger has not been completed on or before December 31, 2003;
o if the completion of the merger is legally prohibited by a final and
non-appealable order or by law; or
o if our shareholders fail to approve the merger.
LTI Acquisition has the right to terminate the merger agreement and
abandon the merger under certain specified circumstances regarding our actions
in response to alternative acquisition proposals or if we change our
recommendation that shareholders approve the transactions. In addition, LTI
Acquisition has the right to terminate if we breach or fail to perform certain
covenants, agreements, representations or warranties and we fail to cure such
breaches or we fail to perform within a specified period of time.
We have the right to terminate the merger agreement and abandon the merger
if our board of directors determines that an unsolicited alternative acquisition
proposal is a superior proposal, as described below in "The Merger Agreement-No
Solicitation by Laser Technology," and we comply with certain specified
requirements, or if LTI Acquisition breaches or fails to perform certain
covenants, agreements, representations or warranties and fails to cure such
breaches or failures to perform within a specified period of time.
If the merger agreement is terminated and abandoned, the merger agreement
will be void and we, LTI Acquisition and LTI Merger Sub will not have any
liability other than obligations to pay any termination fees and expenses, if
applicable, provided however, no such termination will relieve any party of any
liability or damages resulting from any willful breach of the merger agreement
prior to such termination.
Termination Fee and Payment of Expenses (Page 49)
Except under specific circumstances set forth in the merger agreement, the
parties have agreed that all expenses will be borne solely by the party
incurring such fees and expenses, whether or not the transactions are
consummated. We must pay LTI Acquisition its out-of-pocket expenses if the
merger agreement is terminated under specified circumstances. Except for its
expenses, LTI Acquisition will not be entitled to a termination fee. LTI
Acquisition must reimburse us for our expenses including expenses associated
with the printing, mailing and filing of this proxy statement, under specified
circumstances.
No Solicitation by Laser Technology (Page 45)
The merger agreement contains restrictions on our ability to solicit or
engage in discussions or negotiations, or otherwise cooperate, with any third
party with respect to any alternative acquisition proposal. Notwithstanding
these provisions, the merger agreement provides that, under specified
circumstances, we may, in response to an unsolicited acquisition proposal,
request clarifications from or furnish information to a third party to determine
if an unsolicited acquisition proposal would be reasonably likely to lead to a
superior proposal. If our board of directors determines that such proposal is
superior to the merger, the merger
12
agreement provides that, under specified circumstances, we may engage in
negotiations regarding an acquisition proposal with that party. Under the merger
agreement, however, our board of directors has agreed not to change or withdraw
its recommendation of the merger agreement, or to recommend, approve, or cause
us to accept an alternative acquisition proposal, unless (i) such proposal is a
superior proposal, (ii) our board determines in good faith that the failure to
so act is a breach of fiduciary duty, and (iii) we give LTI Acquisition 5 days
notice of our intent to take any such action, and LTI Acquisition does not make
a non-revocable binding offer at least as favorable as the superior proposal
within such five (5) days.
Market Price and Dividend Information (Page 32)
Our common stock is listed on the American Stock Exchange under the symbol
"LSR." As of September 26, 2003, we had 5,486,217 common shares outstanding and
we had approximately _____ shareholders of record. The number of shareholders
does not take into account those shareholders whose certificates are held by
broker-dealers or other nominees. The following table sets forth the range of
high and low sale prices of our common stock for each calendar quarterly period
as reported on the American Stock Exchange.
High Low
---- ---
2003
First Quarter ........................................ $ 1.30 $ 1.01
Second Quarter ....................................... 1.40 1.25
Third Quarter* ....................................... 2.01 1.33
2002
First Quarter ........................................ $ 1.20 $ .85
Second Quarter ....................................... .95 .62
Third Quarter ........................................ .92 .41
Fourth Quarter ....................................... 1.08 .80
2001
First Quarter ........................................ $ 1.38 $ .87
Second Quarter ....................................... 1.60 1.01
Third Quarter ........................................ 1.27 .92
Fourth Quarter ....................................... 1.05 .85
- ----------
* The 2003 third quarter reflects the high and low sale prices through
September __, 2003.
On July 31, 2003, the last full trading day prior to the announcement of
the proposed merger, the last reported sales price per share was $1.38. On
__________, 2003, the most recent practicable trading day prior to the date of
this proxy statement, the last reported sales price was $__________. On
September 26, 2002, the last trading day prior to the initial offer of members
of LTI Acquisition, the last reported trading price per share was $0.75. You
should obtain current market price quotations for shares of our common stock in
connection with voting your shares.
We have never declared or paid any cash dividends on our common stock. Our
current policy is to retain earnings to finance future operations, expansion and
capital investments. Following the merger, our common stock will not be traded
on any public market.
Selected Financial Information
The following table contains selected financial data for each year in the
five year period ended September 30, 2002 and for the nine-month periods ended
June 30, 2003 and 2002. The financial data for each of the full fiscal years
have been derived from our audited financial statements for those periods. The
financial statements for each of the nine-month periods included in the table
have been derived from our unaudited financial statements for those periods. The
unaudited financial statements have been prepared on the same basis as the
audited financial statements, and we believe that they contain all adjustments
necessary for a fair presentation of the financial information presented
(consisting only of normal recurring adjustments). The historical financial data
for the interim periods are not necessarily indicative of the results that may
be expected for our full year. This selected financial data should be read along
with our "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and our audited and unaudited
13
consolidated financial
statements for the applicable periods, each of which we have filed with the SEC,
and incorporate by reference.
Fiscal Years Ended September 30,
--------------------------------
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
Statement of Operations Data:
Net sales ................................... $ 10,577,216 $ 11,472,459 $ 12,720,299 $ 11,814,654 $ 11,801,293
Cost of goods sold .......................... 5,249,501 5,416,379 5,802,123 5,845,387 5,554,037
Gross profit ................................ 5,327,716 6,056,080 6,918,176 5,969,267 6,247,256
Royalty and licensing income ................ 998,392 1,033,129 959,015 932,796 1,242,732
Total operating income ...................... 6,326,108 7,089,209 7,877,191 6,902,063 7,489,988
Operating expenses .......................... 6,820,174 6,769,882 7,361,190 8,211,854 6,205,024
Settlement and restructuring costs .......... -- -- 2,071,257 --
Income (loss) from operations ............... (494,066) 319,327 516,001 (3,381,048) 1,284,964
Other income, net ........................... 25,044 203,400 59,211 9,009 115,535
Income (loss) before taxes on income ........ (469,022) 522,727 575,212 (3,372,039) 1,400,499
Taxes on income ............................. (183,645) 113,614 233,800 (985,934) 504,000
Net income (loss) ........................... (285,377) 409,113 341,412 (2,386,105) 896,499
Net income per common share:
Basic earnings (loss) per common share ...... (.05) .07 .07 (.48) .18
Weighted average shares outstanding ......... 5,486,217 5,446,633 5,011,220 4,994,622 4,985,902
Diluted earnings per common share ........... (.05) .06 .06 (.48) .15
Diluted average shares outstanding .......... 5,486,217 6,401,833 5,642,720 4,994,622 5,981,235
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
Balance Sheet Data:
Working capital ............................. $ 8,196,231 $ 8,201,411 $ 6,918,219 $ 5,753,229 $ 8,434,703
Total assets ................................ 10,693,648 10,993,929 10,863,213 11,211,708 12,515,957
Short-term debt, including current maturities
of long term debt ........................ -- 14,611 83,727 91,621 76,564
Long-term debt less current maturities ...... -- -- 14,364 114,400 159,549
Total stockholders' equity .................. 9,773,576 10,058,953 9,026,166 8,678,243 11,044,810
Nine Months Ended June 30
-------------------------
2003 2002
---- ----
Statement of Operations Data:
Net sales ................................... 7,925,813 7,415,294
Cost of goods sold .......................... 3,766,891 3,673,134
Gross profit ................................ 4,158,922 3,742,160
Royalty and licensing income ................ 483,585 521,241
Total operating income ...................... 4,642,507 4,263,401
Operating expenses .......................... 5,897,149 5,146,859
Income (loss) from operations ............... (1,254,642) (883,458)
Other income, net ........................... 28,505 73,284
Changes in accounting estimates ............. (14,945)
Income (loss) before taxes on income ........ (1,226,137) (825,119)
Taxes on income ............................. (436,189) (297,043)
Net income (loss) ........................... (789,948) (528,076)
Net income per common share:
Basic earnings (loss) per common share ...... $ (0.14) $ (0.10)
Weighted average shares outstanding ......... 5,486,217 5,486,217
Diluted earnings per common share ........... $ (0.14) $ (0.10)
Diluted average shares outstanding .......... 5,486,217 5,486,217
Balance Sheet Data:
Working capital ............................. 7,582,709 7,908,129
Total assets ................................ 10,176,561 10,693,648
Short-term debt, including current maturities
of long term debt ........................ -- --
Long-term debt less current maturities ...... -- --
Total stockholders' equity .................. 8,983,628 9,773,576
Pro Forma and LTI Acquisition Corporation Financial Information
We have not provided any pro forma data giving effect to the proposed
merger. We do not believe that information is material to our shareholders in
evaluating the merger agreement because the proposed merger consideration is all
cash and, if completed, our common stock will cease to be publicly traded.
We also have not provided any separate financial information for LTI
Acquisition or LTI Merger Sub, because they are special purpose entities formed
in connection with the proposed merger and they have no operations or assets
other than for the purpose of completing the merger.
14
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER
The following questions and answers are intended to address briefly some
commonly asked questions regarding the merger, the special meeting and other
matters to be considered by our shareholders. These questions and answers may
not address all questions that may be important to you as a shareholder. Please
refer to the more detailed information contained elsewhere in this proxy
statement, the appendices hereto and the documents referred to in this proxy
statement.
(1) Q: On what am I being asked to vote?
A: You are being asked to vote on a going private transaction that will
result in LTI Acquisition acquiring Laser Technology. The going
private transaction will be accomplished through the merger of LTI
Merger Sub into Laser Technology, with the result that Laser
Technology will become a wholly-owned subsidiary of LTI Acquisition.
If the merger is approved and finalized, each outstanding share of
our common stock, excluding shares owned by LTI Acquisition and its
affiliates, will automatically be cancelled and will be converted
into the right to receive $2.06 in cash, without interest. Our
shareholders will not have the option to receive LTI Acquisition
common stock in exchange for their shares instead of cash.
(2) Q: What will happen to Laser Technology as a result of the merger?
A: If the merger is completed, Laser Technology will cease to be a
publicly traded company and its shares will be delisted from the
American Stock Exchange.
(3) Q: When do you expect the merger to be completed?
A: We are working toward completing the merger as quickly as possible.
In addition to obtaining shareholder approval, we must satisfy all
other closing conditions. We expect to complete the merger during
the fourth calendar quarter of 2003, but we cannot assure you that
we will meet this goal.
(4) Q: Will the merger be taxable to me?
A: Generally, yes. For U.S. federal income tax purposes, you will
recognize a taxable gain or loss as a result of the merger measured
by the difference, if any, between $2.06 per share and your adjusted
tax basis in that share. You should read "The Merger--Material U.S.
Federal Income Tax Consequences of the Merger" beginning on page 41
for a more complete discussion of the federal income tax
consequences of the merger.
(5) Q: Why did our board of directors form the special committee?
A: The board of directors believed that a special committee, comprised
entirely of directors who are not officers or employees of Laser
Technology, are not affiliates of either LTI Acquisition or LTI
Merger Sub and who have no financial interest in the merger
different from our public shareholders, should be formed to
eliminate any conflict of interest in evaluating, negotiating and
recommending the merger and the terms of the merger agreement to the
board. The members of the special committee are Walter R. Keay,
William P. Behrens and Nicholas J. Cooney.
(6) Q: Has the special committee concluded that the merger is fair to our
shareholders?
A: Yes. The special committee independently selected and retained legal
counsel and a financial advisor to assist it in its deliberations.
The special committee has unanimously determined that the merger is
substantively and procedurally fair from a financial point of view
to our shareholders. In reaching this conclusion, the special
committee considered, among other factors, the opinion issued by
Andersen, Weinroth & Partners., to the effect that the price per
share to be received by our shareholders pursuant to the merger
agreement was fair from a financial point of view to the
shareholders. Please read the "The Merger-Opinion of Andersen,
Weinroth & Partners."beginning on page 29 of this proxy
15
statement. A complete copy of the opinion of Andersen, Weinroth &
Partners. is attached as Appendix B to this proxy statement.
(7) Q: Does our board of directors recommend the adoption of the merger
agreement?
A: Yes. Our board of directors, following the recommendation of the
special committee, recommends that our shareholders adopt the merger
agreement. Our board considered many factors in deciding to
recommend the adoption of the merger agreement, including, but not
limited to, the opinion of our financial advisor and the premium to
the then current market price offered by LTI Acquisition. The $2.06
cash per share merger consideration represents a 49% premium to the
closing price of our common stock on July 31, 2003, the last trading
day before the public announcement of the signing of the merger
agreement, and a 51% premium over the average daily closing price of
our common stock over the 30 trading day period ending July 31,
2003.
(8) Q: What are the relationships among the parties to the merger agreement?
A: LTI Acquisition, the proposed acquirer of Laser Technology, formed
LTI Merger Sub as its wholly- owned subsidiary solely for the
purpose of effecting the merger. David Williams, our former
President and CEO is the founder and principal of LTI Acquisition.
Other affiliates and shareholders of LTI Acquisition are Pamela
Sevy, our former CFO, and current Laser Technology board members
Jeremy G. Dunne, H. Deworth Williams and Edward F. Cowle. In the
aggregate, the affiliates of LTI Acquisition own beneficially
approximately 28.4% of our outstanding shares of common stock.
However, they will not be able to vote their shares in favor of the
merger.
(9) Q: What vote of the shareholders is required to adopt the merger agreement?
A: For us to complete the merger, Delaware law requires that
shareholders as of the record date holding at least 66 2/3% of the
outstanding shares of our common stock, excluding shares owned by
LTI Acquisition and its affiliates, must vote "for" the adoption of
the merger agreement.
(10) Q: Am I entitled to appraisal rights?
A: Yes. Under Delaware law, if you do not vote in favor of adopting the
merger agreement, you have the right to seek appraisal of the fair
value of your shares as determined by the Delaware Court of Chancery
if the merger is completed, but only if you submit a written demand
for an appraisal before the vote on the merger agreement and comply
with the Delaware law procedures explained in this proxy statement.
(11) Q: What do I need to do now?
A: We urge you to read this proxy statement carefully, including its
appendices, and to consider how the merger affects you. Then just
sign, date and return the enclosed proxy card in the postage-paid
envelope provided as soon as possible, or cast your vote by
telephone or over the Internet so that your shares can be voted at
the special meeting.
(12) Q: What happens if I do not return a proxy card?
A: Failure to return your proxy card will have the same effect as
voting against the merger, and will make it more difficult for Laser
Technology to obtain the vote required to approve the merger,
described above.
(13) Q: May I vote in person?
A: Yes. You may vote in person at the meeting, rather than signing and
returning your proxy card or voting by telephone or over the
Internet, if you own shares in your own name. You may also vote in
person at the meeting if your shares are held in "street name,"
through a broker or bank provided that you bring a legal proxy from
your broker or bank and present it at the special meeting. You may
also be asked to present photo identification for admittance.
16
(14) Q: May I change my vote after I have mailed my signed proxy card or voted
by telephone or over the Internet?
A: Yes. You may change your vote at any time before the shares
reflected on your proxy card, telephone or Internet vote are voted
at the special meeting. You can do this in one of three ways by:
o sending a written, dated notice to our Secretary stating that
you would like to revoke your proxy;
o signing dating and submitting a new proxy card; or
o attending the meeting and voting in person.
Your attendance at the meeting by itself will not revoke your proxy. If
you have instructed a broker to vote your shares, you must follow the directions
received from your broker to change your instructions.
(15) Q: If my shares are held in "street name" by my broker, will my broker vote
my shares for me?
A: Your broker will not vote your shares without instructions from you.
You should instruct your broker to vote your shares following the
procedure provided by your broker. Without instructions, your shares
will not be voted, which will have the effect of a vote against the
merger.
(16) Q: Should I send in my stock certificates now?
A: No. After the merger is completed, you will receive written
instructions for exchanging your shares of our common stock for the
merger consideration of $2.06 in cash, without interest, for each
share of our common stock.
(17) Q: Who can help answer my questions?
A: If you would like additional copies, without charge, of this proxy
statement or if you have questions about the merger, including the
procedures for voting your shares, you should contact us as follows:
Laser Technology, Inc.
Attn: Investor Relations
7070 South Tucson Way
Englewood, Colorado 80112-3921
Telephone: (303) 649-1000
RISK FACTORS
In addition to the other information contained in this proxy statement,
you should carefully consider the following risk factors in deciding whether to
vote for the merger. If any of the following risks actually occurs, our business
and prospects may be seriously harmed. In such case, the trading price of our
common stock could decline.
Failure to complete the merger could negatively impact our stock price and
future business and operations.
If the merger is not completed for any reason, we may be subject to a
number of material risks, including the following:
o We may be required to reimburse LTI Acquisition for its expenses in
connection with the transaction, under certain circumstances;
o The price of our common stock may decline to the extent that the
current market price of our common stock reflects a market
assumption that the merger will be completed; and
17
o Costs related to the merger, such as legal, accounting and financial
advisor fees, must be paid even if the merger is not completed.
In addition, our customers may, in response to the announcement of the
merger, delay or defer decisions concerning us. Any delay or deferral in those
decisions by our customers or suppliers could have a material adverse effect on
us. Similarly, our current and prospective employees may experience uncertainty
about their future roles following the merger and until LTI Acquisition's
strategies with regard to our employees are announced or executed. This may
adversely affect our ability to attract and retain key management, sales,
marketing and technical personnel.
Further, if the merger is terminated and our board of directors determines
to seek another merger or business combination, there can be no assurance that
it will be able to find a partner willing to pay an equivalent or more
attractive price than the price to be paid in the merger. In addition, while the
merger agreement is in effect, subject to compliance with applicable securities
laws and fulfillment of our fiduciary duties, we are prohibited from soliciting,
initiating, encouraging or entering into extraordinary transactions, such as a
merger, sale of assets or other business combination, with any party other than
LTI Acquisition.
Our officers and directors have interests in the merger in addition to the
interests of other Laser Technology shareholders. These different
interests may influence them to support or approve the merger agreement
and the merger.
Our directors and officers participate in arrangements that provide them
with interests in the merger that are different from, or in addition to, those
of our shareholders generally, including the following:
o Three of our directors are principal shareholders of LTI Acquisition
and will remain as principals of LTI Acquisition following
consummation of the merger. Also, LTI Acquisition has indicated that
if the merger is completed, it anticipates asking Eric Miller, our
current President, CEO and a director, to remain as part of the
management group of the acquired business.
o For a period of three years following completion of the merger, LTI
Acquisition will indemnify and will cause the surviving corporation
in the merger to indemnify the present, and certain former,
directors and officers of Laser Technology.
o Each outstanding option to purchase Laser Technology common stock,
whether vested or unvested, except for those owned by affiliates of
LTI Acquisition, will be cancelled and converted into a right to
receive cash equal to the difference between the $2.06 cash merger
consideration and the exercise price per share of the options.
o Upon completion of the merger, LTI Acquisition could possibly offer
employment agreements with some of our current officers and
directors. There is no current plan or arrangement for materially
increasing the compensation of any director or executive officer of
Laser Technology after the merger, although LTI Acquisition
expressly reserves the right to do so. As a result of these
interests, these persons could be more likely to vote to approve the
merger agreement than if they did not hold these interests. Our
shareholders should consider whether these interests may have
influenced these directors and officers to support or recommend the
merger.
The merger requires the vote of 66 2/3% of the outstanding shares,
excluding shares held by LTI Acquisition and its affiliates.
To complete the merger, we will need our holders of 66 2/3% of the
outstanding shares, exclusive of shares held by LTI Acquisition and its
affiliates to vote in favor of the merger at the special meeting. There are
currently a total of 5,486,217 of our shares outstanding, of which a total of
1,560,022 shares are held by LTI Acquisition affiliates. Therefore, we will need
66 2/3% of 3,926,195 shares, or 2,617,463 shares, voting in favor of the merger.
This may be difficult to obtain, and, our failure to obtain this vote could
adversely affect our stock price and business as described above.
18
THE SPECIAL MEETING
Date, Time and Place of Special Meeting
This proxy statement and accompanying proxy card are solicited by our
board of directors. These proxies will be used at our special meeting to be held
at our corporate offices located at 7070 South Tucson Way, Englewood, Colorado,
on Thursday, November 20, 2003 at 10:00 a.m. local time, and at any and all
adjournments or postponements thereof.
Purpose of the Special Meeting
At the special meeting, we will ask you to adopt the merger agreement and
to consider such other business as may properly come before the meeting and any
adjournments thereof. Our board of directors has:
o approved and declared the merger, the merger agreement and the
transactions contemplated by the merger agreement advisable;
o declared that it is in the best interests of our shareholders that
we enter into the merger agreement and complete the merger on the
terms and conditions in the merger agreement; and
o recommended that you adopt the merger agreement.
We will also be asking you to grant our board of directors discretionary
authority to adjourn the special meeting to solicit additional votes for
approval of the merger agreement and merger;
Record Date; Stock Entitled to Vote; Quorum
Only holders of record of our common stock at the close of business on
September 26, 2003, the record date, are entitled to notice of and to vote at
the special meeting. On the record date, 5,486,217 shares of our common stock
were issued and outstanding and held by approximately ______ holders of record.
A quorum will be present at the special meeting if a majority of the outstanding
shares of our common stock entitled to vote on the record date is represented in
person or by proxy. In the event that a quorum is not present at the special
meeting, it is expected that the meeting will be adjourned to solicit additional
proxies. Holders of record of our common stock on the record date are entitled
to one vote per share at the special meeting on the proposal to adopt the merger
agreement.
Vote Required
The adoption of the merger agreement requires the affirmative vote of the
holders of at least 66 2/3% of the outstanding shares of our common stock,
excluding shares owned by LTI Acquisition and its affiliates, on the record
date. If you abstain from voting or do not vote, either in person or by proxy,
it will effectively count as a vote against the adoption of the merger
agreement.
Voting by Our Directors, Executive Officers and Certain Shareholders
At the close of business on the record date, all affiliates of Laser
Technology, which include our directors and executive officers and certain
affiliates of LTI Acquisition, were entitled to vote 1,618,522 shares of our
common stock, which represented approximately 29.5% of the outstanding shares of
our common stock on that date. Under the terms of voting agreements entered into
in conjunction with the merger agreement, all of these affiliates have agreed to
vote their shares of our common stock for the adoption of the merger agreement.
However, only those affiliates not associated with LTI Acquisition will be
counted in the vote to approve the merger agreement and related transaction at
the special meeting. Thus, only 58,500 shares, or approximately 1.1% of the
outstanding shares held by our affiliates will vote at the meeting.
Voting of Common Stock
All shares represented by properly executed and unrevoked proxies received
in time for the special meeting, will be voted at the special meeting in the
manner specified by the holders. Properly executed proxies that do not contain
voting instructions will be voted "for" the adoption of the merger agreement.
Also, the named proxies will vote at their discretion in connection with other
business that may properly come before the special meeting or any adjournment or
postponement thereof. Each share of our common stock is entitled to one vote.
You may revoke your proxy at any time prior to its use:
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o by executing another proxy at a later date;
o by notifying our corporate secretary in writing of your revocation;
or
o by attending the special meeting and voting in person.
A number of brokers and banks are participating in a program provided
through ADP Investor Communications Services that offers telephone and Internet
proxy options. If your shares are held in an account with a broker or bank
participating in the ADP Investor Communication Services program, you may grant
a proxy with respect to those shares telephonically by calling the telephone
number shown on the voting form received from your broker or bank, or via the
Internet at ADP's voting web site (www.proxyvote.com).
Votes withheld, abstentions and "broker non-votes" will not be counted as
votes cast and will not be voted. A failure to vote, an abstention or a broker
non-vote will have the same legal effect as a vote cast against approval of the
merger.
At this time, we know of no other matters that may be presented for
shareholder action at the special meeting. However, if any matters, other than
the proposal stated above, should properly come before the special meeting, it
is the intention of the persons named in the enclosed proxy to vote such proxy
in accordance with their best judgment. In the event that there are not
sufficient votes to adopt the proposal stated above, it is expected that the
special meeting will be adjourned in order to permit further solicitation of
proxies by us. No proxy that is voted against approval of the merger will be
voted in favor of any adjournment or postponement of the special meeting for the
purpose of soliciting additional proxies.
The delivery of this proxy statement will not, under any circumstances,
create any implication that the information contained herein is correct after
the date hereof.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE MERGER.
Appraisal Rights
If you wish to exercise appraisal rights, you must not vote in favor of
the adoption of the merger agreement, must not return a signed but not voted
proxy card, and you must follow specific procedures. You must precisely follow
these specific procedures to exercise your appraisal rights, or you may lose
your appraisal rights.
Solicitation of Proxies
We will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to shareholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of our common stock beneficially owned
by others, in order to forward to such beneficial owners. We may reimburse
persons representing beneficial owners of common stock for their costs of
forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram,
E-mail or personal solicitation by our directors, officers or other regular
employees. No additional compensation will be paid to directors, officers or
other regular employees for such services.
NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT IN CONNECTION
WITH OUR SOLICITATION OF PROXIES AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY US OR ANY
OTHER PERSON.
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THE COMPANIES
Laser Technology, Inc.
We are a developer, manufacturer and worldwide marketer of applied field
measurement instrumentation, incorporating laser-based distance measurement
employing proprietary technology developed by us. Our technology permits a pulse
laser to measure distance to a non-cooperative or low reflective surface using a
very low power source. As a result, our products operate within the requirements
of eye safety promulgated by the United States Food and Drug Administration and
are completely safe to an operator. Despite a very low power source, our laser
instruments measure more rapidly and at longer ranges than corresponding
conventional devices. We have also developed proprietary, patented software and
circuitry integral to each of our products, as well as accessory instrumentation
to improve the utility of our laser instruments.
Historically, our primary product lines have been the Marksman Laser Speed
Detection Systems and Criterion Series of Survey Lasers, both being handheld
field measurement devices. Since fiscal 1995, we have expanded these product
lines through new product development including the introduction of second
generation instrumentation. Because of enhancements to our existing products,
new product development and expanding markets for our technology, we currently
organize and market our products in four categories: Traffic Safety,
Professional Measurement, Industrial and Consumer products.
We market our products both internationally and domestically, through
direct representation and independent distributors. Internationally we sell our
Traffic Safety and Professional Measurement products through independent, local
distributors that are supported by our internal sales managers. Domestically we
sell our Traffic Safety products through a direct sales force that are
positioned in specific regions of the country. Domestic sales of our
Professional Measurement products are directed through a distribution network of
traditional survey instrumentation dealers, who are supported by our regional
Professional Measurement sales managers. Sales of our Industrial and Consumer
products are primarily through strategic business relationships with specific
industry leaders. Currently a minimal amount of sales are realized through our
Internet web sight, which is used primarily for marketing and distributor
support.
The majority of products we market are designed and manufactured by us.
Our design expertise includes electronic circuitry, software, embedded firmware,
electro-optical and mechanical design disciplines. On occasion we provide design
services to external customers, but primarily utilize our engineering department
for our internal product designs. Many of our products incorporate proprietary,
intellectual property which we actively protect with United States and
international patents, where appropriate. We previously have licensed some
aspects of our patented technology, primarily in the consumer marketplace.
Our manufacturing processes consist primarily of electronic, mechanical
and optical assembly, along with technical processes involving optical
alignments and product calibrations. We use external contract manufacturers to
assemble the majority of our printed circuit assemblies and associated cabling.
The mechanical components used in our products include machined aluminum,
plastic, brass and stainless steel, and injection molded plastic, the majority
of which are provided by external vendors. We have internal purchasing
activities to procure raw materials, electronic components, sub-assemblies and
finished goods for resale, all of which are stocked and inventoried on-sight to
support our manufacturing processes. Many of our products require proprietary
manufacturing processes and fixtures which are designed and supported by our
internal engineering department.
The majority of customer support and technical service activities are
conducted at our corporate offices, both for domestic and international
customers. We have established a full technical service facility with our
affiliated distributor in the UK, to support our European, Middle Eastern and
North African markets. We also provide technical support related to judicial
proceedings involving our speed measurement products, and applications support
related to our professional measurement products.
Related Transactions
We currently have a marketing and consulting agreement with Laser
Innovations International, Inc., whose principal is David Williams. In addition
to being the founder and a principal shareholder of LTI Acquisition, Mr.
Williams is the beneficial owner of more than 5% of our outstanding common stock
and was formerly our President, CEO and director. Laser Innovations sells our
products to certain international markets and its sales comprised approximately
17% of our total sales during both fiscal years 2002 and 2001.
Two other principal shareholders of LTI Acquisition, H. Deworth Williams
and Edward F. Cowle, are also members of our board of directors and have entered
into a joint venture relationship with GHF International Trading, Ltda, a
Brazilian company. GHF is associated with Laser Technology as a dealer for our
Traffic
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Safety products and has been distributing the products in Brazil for
approximately the last six years. During fiscal years 2002 and 2001, GHF
purchased products from us in the amounts of approximately $57,000 and $61,000,
respectively. GHF has been seeking investment capital to further develop the
market for our products in Brazil and Messrs. Williams and Cowle have provided
such capital.
Contact Information
Our corporate offices are located at 7070 South Tucson Way, Englewood,
Colorado 80112, and our telephone number is (303) 649-1000. Additional
information regarding Laser Technology is contained in our filings with the SEC.
See "Where You Can Find More Information" on page ___.
LTI Acquisition
LTI Acquisition is a Delaware corporation organized in July 2003, for the
purpose entering into the merger agreement and the merger with us. LTI
Acquisition has not engaged in any business except actions in connection with
the merger. The shareholders of LTI Acquisition are: H. Deworth Williams, Jeremy
G. Dunne and Edward F. Cowle, directors of Laser Technology, David Williams, our
former President and CEO, Pamela J. Sevy, our former CFO, and Kama-Tech
Corporation and Kama-Tech (HK) Ltd.. The shareholders of LTI Acquisition own
collectively a total of 1,560,022 shares of our stock.
LTI Merger Sub
LTI Merger Sub is a Delaware corporation organized in July 2003, as a
wholly-owned subsidiary of LTI Acquisition, for the purpose of effectuating the
merger. It has not engaged in any operations, except for entering into the
merger agreement.
THE MERGER
Background of the Merger
On September 18, 2002, we received a letter of intent from a group, now
incorporated as LTI Acquisition Corp. ("LTI Acquisition"), consisting of David
Williams, our former President and Chief Executive Officer, three of our current
directors, Jeremy G. Dunne, H. Deworth Williams and Edward F. Cowle, and Pamela
Sevy, our former Chief Financial Officer, proposing to acquire all of our
non-cash assets and assume our liabilities. In addition, LTI Acquisition
indicated that it anticipated asking Eric Miller, our current President and a
member of the board of directors, to become part of the management group of the
acquired business. Shortly thereafter, LTI Acquisition indicated that it would
withdraw the letter and issue another letter after making required filings with
the SEC concerning the proposal.
Once we were notified that LTI Acquisitions intended to submit a new
letter of intent, a meeting of the board of directors was held on September 23,
2002. Since three of our existing board members were members of LTI Acquisition,
and LTI Acquisition indicated that it anticipated it would retain Eric Miller as
part of management, the board of directors determined that it would be
appropriate to appoint a special committee to act on behalf of the board - such
committee to be composed of board members who were not employees of the company
and were not participants in the buyout proposal. The members of the special
committee are William P. Behrens, Nicholas J. Cooney and Walter R. Keay. Subject
to limitations under Delaware law, the special committee was authorized to
exercise all of the powers of the board of directors with respect to the LTI
Acquision offer, and to negotiate the terms of any proposed transaction,
including the power to select and retain its own legal counsel and an
independent financial advisor.
In a letter dated September 27, 2002, LTI Acquisition made an offer to
acquire all of our tangible and intangible assets, including those of our
subsidiaries, excluding cash and cash equivalents. Subject to certain
adjustments, the proposal was to pay us approximately $3,650,000 in cash and to
assume essentially all of our liabilities, except those incurred after the date
of the letter of intent and not in the ordinary course of business. The offer
provided that simultaneous with LTI Acquisition's purchase of the non-cash
assets, a cash dividend be paid to our common shareholders equal to a minimum of
$1.10 per share. LTI Acquisition further expressed their intent to continue the
day-to-day operations of our business following consummation of a transaction.
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The offer provided that we had until October 28, 2002 to agree to the
proposed terms; such date was later extended by LTI Acquisition to November 18,
2002. LTI Acquisition subsequently agreed to extend the date for acceptance of
the letter of intent until such time as the special committee and its financial
advisor completed their evaluation of the terms of the proposal.
We issued a press release on September 27, 2002 in which we described the
material terms of the offer, and issued a further press release on October 28,
2003 stating that the acceptance date of the offer had been extended.
The special committee then engaged Orrick, Herrington and Sutcliffe LLP
("Orrick") as its legal counsel and, on October 2, 2002, met at Orrick's offices
to review the special committee's duties and obligations. The current letter of
intent from LTI Acquisition, dated September 27, 2002, was reviewed and certain
issues with the proposal were identified. It was agreed that Orrick would
contact our counsel to discuss the validity of, and issues with, the current
proposal.
In defining its duties, the special committee determined that it should
use its best efforts to contact other potential and strategic investors to
determine their interest in making a bid for the company or any substantial
portion of the company's assets. The special committee contacted five potential
investors to ascertain whether they had an interest in considering a proposal.
Four of the investors indicated an interest, and three of those four eventually
made proposals that were subsequently considered by the special committee and
its independent financial advisor.
The special committee also discussed public perception of the proposed LTI
Acquisition transaction and established guidelines as to how it would comport
itself, especially in relation to the interested members of the board and former
employees of the company who were stakeholders in LTI Acquisition. It was
established that negotiations would be conducted on an arm's-length basis,
primarily through Orrick and the independent financial advisor, who had yet to
be chosen. At its meeting, the special committee also identified and agreed to
contact several financial advisors.
Subsequent to the initial meeting, the special committee contacted four
prospective independent financial advisors, and, on October 17, 2002, had
face-to-face interviews with two of these advisors. In choosing an independent
financial advisor, the special committee considered the past work of each
financial advisor and considered the ability of each firm to provide independent
unbiased advise. After extensive inquiry and negotiations with both parties as
to the nature and scope of services to be provided, the special committee chose
Andersen, Weinroth, & Partners, LLC (f/k/a Anderson, Weinroth & Co. L.P., "AWP")
as its independent financial advisor, and signed an engagement letter on
November 1, 2002. Shortly thereafter, the company publicly announced the
retention of AWP.
On October 23, 2002, the company received an indication of interest from
Richton International Corporation ("Richton"), subject to completion of a due
diligence review, to invest up to $3,000,000 in the company in exchange for a
controlling interest. This indication of interest was referred to the special
committee.
On November 5, 2002, the special committee met at Orrick's offices with
legal counsel and representatives of AWP. The special committee discussed with
AWP the terms of the Richton proposal received on October 23, 2002. It was
agreed that such proposal was not specific enough in its current form but that
the special committee should continue to communicate with Richton. The special
committee subsequently conveyed the same to Richton. At that meeting, it was
also disclosed that Decatur Electronics, Inc. ("Decatur") had contacted Eric
Miller, CEO of the company, and expressed an interest in making a proposal. Upon
receipt of the inquiry, Mr. Miller referred Decatur to the special committee. On
the same day, the special committee received a letter from Decatur indicating an
interest in pursuing an acquisition of the company. The special committee
acknowledged receipt of the letter on November 10, 2002.
On December 6, 2002, we received a written offer from Decatur pursuant to
which Decatur offered to purchase all of our issued and outstanding shares of
common stock at a tentative price of $1.20 per share, subject to certain
conditions and due diligence. The purchase of shares would be financed through
Decatur's cash assets and potential bank financing. The offer was set to expire
on December 20, 2002.
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On December 11, 2002, the special committee met with Orrick and
representatives of AWP. AWP presented its analysis of the LTI Acquisition and
Decatur offers. Based in part upon AWP's analysis, the special committee
determined that both the Decatur offer of $1.20 per share and the LTI
Acquisition offer of $3,650,000 in cash with a dividend to shareholders of $1.10
per share were inadequate and that the special committee would not recommend
either offer to the board of directors. The special committee also discussed the
status of any additional proposals from Richton, and a possible proposal from a
private investment group.
In considering the relative merits of the proposals, consideration was
given by the special committee to the dynamic aspects of the value of the
transaction due to the pending litigation with Asia Optical Co., Inc. and Nikon,
Inc. (the "Asia Optical Litigation"), the outcome of which would have a bearing
on what the special committee would consider to be an adequate proposal.
It was agreed that a representative of AWP would contact Decatur and LTI
Acquisition to inform them of the special committee's decision, and to invite
them to improve their offers. Both groups indicated that they would consider
improving their bids and subsequently signed confidentiality agreements in
contemplation of meeting with management and conducting due diligence of the
company's operations.
On December 23, 2002, pursuant to previous discussions initiated by the
special committee, Public Safety Equipment, Inc. ("PSE"), a wholly owned
subsidiary of Britax, International, Ltd. indicated that it was interested in
receiving further information concerning the business operations of the company.
PSE signed a confidentiality agreement to access additional information so that
it could evaluate the bases for submitting an acquisition offer.
On December 24, 2002, the company received a further indication of
interest from Richton, expressing interest in signing a confidentiality
agreement in contemplation of making an outright bid to acquire the company or
making a significant investment to obtain a controlling interest in the company.
On December 30, 2002, Richton signed a confidentiality agreement.
On January 21, 2003, the special committee met to discuss the various
indications of interest and proposals received to date. The special committee
authorized AWP to send a letter to each of the parties which had expressed an
interest in submitting an offer, inviting them to make formal proposals and
describing the process by which proposals should be submitted for consideration
by the special committee. This letter was sent on January 29, 2003, and final
date for submission of proposals was set for February 19, 2003.
On January 28, 2002, the special committee set up a meeting between
representatives of Decatur and management of the company so that Decatur could
ask questions of management and access to certain relevant documents of the
company. The special committee set up similar meetings for PSE and another
interested bidder throughout the bidding process.
Three of the invitees, Richton, LTI Acquisition and PSE, responded with
specific proposals. Decatur did not submit a revised bid.
A letter from Richton dated February 12, 2003 contained an offer in which
Richton proposed to invest $3,000,000 in the company in exchange for (i) 650,000
shares of a newly created Class B common stock with super-majority voting rights
equal to 10 votes per share, at $3.00 per share, and (ii) 825,000 shares of a
newly-created Class A common stock with one vote per share, at $1.27 per share.
The letter allotted Richton 60 days to complete due diligence and a period of
exclusivity during such time.
A letter from LTI Acquisition dated February 18, 2003 contained an amended
offer to purchase all of the non-cash assets and assume the liabilities of the
company for $4,750,000, subject to the payment of a dividend to shareholders in
the amount of either (a) $1.55 per share if we elected to retain a small amount
of cash in the company so that we could maintain our American Stock Exchange
listing as a shell company, or (b) $1.60 per share if we elected to liquidate.
A letter from PSE dated February 19, 2003 contained an offer to purchase
all of the outstanding shares of common stock of the company at a price of $1.65
a share, subject to certain conditions including further confirmatory due
diligence.
On February 24, 2003, the special committee met to consider the offers
from Richton, LTI Acquisition and PSE. In connection therewith, AWP reviewed
certain financial information with the special committee,
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including the recent financial performance of the company, EBITDA normalized for
non-recurring expenses incurred in fiscal 2002, budgeted for fiscal 2003, and
combined with certain operating cost reductions implemented in 2002 that
persisted in 2003, and the adjusted book value as of December 31, 2002. The
special committee also discussed the recent stock price performance of the
company, and received an update on the status of the Asia Optical Litigation and
litigation with Bushnell, Inc.
While the special committee did not make a determination as to which
proposal represented the best offer, it did note that although the Richton offer
valued the company at approximately the same level as the other two offers, it
did not provide for the cash payment of $1.65 per share to our shareholders as
in the PSE proposal. The special committee noted further that under the terms of
the Richton proposal, shareholders would not receive any consideration for their
stock and would have their voting position reduced to a minority position with
no assurance as to how the stock would trade in the aftermarket. A
representative of AWP informed Richton about the discussions of the special
committee with respect to its proposal, and Richton declined to make a revised
bid.
During a telephonic conference call on February 28, 2003, the special
committee asked AWP to inform each of the offering parties of the competing
offers and, if they decided to improve their offers, to consider adding any cash
that might be received as a result of a settlement of the Asia Optical
Litigation to its payout to shareholders. AWP sent this letter to the offering
parties on March 3, 2003, and it was requested that such revised offers be
provided to the company no later than March 7, 2003.
On March 7, 2003, the special committee received a letter from PSE in
which PSE increased its offer to $1.72 per share, plus any net cash benefit from
a pending settlement pertaining to the Asia Optical litigation.
On March 7, 2003, the special committee also received a letter from LTI
Acquisition that increased the cash portion of its offer to $5,800,000,
contingent upon a dividend to shareholders of $1.85 per share.
Upon being informed of PSE's March 7, 2003 offer, on March 13, 2003, LTI
Acquisition modified its offer to pass along to shareholders proceeds from any
settlement of the Asia Optical Litigation in excess of $1,000,000, in addition
to the $1.85 dividend. As an alternative, it offered to purchase all of our
non-cash assets (including the assumption of all liabilities) contingent upon a
dividend to shareholders of $1.76 per share, with an offer to pass along any
settlement(s) from the Asia Optical litigation to shareholders.
On March 13, 2003, the special committee met telephonically with Orrick
and representatives of AWP to discuss the LTI Acquisition offer and compare it
with the offer from PSE. The tax consequences of the offers were also discussed.
The special committee decided that the LTI Acquisition offer was better than the
PSE offer. The Committee instructed AWP to inform PSE of the decision by the
special committee and to offer PSE the opportunity to further modify its offer.
On March 20, 2003, AWP received a request from PSE for additional information.
On April 9, 2003, PSE indicated that it had not received all the information it
required to modify its offer and it requested a broader due diligence review.
The special committee agreed to provide PSE with access to as much information
as it required.
A representative of AWP informed PSE and LTI Acquisition that they had
until May 16, 2003 to present modified offers.
On May 15, 2003, the special committee received a letter from LTI
Acquisition confirming that their offer of March 13, 2003 remained in effect.
On May 16, 2003, PSE sent the company a proposal to purchase all of the
outstanding shares of common stock for $2.03 per share, subject to a closing
condition requiring the settlement of the Asia Optical Litigation.
On May 19, 2003, the special committee received a letter from LTI
Acquisition requesting clarification as to the differences between its proposal
and PSE's proposal.
On May 21, 2003, the special committee received a revised offer from LTI
Acquisition that raised the dividend for shareholders to $2.08 per share if
there was a settlement of the Asia Optical Litigation before a closing of the
transaction, and, if there was no settlement prior to the closing of the
contemplated transaction, $1.92 per share (which price included $500,000 as a
guaranteed payment in anticipation of settlement of the Asia Optical Litigation)
plus a subsequent distribution equal to the net proceeds in excess of $500,000,
if any, from a settlement of the Asia Optical Litigation.
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On May 22, 2003, PSE sent an addendum to their offer in which PSE offered
an alternative to their previous proposal; an offering price of $1.95 per share
and the removal of the settlement of the Asia Optical Litigation as a closing
condition.
On May 22, 2003, the special committee along with Orrick and
representatives of AWP met to discuss the competing bids. The special committee
discussed how best to maximize shareholder value and, among other things,
considered tax advice from counsel as to the possible impact of the structure of
the two proposed transactions on the company. Based upon input from Orrick and
AWP, the special committee determined that a transaction in the form of a stock
purchase would be more favorable for the company's shareholders than a
transaction in the form of an asset purchase. In reaching that decision, the
special committee considered the following factors: the cost of keeping a shell
corporation listed on the AMEX; the funds necessary to maintain the company as a
publicly reporting company; the likelihood of finding a merger candidate for the
shell; the AMEX's posture toward such a proposal; tax consequences; and the
mechanics and legality of how such a transaction would be effected. The special
committee concluded that the uncertainty surrounding the necessary events to
cause such a transaction to be successful, coupled with the expenses associated
with a transaction of that nature and lack of personnel to implement such a
chain of events did outweigh the remote value of such a transaction to the
company's shareholders.
A representative of AWP contacted PSE and LTI Acquisition to convey the
special committee's decision as to its preferred structure of the proposals.
On May 28, 2003, LTI Acquisition sent a letter to the special committee
amending its offer of May 21, 2003. LTI Acquisition proposed to increase its
offer to $1.97 per share (which price included $800,000 as a guaranteed payment
in anticipation of settlement of the Asia Optical Litigation) if a settlement of
the Asia Optical Litigation was not consummated before closing, plus a
subsequent distribution equal to the net proceeds, if any, from a settlement of
the Asia Optical Litigation in excess of $800,000. Its offer to purchase shares
at a price of $2.08 if a settlement occurred before closing remained in effect.
On June 6, 2003, the special committee received a letter from LTI
Acquisition reflecting the same terms as the previous proposal letter, with an
acknowledgment that the board of directors could consider superior proposals if
necessary to fulfill their fiduciary duties to the company.
On June 11, 2003, the special committee met at Orrick's office with legal
counsel and representatives of AWP with the purpose to discuss current bids.
Subsequent to the June 6, 2003 offer from LTI Acquisition, AWP had contacted
both LTI Acquisition and PSE and informed them as to the status of the current
bids. AWP indicated at the June 11, 2003 meeting that it had been informed by
PSE that PSE would not continue bidding. After discussion among members of the
special committee, the committee expressed the view that the LTI Acquisition
offer was the superior economic proposal. The special committee expressed the
view that a transaction with LTI Acquisition represented a superior alternative
for shareholders rather than remaining public, and that it was unlikely that
another credible competing offer for the company could be obtained at a higher
price than the LTI Acquisition offer.
It was agreed that a form of definitive merger agreement be prepared and
sent for review by counsel for the shareholders of LTI Acquisition, including
Kama Tech Corporation and Kama Tech (HK) Ltd. The special committee continued to
negotiate the specific terms of the merger with LTI Acquisition and conditioned
its recommendation of the merger to the board of directors on, among other
things, the following: (i) completion by AWP of its financial analyses and its
ability to provide an opinion as to the fairness of the consideration to company
shareholders (other than LTI Acquisition and its affiliates), from a financial
point of view; (ii) completion by LTI Acquisition of financing for the
transaction and receipt of acceptable financing commitments; and (iii)
negotiation of mutually agreeable terms and conditions in a definitive merger
agreement, including the absence of any "break-up" fee in the event of a higher
bid from another party.
The special committee and LTI Acquisition spent several weeks preparing
and negotiating various points of the definitive agreement. As part of these
negotiations, it was agreed that LTI Acquisition would pay certain ongoing costs
related to maintaining a directors' and officers' "tail" liability policy and
that the price per share paid by LTI Acquisition would be reduced to $2.06 per
share, as an offset for the additional insurance costs. Additionally, as part of
these negotiations, the special committee required that before recommending the
LTI Acquisition offer to the board of directors, LTI Acquisition needed to
provide
26
satisfactory evidence to the special committee that the necessary funds to
complete the transaction were available in a segregated account set up
specifically for the transaction. Such financial arrangements were arranged and
LTI Acquisition provided sufficient evidence to the special committee.
On July 31, 2003, the special committee met telephonically with its
counsel. AWP delivered its opinion to the special committee that as of such date
and based upon and subject to the factors and assumptions set forth in the
opinion, the consideration of $2.06 per share in cash to be received by the
holders of company common stock (other than LTI Acquisition and its affiliates)
under the merger agreement is fair from a financial point of view to such
holders. The special committee then unanimously determined to recommend that the
board of directors approve the merger agreement.
Subsequently, on July 31, 2003, the special committee reported its
findings to the entire board of directors. The special committee reported to the
board of directors that the proposed merger likely would provide the greatest
value reasonably attainable for shareholders and recommended that the board of
directors approve the merger.
Fairness of the Merger; Recommendation of the Special Committee of the Board of
Directors
The special committee believes that the merger is fair to and in the best
interests of our shareholders. The special committee unanimously recommended
that the board of directors approve and adopt the merger and authorize the
execution of the merger agreement.
In the course of reaching its decision to approve the merger agreement and
to recommend that you adopt the merger agreement, our special committee
considered a number of potentially positive factors in their deliberations,
including:
o the historical market prices of our common stock and recent
trading activity, including the fact that the proposed
consideration of $2.06 per share in cash to be received by
shareholders in the merger represents a premium of
approximately 190% to the trading price of the common stock on
September 20, 2002, one week prior to the initial bid by LTI
Acquisition;
o the special committee's belief, based on, among other things,
the financial advice provided to the special committee by AWP
during the period from November 1, 2002 to the present, that
the $2.06 per share merger consideration:
o compared favorably to the current and historical
market prices of our common stock, including the
fact that our stock had not closed at or above
$2.06 per share in the period from May, 2000 to
the present time,
o was in the range of fairness, from a financial
point of view, when compared with transactions
involving the acquisition of companies which
manufacture and market measuring and controlling
devices that were announced or completed since
January 1, 2001, based upon the publicly available
financial terms of such transactions, and
o comported with contextual data and market
information for certain other selected companies
of whose securities are publicly traded;
o the opinion of AWP, described in detail under "--Opinion of
Anderson, Weinroth & Co., LP" beginning on page [__], that, as
of as of July 31, 2003, the consideration to be received in
the merger was fair, from a financial point of view, to our
shareholders;
o the special committee's belief, based upon negotiations with
LTI Acquisition, that the merger consideration represents the
highest price that LTI Acquisition is willing to pay, and in
light of the lack of competing proposals at comparable or
higher valuations after providing an opportunity for the
remaining bidder to revise its offer in light of the LTI
Acquisition offer, as well as the breadth
27
of the bidding process, is likely the highest price reasonably
attainable for our shareholders in a merger transaction;
o the fact that the merger consideration is all cash, which
provides certainty of value to our shareholders compared to a
transaction in which our shareholders would receive stock;
o the fact that a transaction in the form of a stock purchase
was more favorable to the company's shareholders than a
transaction in the form of an asset purchase;
o the fact that LTI Acquisition has the financial resources to
complete the merger expeditiously;
o the fact that, pursuant to the merger agreement, we can
respond in the manner provided in the merger agreement to any
unsolicited written proposal that our board of directors
reasonably determines in good faith constitutes or is
reasonably likely to lead to a superior proposal and the fact
that we may terminate the merger agreement in the event of a
superior proposal (as described below in "The Merger
Agreement--No Solicitation by Laser Technology"), and that
there is no "break-up" fee upon termination of the merger
agreement;
o the requirement that the merger be authorized by the
affirmative vote of at least 66?% of the outstanding shares of
our common stock that are held by non-interested shareholders
for purposes of Section 203 of the Delaware General
Corporation Law;
o the fact that the merger agreement and the merger are the
product of arm's-length negotiations between LTI Acquisition
and the special committee; and
o the availability of appraisal rights for shareholders under
the Delaware General Corporation Law.
In addition, the special committee has had discussions with AWP regarding
the potential transaction with LTI Acquisition, our business, financial
condition, competitive position, business strategy, and strategic options, as
well as the risks involved in achieving these prospects, the nature of our
business and the industry in which we compete, and current industry, economic
and market conditions, both on a historical and on a prospective basis.
The special committee also considered a number of potentially negative
factors in their deliberations concerning the merger, including:
o that we will no longer exist as an independent company and our
shareholders will no longer participate in our growth or from any
future increase in the value of our business;
o the risks and contingencies related to the announcement and pendency
of the merger, including any potentially negative perception of the
merger by our employees, customers, vendors, shareholders and other
parties and the potentially negative actions that such persons may
take as a result of the announcement of the merger;
o the possibility that the merger will not be completed and the
potentially negative impact on our revenues, sales, earnings,
operating results, financial condition, business and stock price in
the event the merger does not close following its public
announcement;
o the fact that gains from an all-cash transaction would be taxable to
our shareholders for U.S. federal income tax purposes; and
o that if the merger does not close, our officers and other employees
will have expended extensive efforts attempting to complete the
transaction and will have experienced significant distractions from
their work during the pendency of the transaction and we will have
incurred substantial transaction costs in connection with the
transaction and such costs will negatively impact our operating
results.
28
In view of the number of factors considered by the special committee in
connection with the evaluation of the merger, the special committee did not
consider it practicable to, nor did it attempt to, quantify, rank or otherwise
assign relative weights to the specific factors considered in reaching its
decision, nor did it evaluate whether these factors were of equal importance. In
addition, each member of the special committee may have given different weights
to the various factors.
After considering the foregoing factors, the other information available
to it, and after numerous meetings and discussions with AWP and internally, the
special committee unanimously recommended that the board of directors approve
the merger agreement, and determined that the merger agreement and merger are
fair to, and in the best interests of, the shareholders.
Opinion of Andersen, Weinroth & Partners, L.L.C..
Pursuant to an engagement letter dated November 1, 2002, the special
committee retained AWP to render an opinion to our board of directors as to the
fairness, from a financial point of view, to the holders of our common stock, of
the consideration to be received in the merger.
On July 31, 2003, AWP delivered its written opinion to the special
committee to the effect that, and subject to the various assumptions set forth
in the opinion, as of July 31, 2003, the consideration to be received in the
merger was fair, from a financial point of view, to our shareholders. The full
text of the written opinion of AWP is attached as Appendix B and is incorporated
by reference. Holders of our common stock are urged to read the opinion in its
entirety for the assumptions made, procedures followed, other matters considered
and limits of the review by AWP This summary of the written opinion of AWP is
qualified in its entirety by reference to the full text of such opinion.
AWP's analyses and opinion were prepared for and addressed to our board of
directors and are directed only to the fairness, from a financial point of view,
of the consideration to be received in the merger, and do not constitute an
opinion as to the merits of the merger or a recommendation to any shareholder as
to how to vote on the proposed merger. The consideration received in the merger
was determined through negotiations between Laser Technology and LTI Acquisition
and not pursuant to recommendations of AWP.
In arriving at its opinion, AWP reviewed and considered such financial and
other matters as it deemed relevant, including, among other things:
o a draft of the merger agreement dated July 31, 2003;
o certain publicly available financial and other information for Laser
Technology, and certain other relevant financial and operating data
furnished to AWP by our management;
o certain information concerning LTI Acquisition and its principals;
o certain internal financial analyses, financial forecasts, reports
and other information concerning Laser Technology prepared by our
management;
o certain operating results and the reported price and trading
histories of the shares of our common stock as compared to operating
results and the reported price and trading histories of certain
publicly traded companies AWP deemed relevant;
o certain financial terms of the merger as compared to the financial
terms of certain selected business combinations AWP deemed relevant;
o results of the process to solicit interest from other companies in
acquiring us; and
o such other information, financial studies, analyses and
investigations and such other factors that AWP deemed relevant for
the purposes of its opinion.
AWP also held discussions with members of Laser Technology's senior
management regarding their
29
assessment of the past and current business operations, financial condition and
future prospects of Laser Technology.
In conducting its review and arriving at its opinion, AWP, with our
consent, assumed and relied, without independent investigation, upon the
accuracy and completeness of all financial and other information provided to it
by us, or which was publicly available. AWP did not undertake any responsibility
for the accuracy, completeness or reasonableness of, or to independently verify,
this information. AWP further relied upon the assurance of our management that
they were unaware of any facts that would make the information provided to AWP
incomplete or misleading in any respect. AWP, with our consent, assumed that the
financial forecasts provided to AWP were reasonably prepared by our management,
and reflected the best available estimates and good faith judgments of such
management as to our future performance. Our management confirmed to AWP, and
AWP assumed, with our consent, that the financial forecasts used in AWP's
analyses with respect to us provided a reasonable basis for its opinion. AWP did
not make or obtain any independent evaluations, valuations or appraisals of our
assets or liabilities, nor was AWP furnished with these materials. With respect
to all legal matters relating to us, AWP relied on the advice of our outside
legal counsel.
AWP's services to us in connection with the merger were comprised of
acting as our financial advisor in connection with the merger and rendering an
opinion from a financial point of view of the consideration to be received in
the merger. AWP's opinion was necessarily based upon economic and market
conditions and other circumstances as they existed and could be evaluated by AWP
on the date of its opinion. It should be understood that although subsequent
developments may affect its opinion, AWP does not have any obligation to update,
revise or reaffirm its opinion and AWP expressly disclaims any responsibility to
do so.
In rendering its opinion, AWP assumed, in all respects material to its
analysis, that the representations and warranties of each party contained in the
merger agreement are true and correct, that each party will perform all of the
covenants and agreements required to be performed by it under the merger
agreement and that all conditions to the consummation of the merger will be
satisfied and not waived. AWP assumed that the final form of the merger
agreement would be substantially similar to the last draft received by AWP prior
to rendering its opinion. AWP also assumed that all governmental, regulatory and
other consents and approvals contemplated by the merger agreement would be
obtained and that, in the course of obtaining any of those consents, no
restrictions will be imposed or waivers made that would have an adverse effect
on the contemplated benefits of the merger.
AWP's opinion does not constitute a recommendation to any shareholder as
to how the shareholder should vote on the proposed merger. AWP's opinion is
limited to the fairness, from a financial point of view, of the consideration to
be received in the merger. AWP expresses no opinion as to the underlying
business reasons that may support the decision of our board of directors to
approve, or our decision to consummate, the merger.
The following is a summary of the principal financial analyses performed
by AWP to arrive at its opinion. Some of the summaries of financial analyses
include information presented in tabular format. In order to fully understand
the financial analyses, the tables must be read together with the text of each
summary. The tables alone do not constitute a complete description of the
financial analyses. Considering the data set forth in the tables without
considering the full narrative description of the financial analyses, including
the methodologies and assumptions underlying the analyses, could create a
misleading or incomplete view of the financial analyses. AWP performed certain
procedures, including each of the financial analyses described below, and
reviewed with our management the assumptions on which such analyses were based
and other factors, including our historical and projected financial results. No
limitations were imposed by our board of directors with respect to the
investigations made or procedures followed by AWP in rendering its opinion.
Analysis of Selected Publicly Traded Companies . To provide contextual
data and comparative market information, AWP compared selected historical
operating and financial data and ratios for Laser Technology to the
corresponding financial data and ratios of certain other companies (the
"Selected Companies") whose securities are publicly traded. The Selected
Companies were:
o Jenoptik AG
o Coherent, Inc.
o Armor Holdings, Inc.
o Rofin-Sinar Technologies, Inc.
30
o II-VI Inc.
o Excel Technology, Inc.
o OYO Geospace Corp.
o Isco, Inc.
o Transact, Inc.
o O.I. Corp.
o Mocon, Inc.
o Taser International, Inc.
o Image Sensing, Systems
The data and the enterprise value (market capitalization of common stock
plus debt minus cash) of the Selected Companies as multiples of last twelve
months ("LTM") revenue, calendar year 2003 estimated revenue, LTM earnings
before income taxes, depreciation and amortization ("EBITDA"), and 2003
estimated EBITDA.
The following table presents, for the periods indicated, the multiples
implied by the ratio of enterprise value to LTM revenue, 2003 estimated revenue,
LTM EBITDA, and 2003 estimated EBITDA. The information in the table is based on
the closing stock prices on July 9, 2003.
Leveraged Market Capitalization as a Multiple of:
--------------------------------------------------------
Equity
Market Sales EBITDA
Capitalization ---------------------- ----------------------
(000,000) LTM 2003E* LTM 2003E*
--------- --- ------ --- ------
All companies
- Range $12-$758 0.3x-3.2x 0.3x - 3.0x 3.8x-41.9x 5.5x-15.1x
- Median $72 1.3x 1.6x 9.2x 11.5x
In addition, AWP selected the six companies from the above list with the
smallest market capitalization and compared selected historical operating and
financial data and ratios for Laser Technology to the corresponding financial
data and ratios of these companies. These smaller capitalization companies were:
o Isco, Inc.
o Transact, Inc.
o O.I. Corp.
o Mocon, Inc.
o Taser International, Inc.
o Image Sensing, Systems
The following table presents, for the periods indicated, the multiples
implied by the ratio of enterprise value to 2002 revenue, LTM revenue, 2003
estimated revenue, 2004 estimated revenue, 2002 EBITDA, LTM EBITDA, 2003
estimated EBITDA and 2004 estimated EBITDA. The information in the table is
based on the closing stock prices on July 9, 2003.
Leveraged Market Capitalization as a Multiple of:
--------------------------------------------------------
Equity
Market Sales EBITDA
Capitalization ---------------------- ----------------------
(000,000) LTM 2003E* LTM 2003E*
--------- --- ------ --- ------
Selected Small Companies
- Range $12-$49 0.3x-3.2x 1.7x - 1.7x 3.8x-41.9x N/A
- Median $18 1.3x 1.7x 8.0x N/A
*Estimated
31
Although the Selected Companies were used for comparison purposes, none of
those companies is directly comparable to us. Accordingly, an analysis of the
results of such a comparison is not purely mathematical, but instead involves
complex considerations and judgments concerning differences in historical and
projected financial and operating characteristics of the Selected Companies and
other factors that could affect the public trading value of the Selected
Companies or Laser Technology to which they are being compared.
Analysis of Selected Transactions. AWP reviewed the financial terms, to
the extent publicly available, of transactions involving the acquisition of
companies which manufacture and market laser-based measurement instruments,
which were announced or completed since January 1, 2001. Of the transactions
reviewed, only 4 transactions included meaningful data points due to limitations
on financial statement disclosure. The transactions were listed as (target /
acquiror):
o Raytek Corp. / Danaher Corp.
o IFR Systems / Aeroflex Inc.
o Visionics Corp. / Identix Inc.
o SpatialMatrix / Faro Technologies
AWP reviewed the enterprise value in the selected transactions as a
multiple of LTM revenue and LTM EBITDA. It also examined the premium of the
offer price over the trading prices one trading day and one week prior to
announcement date. The following table presents, for the periods indicated, the
multiples implied by the ratio of enterprise value to LTM revenue and LTM
EBITDA.
Premium to offer Target LTM Multiple of LTM:
- -------------------------------------------------------------------------------------------------------------------
Target Acquiror Ann. Effective Trans. 1-Day 1-Week Sales EBITDA Sales EBITDA
Value Prior Prior
- -------------------------------------------------------------------------------------------------------------------
Raytek Corp Danaher Corp 8/23/02 9/3/02 $75 NA NA $50 NA 1.5x NM
IFR Systems Aeroflex Inc. 4/15/02 4/15/02 60.0 2.6% 22.7% 124.9 8.5 0.5x 7.0x
Visionics Corp Identix Inc. 2/22/03 6/26/02 246.1 (9.3%) (11.7%) 30.8 (2.1) 8.0x NM
SpatialMetrix FARO Tech. 1/16/02 1/16/02 6.8 NA NA 11.4 (4.0) 0.6x NM
- -------------------------------------------------------------------------------------------------------------------
Although the selected transactions were used for comparison purposes, none
of those transactions is directly comparable to our proposed merger with LTI
Acquisition, and none of the companies in those transactions is directly
comparable to us. Accordingly, an analysis of the results of such a comparison
is not purely mathematical, but instead involves complex considerations and
judgments concerning differences in historical and projected financial and
operating characteristics of the companies involved and other factors that could
affect the acquisition value of such companies or Laser Technology to which they
are being compared.
Historical Stock Trading Analysis. AWP compared the closing prices of our
common stock over various periods ended June 30, 2003 to the offer price of
$2.06 per share. The table below sets forth the stock prices for those periods
and the premium implied by the offer price in the merger to the historical stock
price.
Stock
Price Premium
----- -------
Latest twelve months average $1.00 106 %
Latest six months average $1.25 65 %
Latest three months average $1.32 57 %
Latest two months average $1.33 55 %
Latest one month average $1.33 55 %
Stock price one month prior to initial announcement $0.65 217 %
Stock price one week prior to initial announcement $0.71 190 %
Low (latest twelve months) $0.41 402 %
High (latest twelve months) $1.41 46 %
32
Marketing Process. In addition to the foregoing financial analyses, AWP
considered the results of a process to solicit interest from other companies in
acquiring Laser Technology. Confidential information was sent to five entities
that expressed a potential interest in acquiring Laser Technology. Four of these
companies, including LTI Acquisition, conducted on-site due diligence activities
and submitted revised offers on several occasions. All of these offers were
considered to be inferior to the LTI Acquisition offer.
The summary set forth above does not purport to be a complete description
of all the analyses performed by AWP. The preparation of a fairness opinion
involves various determinations as to the most appropriate and relevant methods
of financial analyses and the application of these methods to the particular
circumstances and, therefore, such an opinion is not readily susceptible to
partial analysis or summary description. AWP did not attribute any particular
weight to any analysis or factor considered by it, but rather made qualitative
judgments as to the significance and relevance of each analysis and factor.
Accordingly, notwithstanding the separate factors summarized above, AWP
believes, and has advised our board of directors, that its analyses must be
considered as a whole and that selecting portions of its analyses and the
factors considered by it, without considering all analyses and factors, could
create an incomplete view of the process underlying its opinion. In performing
its analyses, AWP made numerous assumptions with respect to industry
performance, business and economic conditions and other matters, many of which
are beyond our control. These analyses performed by AWP are not necessarily
indicative of actual values or future results, which may be significantly more
or less favorable than suggested by such analyses. In addition, analyses
relating to the value of businesses do not purport to be appraisals or to
reflect the prices at which businesses or securities may actually be sold.
Accordingly, such analyses and estimates are inherently subject to uncertainty,
being based upon numerous factors or events beyond the control of the parties or
their respective advisors. None of Laser Technology, AWP or any other person
assumes responsibility if future results are materially different from those
projected. The analyses supplied by AWP and its opinion were among several
factors taken into consideration by our board of directors in making its
decision to enter into the merger agreement and should not be considered as
determinative of such decision.
AWP was selected by our special committee to render an opinion to our
board because AWP is a merchant banking firm that has extensive experience in
the valuation of businesses and their securities in connection with mergers and
acquisitions, private placements and valuations for corporate and other
purposes. AWP is providing financial services for us for which it will receive
customary fees. Pursuant to the AWP engagement letter, if the merger is
consummated, AWP will be entitled to receive a transaction fee equal to $175,000
for its financial advisory services, including the rendering of its opinion. AWP
has been paid $140,000 to date which will be credited against any transaction
fee paid. Additionally, we have agreed to reimburse AWP for its out-of-pocket
expenses, including attorneys' fees, and have agreed to indemnify AWP against
certain liabilities, including liabilities under the federal securities laws.
The terms of the fee arrangement with AWP, which are customary in transactions
of this nature, were negotiated at arm's length between the special committee
and AWP, and our board of directors was aware of the arrangement.
LTI Acquisition's And Affiliates' Positions As To The Fairness Of The Merger
LTI Acquisition and its principals and shareholders believe that the
merger is substantively and procedurally fair to such unaffiliated holders of
our common stock. However, neither LTI Acquisition nor its affiliates has
performed, or engaged a financial advisor to perform, any valuation analysis for
the purpose of assessing the fairness of the merger to the unaffiliated holders
of our common stock. Moreover, they did not participate in the deliberations of
the special committee or receive advice from the special committee's financial
advisor.
The belief of LTI Acquisition and its affiliates that the merger is
substantively fair to the unaffiliated holders of our common stock is based upon
the following factors:
o The fact that the special committee and the board of directors
recommended the merger, and concluded that the merger is advisable,
and in the best interests of our shareholders (although LTI
Acquisition did not rely upon the special committee's analysis);
33
o The fact that the special committee received a written opinion from
Andersen, Weinroth & Partners, LLC, dated July 31, 2003, as to the
fairness, from a financial point of view, of the $2.06 per share
cash merger consideration to our shareholders (other than LTI
Acquisition affiliates);
o The consideration to be paid in the merger represents a nearly 275%
premium over the reported trading price per share on September 26,
2002, the last trading day prior to the initial offer by LTI
Acquisition; a 49% premium over the reported closing price of our
common stock on July 31, 2003, the last trading day prior to the
announcement of the proposed merger; and a significant premium over
the trading prices at any time since the negotiations commenced;
o The anticipated increases in costs to our company resulting from the
Sarbanes-Oxley Act of 2002, including increased audit fees, legal
fees and director and officer insurance premiums;
o The anticipated increases in the time requirements imposed on our
officers and directors in connection with preparing and filing
documents with the SEC;
o The concurrence of LTI Acquisition and its affiliates, with the
special committee and board of directors, that Laser Technology
obtained the highest price per share possible;
o The merger will provide consideration to our shareholders entirely
in cash; and
o The merger would shift the risks associated with our future
financial performance from the public shareholders, who do not have
the power to control decisions made as to our business, entirely to
the LTI Acquisition shareholders, who have a greater degree of power
to control our business.
LTI Acquisition and its affiliates considered each of the foregoing
factors to support their determinations as to the fairness of the merger. LTI
Acquisition and its affiliates did not consider any other material factors in
evaluating the substantive fairness of the merger to the unaffiliated holders of
our common stock.
Neither LTI Acquisition nor its affiliates found it practicable to assign,
nor did they assign, relative weights to the individual factors considered in
reaching their conclusion as to fairness. LTI Acquisition and its affiliates did
not consider whether the merger consideration constitutes fair value in relation
to our liquidation value, and did not base its offer on our book value, because
they believed that those measures of asset value are not relevant to the market
value of our business, since they intend to continue to operate our company as a
going concern and would not vote the shares of our common stock beneficially
owned by them in favor of liquidating our company. Therefore, no appraisal of
liquidation value was sought for purposes of valuing the shares of our common
stock.
LTI Acquisition and its affiliates belief that the merger is procedurally
fair to the unaffiliated holders of our common stock is based upon the following
factors:
o The formation of an independent special committee;
o The terms and conditions of the merger agreement were the result of
good faith negotiations between the special committee and affiliates
of LTI Acquisition and their respective advisors and
representatives;
o The requirement under Delaware law that the merger agreement and
merger be approved by holders of 66 2/3% of the outstanding stock,
exclusive of shares held by LTI Acquisition and its affiliates;
o The special committee retained Andersen, Weinroth & Partners, LLC
("AWP"), which is not affiliated with LTI Acquisition and its
affiliates, to serve as its independent financial advisor, and the
special committee received an opinion from AWP on July 31, 2003, to
the effect that as of such date and based upon and subject to the
various assumption s made, procedures followed, matters considered
and limitations upon the review undertaken set forth in its written
opinion, the $2.06 in cash per share merger consideration is fair
from a financial point of view to our unaffiliated shareholders;
34
o The merger was approved by the special committee and by each non
affiliated member of our board of directors with H. Deworth
Williams, Edward F. Cowle and Jeremy G. Dunne, principals of LTI
Acquisition, abstaining, but carried unanimously by four independent
board members;
o Under the merger agreement, and subject to certain limitations,
alternative unsolicited acquisition proposals may be considered; and
o The fact that shareholders who do not vote to adopt the merger
agreement would be entitled to exercise statutory appraisal rights
under Delaware law.
The foregoing discussion of the information and factors considered and
given weight by LTI Acquisition and its affiliates is not intended to be
exhaustive, but is believed to include all material factors considered by LTI
Acquisition and its affiliates. The view of LTI Acquisition and its affiliates
as to the fairness of the merger is not a recommendation to any shareholders as
to how that shareholder should vote on the merger.
Interests of Certain Persons in the Merger
In considering the recommendation of our board of directors with respect
to the merger, shareholders should be aware that certain of our officers and
directors have interests in connection with the merger which may present them
with actual or potential conflicts of interest. These interests include the
following:
o three of our directors are shareholders of LTI Acquisition and will
remain as principals of LTI Acquisition following consummation of
the merger;
o LTI Acquisition has indicated that if the merger is completed, it
anticipates asking Eric Miller, our current President, CEO and a
director, to remain as part of the management group of the acquired
business.
o certain of our directors and executive officers hold options and/or
warrants to purchase our common stock, which will be treated the
same as all options and warrants held by other persons, except for
directors or executive officers affiliated with LTI Acquisition or
LTI Merger Sub, whose options will be cancelled without
consideration; and
o the terms of the merger agreement provide for continued
indemnification arrangements and insurance coverage for our
directors and officers for a period of three years.
All additional interests are described below, to the extent material and,
except as described below, such persons have, to our knowledge, no material
interest in the merger that differ from your interests generally. Our board of
directors and special committee were aware of and considered the interests of,
our directors and executive officers in approving the merger agreement and the
merger.
Options. Options to purchase our common stock held by our executive
officers, directors and key employees, except for those persons that are also
affiliates of LTI Acquisition, will be cancelled upon the completion of the
merger, in exchange for a cash payment equal to the excess of the $2.06 per
share merger consideration over the per share option exercise price, multiplied
by the number of shares of common stock subject to the option. Options held by
those officers and directors that are affiliates of LTI Acquisition will be
cancelled without any consideration to the holder.
Indemnification and Insurance. The merger agreement provides that all
rights of indemnification and exculpation from liabilities for acts or omissions
occurring at or prior to the merger that exist in favor of our directors or
officers, as provided in our articles of incorporation or bylaws and any of our
existing indemnification agreements in effect as of the date of the merger
agreement, will be assumed by Laser Technology, Inc. as the surviving
corporation in the merger, and will continue in full force and effect in
accordance with their terms. LTI Acquisition has agreed to cause Laser
Technology as the surviving corporation to fulfill and honor in all respects
those obligations. The merger agreement further provides that after the merger,
LTI Acquisition will cause Laser Technology, as the surviving corporation, to
maintain in
35
effect for three years our existing claims made directors' and officers'
liability insurance with respect to matters occurring prior to the effective
time of the merger. Following the merger, the surviving corporation may elect to
substitute insurance policies of at least the same amount of coverage containing
terms and conditions not materially less favorable that those in effect prior to
the merger. However, in no event will the surviving corporation be required to
expend more than an amount per year equal to 150% of our current annual premiums
paid by us for such insurance, which is approximately $194,000 in the aggregate,
for all three years.
Employment Agreement. We currently do not have any employment agreements
with any of our officers, directors or employees. In April 2002, we renewed a
consulting agreement with Knickerbocker Capital, Inc., whose principle is Walter
R. Keay, one of our directors and a member of the special committee. Pursuant to
the agreement, Mr. Keay provides certain consulting services to us. This
agreement expired in May 2003 and will not be in effect following the merger.
Fees and Expenses of the Merger
All fees and expenses in connection with the merger will be paid by the
party incurring those fees and expenses, except that we will pay the expenses
related to the preparation, printing and mailing of this proxy statement and all
filing and other fees paid to the SEC in connection with the merger. The total
fees and expenses we will incur in connection with the merger are estimated to
be approximately $530,828. This amount consists of the following estimated fees:
Legal and other professional fees $35,000
Printing, proxy solicitation and mailing costs 46,511
Special committee fees and expenses(1) 373,734
Financial Advisor 177,282
Filing fees (SEC) 800
Miscellaneous 6,500
--------
Total $639,828
- ----------
(1) Includes fees paid or incurred for legal counsel.
In addition to the above expenses, LTI Acquisition estimates to incur $110,000
costs for legal and other professional fees in connection with the merger.
Financing of the Merger
We and LTI Acquisition have estimated that LTI Acquisition will need
approximately $8,261,990 to complete the purchase of the shares, and payment for
the options, pursuant to the merger (excluding fees and expenses described
above). We and LTI Acquisition expect this amount to be paid out of available
funds of LTI Acquisition at the effective time of the merger.
LTI Acquisition currently has a total of $3,631,708 in an account at Wells
Fargo Bank, Greenwood Village, Colorado, representing deposits from LTI
Acquisition shareholders as follows: H. Deworth Williams - $750,000; Edward F.
Cowle - $944,474; Kama-Tech Corporation - $590,125; and Kama-Tech (HK) Ltd. -
$8,262,090. In addition, on July 29, 2003, Sumitomo Mitsui Banking Corporation
("Sumitomo") issued a written commitment to Kama-Tech (HK) Ltd., with LTI
Acquisition as beneficiary, pursuant to which Sumitomo provided letter of credit
financing of up to $4,630,000 to assist in financing the merger.
The merger agreement requires that, upon execution, LTI Acquisition have
cash on hand, a letter of credit in place, or such other financial arrangements
in place as necessary to complete the merger.
In connection with the signing of the merger agreement, Laser Technology
and LTI Acquisition entered into a funding agreement, under the terms of which
LTI Acquisition has established the bank account and letter of credit, and
agreed that the funds in the bank account and letter of credit will be
maintained and used solely for the closing of the merger. LTI Acquisition has
sent a letter to Wells Fargo and Sumitomo, including a copy of the funding
agreement, and notifying them that no funds are to be used for any purpose
except the closing of the merger, unless and until the merger agreement is
terminated.
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Appraisal Rights
The following discussion is not a complete summary regarding your
appraisal rights under Delaware law and is qualified in its entirety by
reference to the text of the relevant provisions of Delaware law which are
attached to this proxy statement as Appendix C. Any shareholders intending to
exercise appraisal rights should carefully review Appendix C.
If the merger is completed, dissenting holders of our common stock who
follow the procedures specified in Section 262 of the Delaware General Corporate
Law within the appropriate time periods, will be entitled to have their shares
appraised and receive the "fair value" of such shares in cash, as determined by
the Delaware Court of Chancery. This payment would be in lieu of the
consideration that such shareholder would otherwise be entitled to receive under
the merger agreement.
The following summary of Section 262 explains the procedures for
dissenting from the merger and demanding statutory appraisal rights. Failure to
follow the procedures described in Section 262 precisely could result in the
loss of appraisal rights.
This proxy statement constitutes notice to holders of our common stock
concerning the availability of appraisal rights under Section 262. A shareholder
of record wishing to assert appraisal rights must hold the shares of stock on
the date of making a demand for appraisal rights with respect to such shares and
must continuously hold such shares through the effective time of the merger.
Shareholders who desire to exercise their appraisal rights must satisfy all of
the conditions of Section 262. A written demand for appraisal of shares must be
filed with Laser Technology before the special meeting on November 20, 2003.
This written demand for appraisal of shares must be in addition to and separate
from a vote against the merger. Shareholders electing to exercise their
appraisal rights must not vote "for" the adoption of the merger agreement. Also,
because a submitted proxy not marked "against" or "abstain" will be voted "for"
the proposal to adopt the merger agreement, such a proxy will result in the
waiver of appraisal rights. Any proxy or vote against the adoption of the merger
agreement will not constitute a demand for appraisal within the meaning of
Section 262.
A demand for appraisal must be executed by or for the shareholder of
record, fully and correctly, as such shareholder's name appears on their share
certificate. If the shares are owned of record in a fiduciary capacity, such as
by a trustee, guardian or custodian, this demand must be executed by or for the
fiduciary. If the shares are owned by or for more than one person, such as joint
tenancy or tenancy in common, the demand must be executed by or for all joint
owners. An authorized agent, including an agent for two or more joint owners,
may execute the demand for appraisal for a shareholder of record. However, the
agent must identify the record owner and expressly disclose the fact that, in
exercising the demand, he or she is acting as agent for the record owner. A
person having a beneficial interest in our common stock held of record in the
name of another person, such as a broker or nominee, must act promptly to cause
the record holder to follow the steps summarized below in a timely manner to
perfect whatever appraisal rights the beneficial owner may have.
Any shareholder who elects to exercise appraisal rights should mail or
deliver his, her or its written demand to Laser Technology, Inc. 7070 South
Tucson Way, Englewood, Colorado 80112-3921, Attention: Corporate Secretary. The
written demand for appraisal should specify the shareholder's name and mailing
address, and that the shareholder is thereby demanding appraisal of his or her
Laser Technology common stock. Within ten days after the effective time of the
merger, we must provide notice of the effective time of the merger to all of our
shareholders who have complied with Section 262 and have not voted for the
merger.
Within 120 days after the effective time of the merger (but not
thereafter), any shareholder who has satisfied the requirements of Section 262
may deliver to us a written demand for a statement listing the aggregate number
of shares not voted in favor of the merger and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Laser Technology, as the surviving corporation in the merger, must mail such
written statement to the shareholder within 10 days after the shareholder's
request is received by us or within 10 days after the latest date for delivery
of a demand for appraisal under Section 262, whichever is later.
Within 120 days after the effective time of the merger (but not
thereafter), either Laser Technology or any shareholder who has complied with
the required conditions of Section 262 and who is otherwise entitled to
appraisal rights may file a petition in the Delaware Court of Chancery demanding
a determination of the fair
37
value of Laser Technology shares of shareholders entitled to appraisal rights.
We have no present intention to file such a petition if demand for appraisal is
made.
Upon the filing of any petition by a shareholder in accordance with
Section 262, service of a copy must be made upon Laser Technology, which must,
within 20 days after service, file in the office of the Register in Chancery in
which the petition was filed, a duly verified list containing the names and
addresses of all shareholders who have demanded payment for their shares and
with whom agreements as to the value of their shares have not been reached by
us. If a petition is filed by us, the petition must be accompanied by the
verified list. The Register in Chancery, if so ordered by the court, will give
notice of the time and place fixed for the hearing of such petition by
registered or certified mail to us and to the shareholders shown on the list at
the addresses therein stated, and notice will also be given by publishing a
notice at least one week before the day of the hearing in a newspaper of general
circulation published in the City of Wilmington, Delaware, or such publication
as the court deems advisable. The forms of the notices by mail and by
publication must be approved by the court, and we must bear the costs thereof.
The Delaware Court of Chancery may require the shareholders who have demanded an
appraisal for their shares (and who hold stock represented by certificates) to
submit their stock certificates to the Register in Chancery for notation of the
pendency of the appraisal proceedings and the Delaware Court of Chancery may
dismiss the proceedings as to any shareholder that fails to comply with such
direction.
If a petition for an appraisal is filed in a timely fashion, after a
hearing on the petition, the court will determine which shareholders are
entitled to appraisal rights and will appraise the shares owned by these
shareholders. In addition, the court will determine the fair value of such
shares, exclusive of any element of value arising from the accomplishment or
expectation of the merger, together with a fair rate of interest to be paid, if
any, upon the amount determined to be the fair value.
Shareholders considering seeking appraisal of their shares should note
that the fair value of their shares determined under Section 262 could be more,
the same or less than the consideration they would receive pursuant to the
merger agreement if they did not seek appraisal of their shares. The costs of
the appraisal proceeding may be determined by the court and taxed against the
parties as the court deems equitable under the circumstances. Upon application
of a dissenting shareholder, the court may order that all or a portion of the
expenses incurred by any dissenting shareholder in connection with the appraisal
proceeding, including reasonable attorneys' fees and the fees and expenses of
experts, be charged pro rata against the value of all shares entitled to
appraisal. In the absence of a determination or assessment, each party bears
his, her or its own expenses. The exchange of shares for cash pursuant to the
exercise of appraisal rights will be a taxable transaction for United States
federal income tax purposes and possibly state, local and foreign income tax
purposes as well.
Any shareholder who has duly demanded appraisal in compliance with Section
262 will not, after the effective time of the merger, be entitled to vote for
any purpose the shares subject to demand or to receive payment of dividends or
other distributions on such shares, except for dividends or distributions
payable to shareholders of record at a date prior to the effective time of the
merger.
At any time within 60 days after the effective time of the merger, any
shareholder will have the right to withdraw his or her demand for appraisal and
to accept the terms offered in the merger agreement. After this period, a
shareholder may withdraw their demand for appraisal and receive payment for
their shares as provided in the merger agreement, only with our consent. If no
petition for appraisal is filed with the court within 120 days after the
effective time of the merger, shareholders' rights to appraisal (if available)
will cease. Inasmuch as we have no obligation to file such a petition, any
shareholder who desires a petition to be filed is advised to file it on a timely
basis. No petition timely filed in the court demanding appraisal may be
dismissed as to any shareholder without the approval of the court, which
approval may be conditioned upon such terms as the court deems just. Failure by
any Laser Technology shareholder to comply fully with the procedures described
above and set forth in Appendix C to this proxy statement may result in
termination of such shareholder's appraisal rights.
Merger Consideration
Upon completion of the merger, each outstanding share of our common stock,
other than (i) treasury shares, (ii) shares owned by us or any of our direct or
indirect subsidiaries, (iii) shares owned by LTI Acquisition or any of its
affiliates or direct or indirect subsidiaries, or (iv) shares held by
shareholders who
38
perfect their appraisal rights; will be converted into the right to receive
$2.06 in cash, without interest. Shares owned by LTI Acquisition or any of its
affiliates or direct or indirect subsidiaries and shares owned by us or any of
our direct or indirect subsidiaries will be cancelled immediately prior to the
merger.
Upon completion of the merger, no shares of our common stock will remain
outstanding and all shares will automatically be cancelled and will cease to
exist and you, unless you have perfected your appraisal rights, will cease to
have any rights as a shareholder, except the right to receive $2.06 per share in
cash. The price of $2.06 per share was determined through arms'-length
negotiations between us and LTI Acquisition.
Payment for Shares
We, together with LTI Acquisition, have designated Continental Stock
Transfer., to act as exchange agent, responsible for paying shareholders for
their Laser Technology shares exchanged for cash pursuant to the merger.
Immediately after the effective time of the merger, LTI Acquisition will make
available to the exchange agent sufficient funds in the amounts and at the times
necessary for payment of the merger consideration described above, and for no
other purpose.
Promptly after the effective time of the merger, LTI Acquisition will
cause the exchange agent to mail a letter of transmittal and instructions for
use in effecting the surrender of share certificates in exchange for cash merger
consideration, to each holder of record of a certificate representing a share
that was converted to a right to receive a cash payment as described above. Upon
surrender of a certificate for cancellation to the exchange agent, together with
such letter of transmittal, duly executed and completed in accordance with the
accompanying instructions, the holder of such certificate will be entitled to
receive in exchange the cash merger consideration for each share represented by
such certificate and such certificate will then be cancelled. Until such
certificates are cancelled, each certificate will be deemed to evidence only the
right to receive upon such surrender the cash merger consideration and no
interest will be paid or will accrue with respect to any cash payable upon
surrender of any certificate.
In the event any certificate or certificates representing common stock are
lost, stolen or destroyed, then the person claiming such fact must provide an
affidavit to that effect and as may be required by LTI Acquisition in its
discretion, a suitable bond or indemnity. Upon receipt and processing of such
documents, the cash merger consideration owing to such person will be paid to
such person.
If payment of cash merger consideration is to be made to a person other
than the person in whose name the surrendered certificate is registered, then
prior to payment, the certificate must be properly endorsed or be otherwise in
proper form for transfer, and the person requesting such payment must have paid
any transfer and other taxes required by reason of payment of the cash merger
consideration to a person other than the registered holder of the certificate or
the person must have established to the surviving corporation's satisfaction
that such tax has either been paid or is not applicable. LTI Acquisition, the
exchange agent, and the surviving corporation will be entitled to deduct and
withhold such amounts as may be required under the Internal Revenue Code or any
other applicable law. To the extent that such amounts are deducted or withheld,
such amounts will be treated as having been paid to the person to whom such
amounts would otherwise have been paid and will be paid to the appropriate
government entity on that person's behalf.
DETAILED INSTRUCTIONS, INCLUDING A TRANSMITTAL LETTER, WILL BE MAILED TO
SHAREHOLDERS PROMPTLY FOLLOWING THE EFFECTIVE TIME OF THE MERGER AS TO THE
METHOD OF EXCHANGING CERTIFICATES FORMERLY REPRESENTING SHARES OF OUR COMMON
STOCK FOR THE MERGER CONSIDERATION. SHAREHOLDERS SHOULD NOT SEND CERTIFICATES
REPRESENTING THEIR SHARES OF OUR COMMON STOCK TO THE EXCHANGE AGENT OR TO LASER
TECHNOLOGY PRIOR TO RECEIPT OF THE TRANSMITTAL LETTER.
Effect on Stock Options and Warrants
Stock Options. Immediately prior to the effective time of the merger, all
outstanding options to purchase Laser Technology common stock, described below,
will become exercisable in full, except for those options held by LTI
Acquisition or its subsidiaries, affiliates or direct or indirect security
holders, which options will be cancelled without consideration.
39
At the effective time of the merger, each outstanding unexercised option
to purchase our common stock with an exercise price less than $2.06 will
automatically be converted into the right to receive a cash payment and will be
cancelled by virtue of the Merger without any action on the part of the holder
thereof. The cash payment to be received with respect to each unexercised option
will be equal to the product obtained by multiplying (i) the excess, if any, of
the $2.06 merger consideration over the applicable exercise price per share for
such option, by (ii) the number of shares of common stock covered by such
unexercised option had such option been exercised in full immediately prior to
the effective time.
Subject to any applicable withholding taxes, the payment for option shares
will be made, without interest, promptly following the date of completion of the
merger.
A description of outstanding options is set forth below.
Laser Technology's Equity Incentive Plan
In 1994, we adopted an equity incentive plan to provide for the issuance
of options to purchase up to 530,000 shares of our common stock to key employees
and consultants. The plan also allows for the grant of stock options, restricted
stock awards, stock units, stock appreciation rights and other grants to all of
our eligible employees and consultants.
In 1998, our shareholders approved an amendment to the employee plan
increasing the aggregate number of shares available for issuance to 1 million
shares, to be increased annually for seven years beginning in fiscal year 1998.
As of September 30, 2002, options to purchase 790,100 shares of our common stock
were outstanding, at exercise prices ranging from $1.38 to $5.25 per share of
which 660,366 options were exercisable at September 30, 2002. There are
currently a total of 369,600 "in the money" options (i.e., options exersisable
at less than $2.06 per share) outstanding with exercise prices ranging from
$1.38 to $1.90. The options are non-transferable and primarily vest annually in
three equal installments over a three year period. The options expire five or
ten years from the date of grant or, if sooner, three months after the holder
ceases to be an employee (subject to certain exceptions contained in the
employee plan).
Non-Employee Director Stock Option Plan
In 1994, we adopted a stock option program for non-employee directors. The
director plan provided for the grant of options to purchase 30,000 shares of our
common stock at the effective date of the plan to each member of our board of
directors who was not an employee, and a grant of options to purchase 30,000
shares to each non-employee director who is newly elected to the board after the
effective date of the plan. The maximum number of shares subject to options
under the director plan was initially 120,000.
In 2000, our shareholders approved an amendment to the plan to increase
the maximum number of shares available under the plan by 120,000 shares. As of
September 30, 2002, pursuant to the amended plan, options to purchase 30,000
shares have been granted to each outside director at exercise prices ranging
from $1.31 to $1.75 per share. Options granted under the director plan vest
one-third each year for three years and expire five or ten years after the date
of grant, or, if sooner, three months after the holder ceases to be a director
(subject to certain exceptions contained in the plan). At September 30, 2002,
150,000 options were outstanding and 90,000 were exercisable pursuant to the
director plan.
Effective Time of the Merger
The merger will become effective upon the filing of a certificate of
merger with the Delaware Secretary of State or at such later time as is agreed
upon by LTI Acquisition and Laser Technology and specified in the certificate of
merger. The filing of the certificate of merger will occur as soon as
practicable on or after the closing date, which will not be later than the 5
business day after satisfaction or waiver of the conditions to the merger
described in the merger agreement.
40
Delisting and Deregistration of Our Common Stock
If the merger is completed, our common stock will be delisted from the
American Stock Exchange and we will withdraw our registration under the
Securities Exchange Act of 1934 and discontinue our reporting obligations under
the Exchange Act.
Material U.S. Federal Income Tax Consequences of the Merger
The following is a summary of certain United States federal income tax
consequences of the merger to our shareholders whose shares of our common stock
are converted into the right to receive cash in the merger. This summary is
based upon the provisions of the Internal Revenue Code of 1986, as amended,
applicable current and proposed United States Treasury Regulations, judicial
authority and administrative rulings and practice, all of which are subject to
change, possibly on a retroactive basis, at any time. This discussion assumes
that shares of our common stock are held as capital assets and does not address
all aspects of U.S. federal income taxation that may be relevant to a particular
shareholder in light of that shareholder's particular circumstances, or to a
shareholder subject to special treatment under the U.S. federal income tax laws.
In addition, the discussion does not address any aspect of foreign, state or
local taxation or estate and gift taxation that may be applicable to a
particular shareholder. We urge each holder of our common stock to consult his
or her own tax advisor regarding the United States federal income or other tax
consequences of the merger to such holder.
The receipt of cash in exchange for shares of our common stock in the
merger or pursuant to the exercise of appraisal rights will be a taxable
transaction for federal income tax purposes. In general, a shareholder will
recognize gain or loss for federal income tax purposes equal to the difference
between the amount of cash received in exchange for their Laser Technology
shares exchanged and that shareholder's adjusted tax basis in such shares.
Assuming the shares constitute capital assets in the hands of the shareholder,
such gain or loss will be capital gain or loss and will be a long-term capital
gain or loss if the holder will have held the shares for more than one year at
the time of the merger. Gain or loss will be calculated separately for each
block, with a "block" consisting of shares acquired at the same cost in a single
transaction.
In general, cash received by shareholders who exercise appraisal rights
will result in the recognition of gain or loss to such shareholders. Any
shareholder considering exercising statutory appraisal rights should consult
with his own tax advisor.
Certain non-corporate shareholders may be subject to backup withholding at
the standard rate on cash payments received in exchange for Laser Technology
shares in the merger or received upon the exercise of appraisal rights. Backup
withholding generally will apply only if the shareholder fails to furnish a
correct social security number or other taxpayer identification number, or
otherwise fails to comply with applicable backup withholding rules and
certification requirements. Corporations generally are exempt from backup
withholding. Each non-corporate shareholder should complete and sign the
substitute Form W-9 that will be part of the letter of transmittal to be
returned to the paying agent in order to provide the information and
certification necessary to avoid backup withholding, unless an applicable
exemption exists and is otherwise proved in a manner satisfactory to the paying
agent.
The foregoing discussion may not be applicable to certain types of
shareholders, including shareholders who acquired their shares pursuant to the
exercise of employee stock options or otherwise as compensation, and individuals
who are not citizens or residents of the United States and foreign corporations.
The federal income tax discussion set forth above is included for general
information only and is based upon present law. Shareholders are urged to
consult their own tax advisors with respect to the specific tax consequences of
the merger to them, including the application and effect of the alternative
minimum tax and state, local and foreign tax laws.
Accounting Treatment
For U.S. accounting and financial reporting purposes, the acquisition
of our shares of our common stock in the merger will be accounted for under the
purchase method of accounting.
Regulatory Matters
There are no federal or state regulatory requirements to be complied with
in order to complete the merger, other than the filing of the certificate of
merger with the Secretary of State of the State of Delaware.
41
THE MERGER AGREEMENT
The following is a summary of the material terms and conditions of the
merger agreement and is qualified in its entirety by the actual merger agreement
attached as Appendix A. The following description may not contain all the
information about the merger agreement that is important to you. We encourage
you to read the merger agreement carefully and in its entirety.
Terms of the Merger
The merger agreement provides that, after all of the conditions to the
merger agreement have been satisfied or waived, or at such other time as may be
agreed upon by the parties:
o LTI Merger Sub will be merged with and into Laser Technology, after
which the separate existence of LTI Merger Sub will cease and we
will be the surviving corporation as a privately held, wholly-owned
subsidiary of LTI Acquisition;
o all shares of our common stock held by us or any of our direct or
indirect subsidiaries, LTI Acquisition or any of its affiliates or
direct or indirect subsidiaries, will be cancelled immediately prior
to the merger;
o each remaining outstanding share of our common stock will be
converted into the right to receive an amount equal to $2.06 in cash
per share, without interest and less any required withholding taxes;
and
o the merger will become effective at the time the applicable
certificate of merger is filed with the Secretary of Delaware.
Merger Consideration
At the closing of the merger, each issued and outstanding share of our
common stock, other than (i) treasury shares, (ii) shares owned by us or by any
of our subsidiaries, (iii) shares owned by LTI Acquisition or any of its
affiliates or direct or indirect subsidiaries, which will have been cancelled,
and (iv) shares held by shareholders who are entitled to, demand and have
properly exercised appraisal rights; will be converted into the right to receive
a cash payment of $2.06 upon the surrender of the certificate representing that
share. No interest will be paid on the merger consideration of $2.06.
Treatment of Stock Options
Immediately prior to the effective time of the merger, all outstanding
options to purchase Laser Technology common stock will become exercisable in
full, except for those options held by LTI Acquisition or its subsidiaries,
affiliates or direct or indirect security holders, which options will be
cancelled without consideration. At the effective time of the merger, each
outstanding unexercised option to purchase our common stock with an exercise
price less than $2.06 will automatically be converted into the right to receive
a cash payment and will be cancelled by virtue of the Merger without any action
on the part of the holder thereof. The cash payment to be received with respect
to each unexercised option will be equal to the product obtained by multiplying
(i) the excess, if any, of the $2.06 merger consideration over the applicable
exercise price per share for such option, by (ii) the number of shares of common
stock covered by such unexercised option had such option been exercised in full
immediately prior to the effective time.
Appraisal Rights
Any record holder of our common stock who, in writing and prior to the
vote on the merger, properly demands appraisal of such common stock and who does
not vote in favor of the merger, will have the right, subject to compliance with
statutory procedures, to receive payment of the appraised value of such shares.
See "The Merger-Appraisal Rights" on page ____.
42
Representations and Warranties
The merger agreement contains customary representations and warranties by
each party to the agreement and relate to, among other things:
o due corporate organization, valid existence, good standing and
necessary corporate power to carry on its business;
o due corporate authorization, execution and enforceability of the
merger agreement, and authorization to enter into the transactions
contemplated thereby;
o the absence of conflicts between the merger agreement and corporate
documents and contracts;
o pending or threatened litigation, actions and proceedings; and
o absence of any brokers' or finders' fees.
In addition to the above, Laser Technology makes additional
representations and warranties related to:
o charter documents;
o our capitalization;
o filings of and disclosure in required SEC filings (including
financial statements' compliance with generally accepted accounting
principles);
o the absence of certain material adverse changes;
o title to properties;
o rights to intellectual property;
o tax matters and our compliance with relevant tax laws;
o our compliance with employment matters;
o matters related to our material contracts;
o compliance with applicable laws;
o accuracy and completeness of our books and records;
o voting agreements entered into by our affiliates;
o approval of the merger agreement by our board of directors;
o no requirement for third party consents;
o our receipt of a fairness opinion from our financial advisor, AWP;
and
o the accuracy and completeness of representations and warranties.
The merger agreement also contains additional representations and
warranties by LTI Acquisition and its acquisition subsidiary, LTI Merger Sub, as
to, among other things:
o ownership interest in our common stock by LTI Acquisition, LTI
Merger Sub and their affiliates;
43
o due diligence conducted by LTI Acquisition;
o assurance by LTI Acquisition of having sufficient cash or access to
cash to pay the aggregate merger consideration as required by the
merger agreement; and
o assurance by members of LTI Acquisition that are directors or
officers of Laser Technology that they are not aware of undisclosed
material events or developments that could materially affect our
business.
The representations and warranties in the merger agreement are complicated
and not easily summarized. You are urged to read carefully and in their entirety
the sections of the merger agreement entitled "Representations and Warranties of
Target" and "Representations and Warranties of Acquiror and LTI Merger Sub" in
Appendix A included with this proxy statement.
Covenants Under the Merger Agreement
Conduct of Laser Technology Business. We have agreed in the merger
agreement that, unless LTI Acquisition otherwise consents in writing, we will,
prior to the completion of the merger, conduct our operations according to our
usual, regular and ordinary course of business substantially consistent with
past practice. In addition, we have agreed that, subject to certain exceptions,
neither we nor any of our subsidiaries may, without LTI Acquisition's prior
written consent:
o amend our certificate of incorporation or bylaws;
o issue dividends or other distributions to our shareholders or effect
any change in our common stock;
o change the exercisability or vesting of outstanding options,
o enter into or materially modify any material contracts;
o issue, deliver or sell any capital stock, securities convertible
into shares of capital stock, or rights to acquire capital stock;
o transfer any rights to our intellectual property;
o sell, lease, license or otherwise dispose of or encumber any of our
material properties or assets;
o incur or guarantee any indebtedness for borrowed money or issue or
sell any debt securities;
o enter into any operating lease in excess of $10,000;
o pay, discharge or satisfy in an amount in excess of $10,000 in any
one case or $100,000 in the aggregate, any claim, liability or
obligation arising other than in the ordinary course of business;
o make any capital expenditures, capital additions or capital
improvements except in the ordinary course of business;
o materially reduce the amount of any insurance coverage provided by
existing insurance policies;
o terminate or waive any right of substantial value;
o adopt or amend any employee benefit or stock purchase or option
plan, hire any new executive level employees, or pay any special
bonus or other special remuneration to any employee or director;
o grant any severance or termination pay to any director, officer or
employee;
44
o commence a lawsuit or other action, except in the routine collection
of bills, or in cases where a good faith determination, after
consultation with LTI Acquisition, is made that the failure would
materially impair the business;
o acquire, merge or consolidate with any other business or entity, or
make a material acquisition of assets;
o make or change any material tax election or settle or compromise any
material tax liability or refund;
o revalue any assets including writing down inventory or writing off
receivables; or
o authorize any agreement to do any of the above.
The covenants in the merger agreement relating to the conduct of our
business are complicated and not easily summarized. You are urged to read
carefully and in its entirety the section of the merger agreement entitled
"Conduct of Business of Target" in Appendix A included with this proxy
statement.
Other Covenants. The merger agreement contains a number of mutual
covenants by us and LTI Acquisition, including covenants relating to:
o fulfilling the conditions to the closing of the merger agreement,
including the execution and delivery of the necessary documents in
order to consummate the merger and the transactions contemplated by
the merger agreement;
o obtaining governmental approval relating to antitrust matters;
o furnishing each other with information required for all governmental
filings; and
o furnishing each other with copies of any notice or other
communication received from any third party relating to the merger.
In addition, the merger agreement contains covenants requiring each of the
parties to use all commercially reasonable efforts to do all things required to
complete the transactions contemplated by the merger agreement, including:
o obtaining any requisite consent of governmental agencies and other
third parties;
o defending any lawsuits or other legal proceedings challenging the
merger agreement or the transactions contemplated by the merger
agreement; and
o executing and delivering any additional instruments.
The merger agreement also contains covenants requiring us to:
o obtain at a special shareholder meeting, shareholder approval of the
merger agreement; and
o provide LTI Acquisition with access to our information prior to the
effective time of the merger.
No Solicitation by Laser Technology
In the merger agreement, we have agreed that prior to the merger, we and
all of our subsidiaries, officers, directors, employees and agents will not,
directly or indirectly:
o take any action to solicit, initiate or knowingly encourage any
inquiries relating to, or the submission of, any takeover proposal,
which will mean any offer or proposal for, or any indication of
interest in, a merger, reorganization, share exchange,
recapitalization, liquidation, dissolution or business combination
involving Laser Technology or any of our subsidiaries, or the
acquisition of any
45
significant equity interest in, or a significant portion of our
assets, other than the transactions contemplated by the merger
agreement;
o engage in any discussions or negotiations with, or disclose any
nonpublic information regarding Laser Technology or any of our
subsidiaries to, or facilitate any effort to make or implement a
takeover proposal, or afford access to our properties, books or
records to, any person that has advised us that it may be
considering making, or that has made, a takeover proposal;
o approve or recommend, or propose publicly to approve or recommend,
any takeover proposal; or
o approve or recommend, or execute or enter into any letter of intent,
agreement in principle, merger agreement, acquisition agreement,
option agreement or other similar agreement or propose publicly or
agree to do any of the foregoing related to a takeover proposal.
However, the merger agreement does not prohibit us or our board of
directors from furnishing information to or discussing with any third party that
makes an unsolicited bona fide takeover proposal, provided our board determines,
in good faith, that these actions are required to comply with its fiduciary
duties and that the proposal could reasonably be expected to result in a
transaction that would be a "superior proposal" to the transaction with LTI
Acquisition. We may not permit any of our officers, directors, employees or
other representatives to agree to or endorse any such takeover proposal unless
we have first terminated the merger agreement and paid LTI Acquisition its
out-of-pocket expenses incurred in connection with the merger agreement and the
transactions contemplated thereby.
LTI Acquisition has the right to terminate the merger agreement in the
event:
o our board of directors withdraws or modifies, or resolves to
withdraw or modify, its recommendation of the merger agreement or
the merger in a manner adverse to LTI Acquisition, or the board
recommends any superior proposal;
o we receive an unsolicited bona fide proposal that constitutes a
superior proposal and (i) we either notify LTI Acquisition in
writing that we intend to enter into such an agreement, or we breach
our obligation to promptly notify LTI Acquisition of such superior
proposal pursuant, or (ii) our board of directors fails to terminate
discussions with the maker of such proposal and its agents within 10
calendar days after such proposal is first received by us or any of
our officers, directors or agents; or
o a tender offer or exchange offer for 50% or more of our outstanding
shares of capital stock is commenced, and our board of directors
conclude that such tender offer is a superior proposal and fails,
within 10 calendar days after such proposal is first received, to
recommend against acceptance of, or takes no position with respect
to the acceptance of, such tender offer or exchange offer by our
shareholders.
We are obligated under the merger agreement to promptly notify LTI
Acquisition upon the receipt of any takeover proposal or any notice that any
person is considering making a takeover proposal, or any request for nonpublic
information relating to us, or for access to our properties, books or records by
any person that has advised us that it may be considering making, or that has
made, a takeover proposal. We must also keep LTI Acquisition fully informed of
the status and details of any such takeover proposal notice or request.
Conditions to the Merger
The parties' obligations to complete the merger are subject to the
following conditions:
o approval and adoption of the merger and the merger agreement and the
transactions contemplated thereby, by at least 66 2/3% of the
outstanding shares of our common stock, other than shares owned by
LTI Acquisition and its affiliates;
o no order by a court or governmental authority preventing the merger
has been issued; and
46
o all approvals, waivers and consents for consummation of the merger
and related transactions have been timely obtained from the
appropriate government entities.
Our obligations to complete the merger are subject to the following
additional conditions:
o LTI Acquisition's and LTI Merger Sub's representations and
warranties must be true and correct at the time the merger is to
become effective;
o LTI Acquisition and LTI Merger Sub must have performed in all
material respects all of their obligations under the merger
agreement;
o LTI Acquisition and LTI Merger Sub will have delivered to us certain
compliance certificates and opinions required by the merger
agreement; and
o LTI Acquisition must not have suffered an event creating a material
adverse effect.
LTI Acquisition and LTI Merger Sub's obligations to complete the
merger are also subject to the following additional conditions:
o our representations and warranties must be true and correct at
the time the merger is to become effective;
o we must have performed in all material respects all of our
obligations under the merger agreement;
o we will have delivered to LTI Acquisition and LTI Merger Sub
certain compliance certificates and a legal opinion required
by the merger agreement;
o we will have provided LTI Acquisition with all necessary
consents, waivers, approvals or authorizations from any
government entity or third party whose consent or approval are
required;
o we must not have suffered an event creating a material adverse
effect; and
o we will have provided LTI Acquisition with the requisite
voting agreements.
Additional Agreements
In addition to the covenants relating to the conduct of our business
before the completion of the merger, we have agreed with LTI Acquisition and
Merger Sub to each perform additional specified covenants in the merger
agreement. The principal additional covenants are as follows:
Best Efforts
Each of the parties to the merger agreement have agreed to use their
best efforts to effectuate the transactions contemplated thereby and to fulfill
conditions to closing of the merger. Each party, at the reasonable request of
another party, has further agreed to execute and deliver such other instruments
and do and perform such other acts and things as may be necessary or desirable
for effecting completely the consummation of the merger agreement and the
transactions contemplated thereby.
Access to Information and Confidentiality
Subject to a confidentiality agreement we entered into with
principals of LTI Acquisition, we have agreed that we will allow LTI
Acquisition, and its accountants, counsel and other representatives, access
47
during the period prior to the merger to all of our, and our subsidiaries',
properties, books, contracts, commitments and records and other information and
business documents, our independent accountants and our premises and the
premises of our subsidiaries for the purpose of inspecting our books and records
and performing environmental assessments.
Public Disclosure
We and LTI Acquisition have agreed to consult with each other before
issuing any press release or making any public statement or other public or
non-confidential disclosure regarding the terms of the merger agreement and the
transactions contemplated thereby. We have further agreed that neither party
will issue any press release or make any statement or disclosure without the
prior approval of the other, which approval will not be unreasonably withheld,
except as may be required by law or obligations pursuant to any listing
agreement with any national securities exchange or with the NASD.
State Anti-takeover Statutes
If any state takeover law becomes applicable to the transactions
contemplated by the merger agreement, we and LTI Acquisition have agreed to use
our reasonable best efforts to grant such approvals and take such actions as are
necessary so that the transactions contemplated by the merger agreement may be
promptly consummated as promptly on the terms contemplated by thereby.
Proxy Statement and Special Meeting
We agreed to prepare and file this proxy statement with the SEC as
soon as practicable after the execution of the merger agreement and to call,
give notice of and convene a special meeting of our shareholders for the purpose
of seeking their approval of the merger. We have agreed to mail this proxy
statement, together with a copy of the AWP Opinion, to our shareholders. We and
LTI Acquisition will each use our best efforts to cause this proxy statement to
comply with applicable federal and state securities law. We have agreed to
include in the proxy statement, the unanimous recommendation of the special
committee and the board of directors, that the shareholders approve the merger
and merger agreement. We each agree to provide promptly to the other such
information concerning business and financial statements and affairs as may be
required or appropriate for inclusion in the proxy statement.
Indemnification
The merger agreement provides that all rights of indemnification and
exculpation from liabilities for acts or omissions occurring at or prior to the
merger that exist in favor of our directors or officers as provided in our
articles of incorporation or bylaws, and any of our existing indemnification
agreements in effect as of the date of the merger agreement, will be assumed by
Laser Technology as the surviving corporation in the merger, and will continue
in full force and effect in accordance with their terms. LTI Acquisition has
agreed to cause Laser Technology as the surviving corporation, to fulfill and
honor in all respects those obligations. The merger agreement further provides
that after the merger, LTI Acquisition will cause Laser Technology, as the
surviving corporation, to maintain in effect for three years our existing claims
made directors' and officers' liability insurance with respect to matters
occurring prior to the Effective Time of the merger. Following the merger, the
surviving corporation may elect to substitute insurance policies of at least the
same amount of coverage containing terms and conditions not materially less
favorable that those in effect prior to the merger. However, in no event will
the surviving corporation be required to expend more than that amount per year
equal to 150% of our current annual premiums paid by us for such insurance,
which is $194,000 in the aggregate.
48
Amendment; Waiver of Conditions
The merger agreement may be amended by the parties, by action taken
or authorized by their respective boards of directors, at any time prior to the
effective time of the merger. After our shareholders approve the merger
agreement, however, no amendment may be made that requires further shareholder
approval under any applicable law without obtaining such further shareholder
approval. The merger agreement may not be amended except in writing and signed
on behalf of each of the parties.
At any time prior to the effective time of the merger the parties
may:
o extend the time for the performance of any of the obligations
or other acts of the other parties set forth in the merger
agreement;
o waive any inaccuracies in the representations and warranties
contained in the merger agreement or in any document delivered
pursuant to the merger agreement; or
o waive compliance with any of the agreements or conditions
contained in the merger agreement.
Any agreement on the part of a party to any such extension or waiver
must be in writing and signed by the party providing the extension or waiver.
The failure of any party to assert any of its rights under the merger agreement
or otherwise will not constitute a waiver of such rights.
Termination
The merger agreement may be terminated by action of the board of
directors of either us or LTI Acquisition, at any time prior to completion of
the merger:
(1) by mutual consent duly authorized by the boards of directors of LTI
Acquisition and us;
(2) by either LTI Acquisition or us if, without fault of the terminating
party:
o the merger is not consummated by December 31, 2003, or such
later date as may be agreed upon in writing by the parties;
o there has been any applicable federal or state law that makes
consummation of the merger illegal or otherwise prohibited or
if any court of competent jurisdiction or governmental entity
has issued an order, decree, ruling or taken any other action
restraining, enjoining or otherwise prohibiting the merger and
such order, decree, ruling or other action has become final
and nonappealable; or
o the special meeting of shareholders has been held and the
required approval of our shareholders has been obtained;
(3) by LTI Acquisition if:
o our board of directors withdraws or modifies, or resolves to
withdraw or modify, its recommendation of the merger agreement
or the merger in a manner adverse to LTI Acquisition, or our
board of directors recommends any superior proposal;
o we receive an unsolicited bona fide proposal that constitutes
a superior proposal to the merger;
49
o a tender offer or exchange offer for 50% or more of our
outstanding shares of capital stock is commenced and our board
of directors concludes that such tender offer is a superior
proposal;
o we materially breach any of our representations, warranties or
obligations under the merger agreement and such breach has not
been cured within 10 calendar days of receipt by us of written
notice of such breach, provided that LTI Acquisition is not in
material breach of any of its representations, warranties or
obligations under the merger agreement and, provided further,
that no cure period will be required for a breach which by its
nature cannot be cured; or
o for any reason we fail to call and hold the special meeting of
shareholders as soon as practical.
(4) by us if:
o our board of directors authorizes us to enter into a binding
written agreement concerning a transaction that constitutes a
superior proposal and we notify LTI Acquisition in writing
that we intend to enter into such an agreement, and LTI
Acquisition does not make, within 5 business days of receipt
of notification, a non-revocable binding offer that our board
of directors determines, in good faith, is at least as
favorable to our shareholders as the superior proposal; or
o LTI Acquisition materially breaches any of its
representations, warranties or obligations under the merger
agreement and such breach will not have been cured within 10
calendar days following receipt by LTI Acquisition of written
notice of such breach, provided that we are not in material
breach of any of our representations, warranties or
obligations under the merger agreement and, provided further,
that no cure period will be required for a breach which by its
nature cannot be cured.
VOTING AGREEMENTS
The following description summarizes the material provisions of the voting
agreements and is qualified in its entirety by reference to the complete text of
the voting agreements. The form of voting agreement with certain of our
directors, executive officers and principal shareholders, is included with this
proxy statement as Appendix D. We encourage you to read the agreement carefully
and in its entirety.
In connection with the execution of the merger agreement, each person that
is deemed an affiliate of Laser Technology, including each of our officers and
directors, has entered into a voting agreement with us and LTI Acquisition.
Those persons executing voting agreements are Eric A. Miller, Walter R. Keay,
William P. Behrens, Nicholas J. Cooney, Roosevelt Rogers, Elizabeth A. Hearty,
Jeremy G. Dunne, H. Deworth Williams, Edward F. Cowle, David Williams and Pamela
Sevy. Each of these persons has agreed to vote all of their respective shares of
our common stock in favor of the merger and any other transactions contemplated
by the merger agreement. Collectively, these shareholders represent
approximately 29.5% of the outstanding shares of our common stock as of the date
of the merger agreement. However, only those affiliates not associated with LTI
Acquisition will be counted in the vote to approve the merger agreement and
related transaction at the special meeting. Thus, only 58,500 shares, or
approximately 1.1% of the outstanding shares will vote at the meeting.
Each of these shareholders also agreed to the following:
o to vote for adoption of the merger agreement at any meeting of our
shareholders at which such matter is considered and to vote for each
transaction contemplated by the merger agreement;
o to vote against any recapitalization, merger, sale of assets or
other business combination other than the proposed merger; and
50
o to vote against any amendment of our certificate of incorporation or
bylaws or other proposal or transaction which would in any manner
impede or nullify the merger, merger agreement or any transaction
contemplated thereby.
In connection with the voting agreements, the shareholders further agreed
not to:
o sell, transfer, convey or otherwise dispose of their respective
shares of our common stock
o grant any proxy, power of attorney or other authorization with
respect to their shares, except for the voting agreement;
o deposit any shares into a voting trust or enter into a voting
agreement or arrangement with respect to such shares, except an
arrangement that does not materially impair their ability to perform
their obligations under the voting agreement; and
o use reasonable efforts to take all necessary actions to consummate
the transactions contemplated by the voting agreement.
Termination
The voting agreements terminate on the earliest to occur of (i) the
termination of the merger agreement in accordance with its terms, or (ii) the
consummation of the merger.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides information, to the best of our knowledge as
of September 26, 2003, regarding beneficial ownership of our common stock by:
o each person known to us to own beneficially more than 5% of our
common stock;
o each of our executive officers;
o each or our directors; and
o all executive officers and directors as a group.
Number of Shares
Beneficially
Owned Percent
Name of Beneficial Owner 2003 Common Stock(1)
- ------------------------ ---- ---------------
Eric A. Miller(2) ................................ 95,500 1.7%
Jeremy G. Dunne(3)(12) ........................... 450,334 8.1%
H. Deworth Williams(4)(12) ....................... 599,007 10.9%
David Williams(5)(12) ............................ 388,686 7.0%
Walter R. Keay (6) ............................... 30,000 0.5%
Edward F. Cowle (7)(12) .......................... 132,220 2.4%
William P. Behrens (8) ........................... 40,000 0.7%
Nicholas J. Cooney (9) ........................... 45,000 0.8%
Roosevelt Rogers (10) ............................ 26,000 0.5%
Elizabeth A. Hearty (11) ......................... 6,667 0.1%
Loeb Partners Corporation ........................ 419,300 7.64%
Directors & Officers as a group (9 persons) (13) . 1,424,728 26.0%
51
- ----------
(1) Percentage ownership is calculated separately for each person on the basis
of the actual number of outstanding shares as of January 31, 2003 and
assumes the exercise of options held by such person (but not by anyone
else) exercisable within sixty days.
(2) Includes 62,000 shares, which may be acquired by Mr. Miller pursuant to
the exercise of stock options exercisable within sixty days.
(3) Includes 101,584 shares, which may be acquired by Mr. Dunne pursuant to
the exercise of stock options exercisable within sixty days.
(4) Includes 20,000 shares, which may be acquired by Mr. Williams pursuant to
the exercise of stock options exercisable within sixty days.
(5) Includes 68,250 shares, which may be acquired by Mr. Williams pursuant to
the exercise of stock options exercisable within sixty days.
(6) Includes 30,000 shares, which may be acquired by Mr. Keay pursuant to the
exercise of stock options exercisable within sixty days.
(7) Includes 30,000 shares, which may be acquired by Mr. Cowle pursuant to the
exercise of stock options exercisable within sixty days.
(8) Includes 30,000 shares, which may be acquired by Mr. Behrens pursuant to
the exercise of stock options exercisable within sixty days.
(9) Includes 30,000 shares, which may be acquired by Mr. Cooney pursuant to
the exercise of stock options exercisable within sixty days.
(10) Includes 26,000 shares, which may be acquired by Mr. Rogers pursuant to
the exercise of stock options exercisable within sixty days.
(11) Includes 6,667 shares, which may be acquired by Ms. Hearty pursuant to the
exercise of stock options exercisable within sixty days.
(12) These individuals are shareholders of LTI Acquisition. As such, their
votes may not be counted at the special meeting. LTI Acquisition does not
hold any of our shares, apart from a total of 1,560,022 shares held by its
shareholders.
(13) Includes 336,251 shares, which may be acquired by our officers or
directors within sixty days pursuant to the exercise of stock options at
various prices.
INDEPENDENT PUBLIC ACCOUNTANTS
The financial statements of our company incorporated into this proxy
statement by reference to our Annual Report on Form 10-K for the fiscal year
ended September 30, 2002, have been incorporated in reliance of the report of H
J & Associates, our independent public accountants. It is not anticipated that a
representatives of H.J & Associates will attend the special meeting or be
available for questions.
OTHER MATTERS
At the time of preparation of this proxy statement, our board of directors
knows of no other matters which will be acted upon at the special meeting other
than the matters described in this proxy statement. If any other matters are
presented for action at the special meeting or at any adjournment or
postponement thereof, it is intended that the proxies will be voted with respect
thereto in accordance with the best judgment and in the discretion of the proxy
holders.
52
FUTURE SHAREHOLDER PROPOSALS
If the merger is completed, no annual meeting of our shareholders will be
held because, following the merger, we will not be a publicly held company. If
the merger is not completed for any reason, an annual meeting of shareholders
will subsequently be scheduled and the following paragraph will be applicable.
New shareholder proposals intended to be considered for inclusion in the
proxy statement for presentation at the 2003 annual meeting of shareholders must
be received by us in writing at our principal executive offices a reasonable
time before we begin to print and mail our proxy materials for the 2003 annual
meeting of shareholders. All proposals received will be subject to the
applicable rules of the SEC. With regard to shareholders who intend to present a
proposal at the 2003 annual meeting of shareholders without including the
proposal in our proxy statement and who fail to submit the proposal a reasonable
time before we mail our proxy materials, the persons named as proxies in the
proxy card accompanying the proxy statement for the 2003 annual meeting of
shareholders will be allowed to use their discretionary voting authority when
the proposal is raised at the meeting, without any discussion of the matter in
our proxy statement for the 2003 annual meeting of shareholders.
ADJOURNMENTS
Although it is not expected, the special meeting may be adjourned for the
purpose of soliciting additional proxies. Any adjournment of the special meeting
may be made without notice, other than by the announcement made at the special
meeting, by approval of the holders of a majority of the shares of our common
stock present in person or represented by proxy at the special meeting, whether
or not a quorum exists. We are soliciting proxies to grant authority to vote in
favor of adjournment of the special meeting. In particular, authority is
expected to be exercised if the purpose of the adjournment is to provide
additional time to solicit votes in favor of adoption of the merger agreement.
All of the members of our board of directors recommend that you vote in favor of
the proposal to grant authority to vote to adjourn the meeting.
WHERE YOU CAN FIND MORE INFORMATION
As required by law, we file reports, proxy statements and other
information with the SEC. These reports, proxy statements and other information
contain additional information about our company. You can inspect and copy these
materials at the Securities and Exchange Commission public reference rooms at
450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on public reference rooms. Some of this
information may also be accessed on the World Wide Web through the SEC's
Internet address at "http://www.sec.gov."
We and LTI Acquisition have filed a transaction statement on Schedule
13E-3 with the SEC with respect to the merger. As permitted by the SEC, this
proxy statement omits certain information contained in the transaction statement
on Schedule 13E-3. The transaction statement on Schedule 13E-3, including any
amendment or exhibit filed or incorporated by reference as a part of it, is
available for inspection or copying as set forth above.
Statements contained in this proxy statement or in any document
incorporated into this proxy statement by reference regarding the contents of
any contract or other document are not necessarily complete and each such
statement is qualified in its entirety by reference to such contract or other
document filed as an exhibit with the SEC.
The SEC allows us to incorporate by reference into this proxy statement
documents we file with the SEC, which means that we can disclose important
information by referring to those documents. The information incorporated by
reference into this proxy statement is considered to be a part of this proxy
statement, and later information that we file with the SEC will update and
supersede that information. We incorporate by reference the documents listed
below and any documents we file pursuant to Section 13(a), 13(c), 14, or 15(d)
of the Exchange Act after the date of this proxy statement and before the date
of the special meeting:
53
o Our Annual Report on Form 10-K for the fiscal year ended September
30, 2002;
o Our Quarterly Reports on Form 10-Q for the quarters ended December
31, 2002, March 31, 2003 and June 30, 2003; and
o Our Current Report on Form 8-K, September 27, 2002, December 23,
2002, December 24, 2002, July 3, 2003 and August 4, 2003.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
INTO THIS PROXY STATEMENT. THE DATE OF THIS PROXY STATEMENT IS ___________,
2003. WE HAVE NOT AUTHORIZED ANYONE TO GIVE ANY INFORMATION DIFFERENT FROM THE
INFORMATION CONTAINED IN THIS PROXY STATEMENT. YOU SHOULD NOT ASSUME THAT THE
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE INTO THIS PROXY STATEMENT IS
ACCURATE AS OF ANY LATER DATE THAN THE DATE OF THE PROXY STATEMENT, AND THE
MAILING OF THIS PROXY STATEMENT TO SHAREHOLDERS WILL NOT CREATE ANY IMPLICATION
TO THE CONTRARY.
GENERAL
The costs of soliciting proxies will be paid by us. In addition to the use
of the mails, proxies may be personally solicited by directors, officers or
regular employees of us (who will not be compensated separately for their
services), by mail, telephone, telegraph, electronic mail, cable or personal
discussion. We will also request banks, brokers and other custodians, nominees
and fiduciaries to forward proxy materials to the beneficial owners of stock
held of record by such persons and request authority for the execution of
proxies. We will reimburse such entities for reasonable out-of-pocket expenses
incurred in handling proxy materials for the beneficial owners of our common
stock.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted by delivering to our corporate
Secretary a written notice of revocation bearing a later date than the proxy, by
duly executing a subsequent proxy relating to the same shares, or by attending
the special meeting and voting in person. Attendance at the meeting will not in
and of itself constitute revocation of a proxy unless the shareholder votes his
or her shares of common stock in person at the meeting.
Any notice revoking a proxy should be sent to Elizabeth Hearty, Secretary
of Laser Technology, in care of Laser Technology, Inc., 7070 S. Tucson Way,
Englewood, Colorado 80112-3921.
Please complete, date, sign and return the accompanying proxy promptly in
the enclosed envelope or submit your proxy by telephone or the Internet.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WE URGE YOU TO FILL IN,
SIGN AND RETURN THE ACCOMPANYING PROXY, NO MATTER HOW LARGE OR SMALL YOUR
HOLDINGS MAY BE.
By Order of the Board of Directors
LOGO
Elizabeth Hearty
Secretary
Englewood, Colorado
September ____, 2003
54
- --------------------------------------------------------------------------------
LASER TECHNOLOGY, INC.
PROXY
Special Meeting, _________, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Eric A. Miller and Walter R. Keay, as
Proxies, each with full power to appoint his substitute, and hereby authorizes
them to appear and vote as designated below, all shares of common stock of Laser
Technology, Inc. held on record by the undersigned on ______________, 2003, at
the Special Meeting of Shareholders to be held on ______________, 2003, and any
adjournments thereof.
The undersigned hereby directs this Proxy to be voted:
1. Proposal to finalize the Agreement and Plan of Merger whereby LTI Merger Sub,
Inc. will be merged with and into Laser Technology, Inc. with Laser Technology
surviving as a direct wholly-owned subsidiary of LTI Acquisition Corp.
_ FOR _ AGAINST _ ABSTAIN
2. Proposal to grant the board of directors discretionary authority to adjourn
the special meeting if necessary to satisfy the conditions to completing the
merger as set out in the merger agreement including for the purpose of
soliciting proxies to vote in favor of adoption of the merger agreement and the
transactions contemplated thereby.
_ FOR _ AGAINST _ ABSTAIN
3. In their discretion, the named proxies may vote on such other business as may
properly come before the Special Meeting, or any adjournments or postponements
thereof.
- --------------------------------------------------------------------------------
-1-
- --------------------------------------------------------------------------------
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN
ACCORDANCE WITH THE SHAREHOLDER'S SPECIFICATIONS ABOVE. THE PROXY CONFERS
DISCRETIONARY AUTHORITY IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE
TIME OF THE MAILING OF THE NOTICE OF THE SPECIAL MEETING OF SHAREHOLDERS TO THE
UNDERSIGNED.
Date:
Signature of shareholder
Signature if held jointly
NOTE: Please mark, date, sign and
return this Proxy promptly using the
enclosed envelope. When shares are
held by joint tenants, both should
sign. If signing as attorney,
executor, administrator, trustee or
guardian, please give full title. If
a corporation or partnership, please
sign in corporate or partnership name
by an authorized person.
- --------------------------------------------------------------------------------
-2-
APPENDIX A
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is made and entered
into as of July 31, 2003, by and among LTI Acquisition Corp., a Delaware
corporation ("Acquiror"), LTI Merger Sub, Inc., a Delaware corporation ("Merger
Sub") and wholly owned subsidiary of Acquiror, Laser Technology, Inc., a
Delaware corporation ("Target") and certain shareholders of Acquiror (the
"Acquiror Shareholders"), as set forth on the signature page attached hereto.
RECITALS
A. The Board of Directors of Target, based on a recommendation of a
Special Committee composed of non-management independent directors (the "Special
Committee"), and the Boards of Directors of Acquiror and Merger Sub believe it
is in the best interests of their respective companies and the stockholders of
their respective companies that Target and Merger Sub combine into a single
company through the merger of Merger Sub and Target (the "Merger") and, in
furtherance thereof, have approved the Merger. Pursuant to the Merger, among
other things, the outstanding shares of capital stock of Target, excluding
shares of Target Common Stock owned by Acquiror (and certain other shares as
described herein), shall be converted into the right to receive cash at the
rates set forth herein.
B. Target, Acquiror, Merger Sub and the Acquiror Shareholders desire to
make certain representations and warranties and other agreements in connection
with the Merger.
AGREEMENT
The parties hereby agree as follows:
SECTION ONE
1. The Merger.
1.1 The Merger At the Effective Time (as defined in Section 1.2
below) and subject to and upon the terms and conditions of this Agreement, the
Certificate of Merger attached hereto as Exhibit A (the "Certificate of Merger")
and the applicable provisions of the Delaware General Corporation Law ("Delaware
Law"), Merger Sub shall be merged with and into Target, the separate corporate
existence of Merger Sub shall cease and Target shall continue as the surviving
corporation of the Merger. Target as the surviving corporation after the Merger
is hereinafter sometimes referred to as the "Surviving Corporation."
1.2 Closing; Effective Time. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place as soon as
practicable (and in no event later than five (5) business days) after the
satisfaction or waiver of each of the conditions set forth in Section Six below
or at such other time as the parties agree (the "Closing Date"). In connection
with the Closing, the parties shall cause the Merger to be consummated by filing
the Certificate of Merger, together with the required officers' certificates,
with the Secretary of State of the State of Delaware, in accordance with the
relevant provisions of Delaware Law (the time of such
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filing being the "Effective Time"). The Closing shall take place at the offices
of Target, or at such other location as the parties agree.
1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement, the Certificate of Merger and the
applicable provisions of Delaware Law. At the Effective Time, all the property,
rights, privileges, powers and franchises of Target and Merger Sub shall vest in
the Surviving Corporation, and all debts, liabilities and duties of Target and
Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
1.4 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the Certificate of Incorporation of
Target, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by Delaware Law and such Certificate of Incorporation.
(b) At the Effective Time, the Bylaws of Target, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter amended as provided by law, the Certificate of
Incorporation of the Surviving Corporation and such Bylaws.
1.5 Directors and Officers. At the Effective Time, the directors of
Merger Sub immediately prior to the Effective Time shall be the directors of the
Surviving Corporation, and the officers of Merger Sub immediately prior to the
Effective Time, shall be the officers of the Surviving Corporation, in each case
until their respective successors are duly elected or appointed and qualified.
1.6 Effect on Capital Stock. By virtue of the Merger and without any
action on the part of Merger Sub, Target or any of their respective
stockholders, the following shall occur at the Effective Time:
(a) Conversion of Target Common Stock. All of the issued and
outstanding shares of Common Stock, par value $.01 per share, of Target (the
"Target Common Stock") issued and outstanding immediately prior to the Effective
Time (other than shares to be cancelled pursuant to Section 1.6(b) and shares,
if any, held by persons who have not voted such shares for approval of the
Merger and with respect to which such persons shall become entitled to exercise
dissenters' rights in accordance with Section 262 of Delaware Law ("Dissenting
Shares")) shall be converted into the right to receive an amount in cash equal
to $2.06 per share (the "Merger Consideration"). All shares of Target Common
Stock, when so converted, shall no longer be outstanding and shall automatically
be cancelled and retired and shall cease to exist, and each holder of a
certificate representing any such shares of Target Common Stock shall cease to
have any rights with respect thereto, except the right to receive the Merger
Consideration therefore upon the surrender of such certificate in accordance
with Section 1.7, without interest.
(b) Cancellation of Target Common Stock Owned by Acquiror or
Target. At the Effective Time, all shares of Target Common Stock that are owned
by Target as
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treasury stock, each share of Target Common Stock owned by Acquiror or any
direct or indirect wholly owned subsidiary of Acquiror or of Target, and each
share of Target Common Stock held by the Acquiror Shareholders immediately prior
to the Effective Time shall be cancelled and extinguished without any conversion
thereof. Neither the Acquiror nor the Acquiror Shareholders will receive any
consideration upon cancellation of their shares of Target Common Stock whether
they hold such shares directly or indirectly.
(c) Target Options. Effective immediately prior to the
Effective Time and contingent upon consummation of the Merger, all outstanding
options to purchase Target Common Stock (the "Target Options") issued under the
Target's Equity Incentive Plan, as amended, and the Target's Non-Employee
Director Stock Option Plan, as amended (collectively, the "Target Plans"), shall
become exercisable in full, except for such Target Options held by the Acquiror,
or its direct or indirect securityholders, as set forth on Section 2.3 of the
Acquiror Disclosure Schedule (the "Acquiror's Options"). As set forth in the
Target Plans, the Target shall give all holders of Target Options notice of the
transactions contemplated herein at least 30 days prior to the Effective Time.
At the Effective Time, all outstanding Target Options that have not been
exercised (the "Unexercised Options"), except for the Acquiror's Options, shall
automatically be converted into the right to receive a cash payment and shall be
cancelled by virtue of the Merger without any action on the part of the holder
thereof. The cash payment to be received with respect to each Unexercised Option
shall be equal to the product obtained by multiplying (i) the excess, if any, of
the Merger Consideration over the applicable exercise price per share for such
option by (ii) the number of shares of Common Stock covered by such Unexercised
Option had such option been exercised in full (without regard to exercisability)
immediately prior to the Effective Time (such payment, the "Option Termination
Payment"). A schedule of Target Options is also set forth as part of Section 2.3
of the Target Disclosure Schedule. All of the Acquiror's Options shall be
cancelled immediately prior to the Effective Time; and neither the Acquiror nor
its direct or indirect securityholders shall receive any consideration upon
cancellation of such Acquiror's Options.
(d) Capital Stock of Merger Sub. At the Effective Time, each
share of Common Stock of Merger Sub ("Merger Sub Common Stock") issued and
outstanding immediately prior to the Effective Time shall be converted into and
exchanged for one validly issued, fully paid and nonassessable share of Common
Stock of the Surviving Corporation. Each stock certificate of Merger Sub
evidencing ownership of any such shares shall continue to evidence ownership of
such shares of capital stock of the Surviving Corporation.
(e) Adjustments. The Merger Consideration shall be adjusted to
reflect fully the effect of any stock split, reverse split, stock dividend
(including any dividend or distribution of securities convertible into Target
Common Stock), reorganization, recapitalization or other like change with
respect to Target Common Stock occurring after the date of this Agreement and
prior to the Effective Time.
(f) Dissenters' Rights. Any Dissenting Shares shall not be
converted into the right to receive the Merger Consideration but shall instead
be converted into the right to receive such consideration as may be determined
to be due with respect to such Dissenting Shares pursuant to Delaware Law.
Target agrees that, except with the prior written consent of Acquiror, or as
required under Delaware Law, it will not voluntarily make any payment with
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respect to, or settle or offer to settle, any such purchase demand. Each holder
of Dissenting Shares who, pursuant to the provisions of Delaware Law, becomes
entitled to payment of the fair value for shares of Target Common Stock shall
receive payment therefor (but only after such value shall have been agreed upon
or finally determined pursuant to such provisions). If, after the Effective
Time, any Dissenting Shares shall lose their status as Dissenting Shares,
Acquiror shall issue and deliver upon surrender by such holder of certificate or
certificates representing shares of Target Common Stock, the Merger
Consideration to which such holder would otherwise be entitled under this
Section 1.6 and the Certificate of Merger.
1.7 Surrender of Certificates.
(a) Exchange Agent. Automatic Data Processing, Inc. shall act
as exchange agent (the "Exchange Agent") in the Merger.
(b) Acquiror to Provide Cash. Promptly after the Effective
Time, Acquiror shall make available to the Exchange Agent for exchange in
accordance with this Section One, through such reasonable procedures as Acquiror
may adopt, sufficient funds in amounts and at times necessary for the payment of
the Merger Consideration in the amounts and at the times provided herein.
(c) Exchange Procedures. Promptly after the Effective Time,
the Surviving Corporation shall cause to be mailed to each holder of record of a
certificate or certificates (the "Certificates") which immediately prior to the
Effective Time represented outstanding shares of Target Common Stock, whose
shares were converted into the right to receive the Merger Consideration
pursuant to Section 1.6, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon receipt of the Certificates by the Exchange Agent, and shall be
in such form and have such other provisions as Acquiror may reasonably specify)
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Acquiror, together with such letter of transmittal, duly completed
and validly executed in accordance with the instructions thereto, the holder of
such Certificate shall be entitled to receive in exchange therefor the Merger
Consideration, and the Certificate so surrendered shall forthwith be cancelled.
Until so surrendered, each Certificate will be deemed from and after the
Effective Time, for all corporate purposes, to evidence the right to receive the
Merger Consideration.
(d) No Liability. Notwithstanding anything to the contrary in
this Section 1.7, none of the Exchange Agent, the Surviving Corporation or any
party hereto shall be liable to any person for any amount properly paid to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(e) Dissenting Shares. The provisions of this Section 1.7
shall also apply to Dissenting Shares that lose their status as such, except
that the obligations of Acquiror under this Section 1.7 shall commence on the
date of loss of such status and the holder of such shares shall be entitled to
receive in exchange for such shares the Merger Consideration to which such
holder is entitled pursuant to Section 1.6 hereof.
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1.8 No Further Ownership Rights in Target Common Stock. All
cash in the amount of the Merger Consideration shall have been deemed to have
been paid in full satisfaction of all rights pertaining to such shares of Target
Common Stock, and there shall be no further registration of transfers on the
records of the Surviving Corporation of shares of Target Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be cancelled and exchanged as provided in this Section One.
1.9 Taking of Necessary Action; Further Action. If at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of Target and Merger Sub, the officers and directors of
Target and Merger Sub are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action, so long as such action is not inconsistent with this Agreement.
1.10 Withholding. Each of the Exchange Agent, Acquiror, and
the Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to any
holder or former holder of Target Common Stock such amounts as may be required
to be deducted or withheld therefrom under the Internal Revenue Code of 1986, as
amended (the "Code") or any provision of state, local or foreign tax law or
under any other applicable legal requirement. To the extent such amounts are so
deducted or withheld, such deducted or withheld amounts shall be treated for all
purposes under this Agreement as having been paid to the person to whom such
amounts would otherwise have been paid.
1.11 Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
pay in exchange for such lost, stolen or destroyed Certificates, upon the making
of an affidavit of that fact by the holder thereof, such Merger Consideration as
may be required pursuant to Section 1.6; provided, however, that Acquiror may,
in its discretion and as a condition precedent to such payment, require the
owner of such lost, stolen or destroyed Certificates to deliver a bond in such
sum as Acquiror may reasonably direct as indemnity against any claim that may be
made against Acquiror, the Surviving Corporation or the Exchange Agent with
respect to the Certificates alleged to have been lost, stolen or destroyed.
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SECTION TWO
2. Representations and Warranties of Target.
In this Agreement, any reference to a "Material Adverse Effect" with
respect to any entity or group of entities means any event, change or effect
that is or is reasonably likely to be materially adverse to the condition
(financial or otherwise), properties, assets, liabilities, business, operations,
results of operations of such entity and its subsidiaries, taken as a whole, or
to prevent or materially delay consummation of the Merger or otherwise to
prevent such entity and its subsidiaries from performing their obligations under
this Agreement.
In this Agreement, any reference to a party's "knowledge" means such
party's actual knowledge after due inquiry of officers, directors and other
employees of such party reasonably believed to have knowledge of the matter in
questions.
Except as disclosed in a document dated as of the date of this
Agreement and delivered by Target to Acquiror prior to the execution and
delivery of this Agreement and referring to the representations and warranties
in this Agreement (the "Target Disclosure Schedule"), Target represents and
warrants to Acquiror and Merger Sub as follows:
2.1 Organization; Subsidiaries. Each of Target and each subsidiary
of Target set forth on Section 2.1 of the Target Disclosure Schedule (each a
"Subsidiary") is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization. Target holds of
record and owns beneficially all of the outstanding equity interests of each
subsidiary, free of any encumbrances, rights of first refusal, preemptive rights
or restriction of any nature (other than restrictions under the Securities Act
of 1933, as amended and State securities laws). Each of Target and each
Subsidiary has the requisite corporate power and authority and all necessary
government approvals to own, lease and operate its properties and to carry on
its business as now being conducted, except where the failure to have such
power, authority and governmental approvals would not, individually or in the
aggregate, have a Material Adverse Effect on Target. Each of Target and each
Subsidiary is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing that would not, individually or in
the aggregate, have a Material Adverse Effect on Target.
2.2 Certificate of Incorporation and Bylaws. Target has delivered a
true and correct copy of the Certificate of Incorporation and Bylaws or other
charter documents, as applicable, of Target and each Subsidiary, each as amended
to date, to Acquiror. Neither Target nor any Subsidiary is in violation of any
of the provisions of its Certificate of Incorporation or Bylaws or equivalent
organizational documents.
2.3 Capital Structure. The authorized capital stock of Target
consists of 25,000,000 shares of Common Stock and 2,000,000 shares of Preferred
Stock, of which there were issued and outstanding as of the close of business on
March 31, 2003, 5,486,217 shares of Common Stock, and no shares of Preferred
Stock. In addition, there are 224,650 shares of
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treasury stock held by the Target. There are no other outstanding shares of
capital stock or voting securities and no outstanding commitments to issue any
shares of capital stock or voting securities after March 31, 2003, other than
pursuant to the exercise of options outstanding as of such date under the Target
Plans. All outstanding shares of Target Common Stock (a) are duly authorized,
validly issued, fully paid and non-assessable and are free of any liens or
encumbrances other than any liens or encumbrances created by or imposed upon the
holders thereof, and are not subject to preemptive rights or rights of first
refusal created by statute, the Certificate of Incorporation or Bylaws of Target
or any agreement to which Target is a party or by which it is bound, (b) were
issued in compliance with all applicable state and federal securities laws, and
(c) were not issued in breach of any commitment or obligation. Target has no
obligation to redeem or otherwise acquire any of its Target Common Stock. As of
the close of business on June 30, 2003, Target has reserved 1,000,000 shares of
Common Stock for issuance to employees, consultants and directors pursuant to
the Target Plans. Section 2.3 of the Target Disclosure Schedule sets forth the
number of outstanding Target Options and all other rights to acquire shares of
Target Common Stock pursuant to the Target Plans and the applicable exercise
prices. As of the date hereof, there are no outstanding warrants to purchase the
capital stock of Target. True and complete copies of all agreements and
instruments relating to or issued under the Target Plans have been made
available to Acquiror and such agreements and instruments have not been amended,
modified or supplemented since March 31, 2003, and there are no agreements to
amend, modify or supplement such agreements or instruments in any case from the
form made available to Acquiror as of March 31, 2003.
2.4 Authority. Target has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Target (upon the recommendation
of the Special Committee), subject only to the approval of the Merger by
Target's stockholders as contemplated by Section 6.1(a). Target's Board of
Directors has unanimously approved the Merger and this Agreement. This Agreement
has been duly executed and delivered by Target and assuming due authorization,
execution and delivery by Acquiror and Merger Sub, constitutes the valid and
binding obligation of Target enforceable against Target in accordance with its
terms.
2.5 No Conflicts; Required Filings and Consents.
The execution and delivery of this Agreement by Target does not, and
the consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default under (with or without notice or
lapse of time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any benefit under (i) any provision of
the Certificate of Incorporation or Bylaws of Target or any of its subsidiaries,
as amended, or (ii) any material mortgage, indenture, lease, contract or other
agreement or instrument to which Target or any Subsidiary is a party.
2.6 SEC Filings; Financial Statements.
Target has previously made available to Acquiror, in the form filed
with the Securities and Exchange Commission ("SEC"), all of Target's forms,
reports, and
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registration statements (collectively, the "Target SEC Reports") requested by
Acquiror. Target SEC Reports, as well as all forms, reports and documents to be
filed by Target with the SEC after the date of this Agreement and prior to the
Effective Time were or will be prepared in accordance with the requirements of
the Securities Act and the Exchange Act, as the case may be, and the rules and
regulations thereunder.
Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the Target SEC Reports was prepared in
accordance with the United States generally accepted accounting principles
applied on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto).
2.7 Absence of Certain Changes. Except as set forth in Section 2.7
of the Target Disclosure Schedule, since March 31, 2003 there has not been,
occurred or arisen any:
(a) transaction by Target or any Subsidiary except in the
ordinary course of business as conducted on that date and consistent with past
practices;
(b) amendments or changes to the Certificate of Incorporation
or Bylaws of Target;
(c) change in accounting methods or practices (including any
change in depreciation or amortization policies or rates), any change in
policies in making or reversing accruals by Target or any revaluation by Target
of any of its or any of its Subsidiaries' assets;
(d) sale, lease, license of other disposition of any of the
assets or properties of Target or any Subsidiary, except in the ordinary course
of business;
(e) termination or material amendment of any material
contract, agreement or license (including any distribution agreement) to which
Target or any Subsidiary is a party or by which it is bound;
(f) waiver or release of any right or claim of Target or any
Subsidiary;
(g) the commencement or notice or threat of commencement of
any lawsuit or proceeding against or, to the Target's or Target's officers' or
directors' knowledge, investigation of Target or any Subsidiary or their
respective affairs;
(h) issuance or sale by Target or any Subsidiary of any of its
shares of capital stock, or securities exchangeable, convertible or exercisable
therefor, or of any other of its securities;
(i) material change in the terms of employment of any key
employee;
(j) agreement by Target, any Subsidiary or any officer or
employee of either on behalf of such entity to do any of the things described in
the preceding clauses (a) through (h) (other than negotiations with Acquiror and
its representatives regarding the transactions contemplated by this Agreement);
or
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(k) any other event which has had a Material Adverse Effect on
Target.
2.8 Litigation. Except for the current litigation between Bushnell,
Inc. and the Target and any related litigation thereto (the "Bushnell Litigation
Matter"), there is no private or governmental action, suit, proceeding, claim,
arbitration or investigation pending before any agency, court or tribunal,
foreign or domestic, or, to the knowledge of Target or any Subsidiary,
threatened against Target or any Subsidiary or any of their respective
properties or any of their respective officers or directors (in their capacities
as such) that, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect on Target or any Subsidiary. There is no
judgment, decree or order against Target or any Subsidiary or, to the knowledge
of Target and its Subsidiaries, any of their respective directors or officers
(in their capacities as such), that could prevent, enjoin, or materially alter
or delay any of the transactions contemplated by this Agreement, or that could
reasonably be expected to have a Material Adverse Effect on Target.
2.9 Title to Property. Except as set forth on Section 2.9 of the
Target Disclosure Schedule, Target and each Subsidiary has good and marketable
title to all of its respective properties, interests in properties and assets,
real and personal, reflected in the balance sheet of Target for the period ended
March 31, 2003 (the "Target Balance Sheet") or acquired after the date of the
Target Balance Sheet (except properties, interests in properties and assets sold
or otherwise disposed of since the balance sheet of Target for the period ended
March 31, 2003 in the ordinary course of business), or with respect to leased
properties and assets, valid leasehold interests in, free and clear of all
mortgages, liens, pledges, charges or encumbrances of any kind or character,
except (i) the lien of current taxes not yet due and payable, (ii) such
imperfections of title, liens and easements as do not and will not materially
detract from or interfere with the use of the properties subject thereto or
affected thereby, or otherwise materially impair business operations involving
such properties, and (iii) liens securing debt which is reflected on the Target
Balance Sheet.
2.10 Intellectual Property.
(a) Target and each of its Subsidiaries own, or are licensed
or otherwise possess legally enforceable rights to use all patents, patent
rights, trademarks, trademark rights, trade names, trade name rights, service
marks, copyrights, and any applications for any of the foregoing, maskworks, net
lists, schematics, industrial models, inventions, technology, know-how, trade
secrets, inventory, ideas, algorithms, processes, computer software programs or
applications (in both source code and object code form), and tangible or
intangible proprietary information or material ("Intellectual Property") that
are used in the business of Target or any Subsidiary as currently conducted by
Target or any Subsidiary, except to the extent that the failure to have such
rights have not had and could not reasonably be expected to have a Material
Adverse Effect on Target or any Subsidiary.
(b) Except as set forth in Section 2.10(b) of the Target
Disclosure Schedule, all patents, registered trademarks, service marks and
copyrights held by Target or any Subsidiary are valid and existing and there is
no assertion or claim challenging the validity of any Intellectual Property of
Target or any Subsidiary. Except as set forth on Section 2.10(b) of
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the Target Disclosure Schedule, Target has not been sued in any suit, action or
proceeding which involves a claim of infringement of any patents, trademarks,
service marks, copyrights or violation of any trade secret or other proprietary
right of any third party. All registered trademarks, service marks and
copyrights held by Target are valid and existing. To Target's knowledge, no
third party is challenging the ownership by Target or any Subsidiary, or the
validity or effectiveness of, any of the Intellectual Property. Except as set
forth on Section 2.10(b) of the Target Disclosure Schedule, neither Target nor
any Subsidiary has brought any action, suit or proceeding for infringement of
Intellectual Property or breach of any license or agreement involving
Intellectual Property against any third party. There are no pending, or to the
best of Target's knowledge, threatened interference, re-examinations,
oppositions or nullities involving any patents, patent rights or applications
therefor of Target or any Subsidiary, except such as may have been commenced by
Target or any Subsidiary.
(c) Except as set forth on Section 2.10(c) of the Target
Disclosure Schedule, Target has taken all necessary and appropriate steps to
protect and preserve the confidentiality of all Intellectual Property not
otherwise protected by patents, patent applications or copyright ("Confidential
Information"). Each of Target and its respective Subsidiaries has a policy
requiring each employee and consultant to execute proprietary information and
confidentiality agreements substantially in Target's standard forms and all
current and former employees and consultants of Target and each Subsidiary have
executed such an agreement. All use, disclosure or appropriation of Confidential
Information owned by Target or a Subsidiary by or to a third party has been
pursuant to the terms of a written agreement between Target or the applicable
Subsidiary and such third party. All use, disclosure or appropriation of
Confidential Information not owned by Target or a Subsidiary has been pursuant
to the terms of a written agreement between Target or a Subsidiary and the owner
of such Confidential Information, or, to the Company's knowledge, is otherwise
lawful.
2.11 Taxes. Target and each of its Subsidiaries have filed all
Federal, state, local and foreign tax returns (collectively, the "Returns")
required to be filed (other than those for which extensions shall have been
granted) and all taxes, assessments, fees and other governmental charges
(`Taxes") upon the Target and any Subsidiary, or upon any of its properties,
income or franchises, shown on the Returns have been paid. The Returns are
complete and correct in all material respects and have been prepared in
compliance with all applicable laws and regulations in all material respects.
2.12 Employee Matters. Neither Target nor any of its Subsidiaries
has received notice that it is not in compliance with all currently applicable
federal, state, local and foreign laws and regulations respecting employment,
discrimination in employment, terms and conditions of employment, wages, hours
and occupational safety and health and employment practices, and is not engaged
in any unfair labor practice. Neither Target nor any of its Subsidiaries is a
party to any collective bargaining agreement or other labor unions contract nor
does Target or any of its Subsidiaries know of any activities or proceedings of
any labor union or other group to organize any such employees.
2.13 Material Contracts.
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(a) Section 2.13(a) of the Target Disclosure Schedule contains
a list of all contracts and agreements to which Target or any Subsidiary is a
party and that are material to the business, results of operations, or condition
(financial or otherwise), of Target and the Subsidiaries taken as a whole (such
contracts, agreements and arrangements as are required to be set forth in
Section 2.13(a) of the Target Disclosure Schedule being referred to herein
collectively as the "Material Contracts").
(b) Except as would not, individually or in the aggregate,
have a Material Adverse Effect on Target, each Target license, each Material
Contract is a legal, valid and binding agreement, and none of the Target
licenses or Material Contracts is in default by its terms or has been cancelled
by the other party; Target and the Subsidiaries are not in receipt of any claim
of default under any such agreement; and none of Target or any of the
Subsidiaries anticipates any termination or change to, or receipt of a proposal
with respect to, any such agreement as a result of the Merger or otherwise.
Target has furnished Acquiror with true and complete copies of all such
agreements together with all amendments, waivers or other changes thereto.
2.14 Compliance With Laws. Neither Target nor any of its
Subsidiaries has received any notices of violation with respect to, any federal,
state, local or foreign statute, law or regulation with respect to the conduct
of its business, or the ownership or operation of its business, except for such
violations or failures to comply as could not reasonably be expected to have a
Material Adverse Effect on Target.
2.15 Minute Books. To the best knowledge of the Target, the minute
books of Target and its Subsidiaries made available to Acquiror contain a
complete summary of all meetings of directors and stockholders or actions by
written consent since the time of incorporation of Target and the respective
Subsidiaries through June 6, 2003, and reflect all transactions referred to in
such minutes accurately in all material respects.
2.16 Brokers' and Finders' Fees. Target has previously furnished to
Acquiror a complete and correct copy of all agreements between Target and the
Target Financial Advisor (as defined in Section 2.20 below) pursuant to which
such firm would be entitled to any payment relating to the Merger. Except for
the Target Financial Advisor, Target has not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or investment bankers' fees or any similar charges in connection
with this Agreement or any transaction contemplated hereby.
2.17 Stockholder Agreement; Irrevocable Proxies. All of the persons
and/or entities deemed "Affiliates" of Target within the meaning of Rule 145
promulgated under the Securities Act have agreed in writing to vote for approval
of the Merger pursuant to stockholder agreements attached hereto as Exhibit B
("Voting Agreements").
2.18 Board Approval. The Board of Directors of Target has
unanimously (i) approved this Agreement and the Merger, (ii) determined that the
Merger is in the best interests of the stockholders of Target and is on terms
that are fair to such stockholders and (iii) recommended that the stockholders
of Target approve this Agreement and the Merger.
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2.19 Third Party Consents. Except as set forth in Section 2.19 of
the Target Disclosure Schedule, to the knowledge of the Company, no consent or
approval is needed from any third party in order to effect the Merger, this
Agreement or any of the transactions contemplated hereby.
2.20 Opinion of Financial Advisors. Target has received the written
opinion of Andersen, Weinroth & Partners LLC (the "Target Financial Advisor") on
or prior to the date of this Agreement, to the effect that, as of the date of
such opinion, the consideration to be received by the holders of Target Common
Stock pursuant to this Agreement is fair to the stockholders of Target, and
Target will promptly, after the date of this Agreement, deliver a copy of such
opinion to Acquiror.
2.21 Representations Complete. None of the representations or
warranties made by Target herein or in any Schedule hereto, including the Target
Disclosure Schedule, or certificate furnished by Target pursuant to this
Agreement, when all such documents are read together in their entirety, contains
or will contain at the Effective Time any untrue statement of a material fact,
or omits or will omit at the Effective Time to state any material fact necessary
in order to make the statements contained herein or therein, in the light of the
circumstances under which made, not misleading.
SECTION THREE
3. Representations and Warranties of Acquiror and Merger Sub.
Except as disclosed in a document dated as of the date of this
Agreement and delivered by Acquiror to Target prior to the execution and
delivery of this Agreement and referring to the representations and warranties
in this Agreement (the "Acquiror Disclosure Schedule"), Acquiror and Merger Sub
hereby jointly and severally represent and warrant to Target, and each Acquiror
Shareholder jointly and severally represents and warrants, as follows:
3.1 Organization, Standing and Power. Each of Acquiror and Merger
Sub is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization. Each of Acquiror and Merger Sub
has the corporate power to own its properties and to carry on its business as
now being conducted and is duly qualified to do business and is in good standing
in each jurisdiction in which the failure to be so qualified and in good
standing would have a Material Adverse Effect on Acquiror.
3.2 Authority. Acquiror and Merger Sub have all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Acquiror and Merger
Sub (other than, with respect to the Merger, the filing and recordation of
appropriate merger documents as required by Delaware law). This Agreement has
been duly executed and delivered by Acquiror and Merger Sub and constitutes the
valid and binding obligations of Acquiror and Merger Sub.
3.3 Ownership. Section 3.3 of the Acquiror Disclosure Schedule sets
forth the ownership interests of the Acquiror, the Merger Sub and each Acquiror
Shareholder in the
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Target. The Acquiror, the Merger Sub and each Acquiror Shareholder are the
lawful owners of the Target Common Stock as set forth in the Acquiror Disclosure
Schedule with good and marketable title thereto, and hold such Target Common
Stock free and clear of all liens, pledges or other encumbrances.
3.4 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default under (with or without notice or
lapse of time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a benefit under (i) any provision of
the Certificate of Incorporation or Bylaws of Acquiror or Merger Sub, as
amended, or (ii) any material mortgage, indenture, lease, contract or other
agreement or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
Acquiror or Merger Sub or their properties or assets.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity, is required
by or with respect to Acquiror or Merger Sub in connection with the execution
and delivery of this Agreement by Acquiror and Merger Sub or the consummation by
Acquiror and Merger Sub of the transactions contemplated hereby, except for (i)
the filing of appropriate merger documents as required by Delaware Law, (ii) any
filings as may be required under applicable state securities laws and the
securities laws of any foreign country, and (iii) such other consents,
authorizations, filings, approvals and registrations which, if not obtained or
made, would not have a Material Adverse Effect on Acquiror and would not
prevent, materially alter or delay any the transactions contemplated by this
Agreement.
3.5 Litigation. There is no private or governmental action, suit,
proceeding, claim, arbitration or investigation pending before any agency, court
or tribunal, foreign or domestic, or, to the knowledge of Acquiror or any of its
subsidiaries, threatened against Acquiror or any of its subsidiaries or any of
their respective properties or any of their respective officers or directors (in
their capacities as such) that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on Acquiror. There is
no judgment, decree or order against Acquiror or any of its subsidiaries or, to
the knowledge of Acquiror or any of its subsidiaries, any of their respective
directors or officers (in their capacities as such) that could prevent, enjoin,
or materially alter or delay any of the transactions contemplated by this
Agreement, or that could reasonably be expected to have a Material Adverse
Effect on Acquiror.
3.6 Brokers' and Finders' Fees. Acquiror has not incurred, nor will
it incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or investment bankers' fees or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
3.7 Diligence. Acquiror acknowledges that it has been given the
opportunity to conduct due diligence on the Target, and has been given the
opportunity to obtain and review information from the Target, and ask questions
of, and receive answers from, the Target or its representatives in connection
therewith. The Acquiror and the Acquiror Shareholders have such
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knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of the transactions contemplated by this
Agreement. The Acquiror and the Acquiror Shareholders have determined that the
purchase of the Target Common Stock as described herein is a suitable
investment. The Acquiror further acknowledges that it and the Acquiror
Shareholders are able to bear the risk of such investments set forth herein.
3.8 Letter of Credit/Escrow Account. As of the date hereof, the
Acquiror has either (i) secured a letter of credit funding ("Letter of Credit"),
from a financial institution acceptable to the Target, in an amount not less
than $8,067,234.00, which is an amount equal to (a) the Merger Consideration (on
all Target Common Stock to be converted) payable by the Acquiror hereunder and
(b) the Option Termination Payments, (ii) deposited into escrow with an
institution acceptable to Target (the "Escrow Account") an amount equal to (a)
the Merger Consideration (on all Target Common Stock to be converted) payable by
the Acquiror hereunder and (b) the Option Termination Payments, or (iii) set up
such other financial arrangement to hold such amounts as may be acceptable to
either the Target or the Special Committee.
The Acquiror further represents and warrants that it has sufficient
funds, whether through a drawdown on the Letter of Credit, the release of the
funds from the Escrow Account, or in such form as otherwise approved by the
Target or the Special Committee, to pay the amount of the Merger Consideration
due at Closing.
3.9 Material Developments. Each Acquiror Shareholder who is a
director or officer of the Target has reviewed the Target's Form 10KSB filed
with the SEC on December 30, 2002, Form 10QSB filed with the SEC on February 14,
2003 and Form 10QSB filed with the SEC on May 15, 2003 (the "Latest 10QSB Filing
Date"). Each such Acquiror Shareholder represents that since the Latest 10QSB
Filing Date, such Acquiror Shareholder does not have knowledge of, nor has such
Acquiror Shareholder been made aware of, any material developments or changes
with respect to the business (financial or otherwise), assets, liabilities,
operations or prospects of the Target that have not been disclosed to the Board
of Directors of the Target as of the date hereof.
In addition, each such Acquiror Shareholder further represents that
such Acquiror Shareholder does not have knowledge of, nor has such Acquiror
Shareholder been made aware of, any agreement or understanding regarding a
possible business combination, a potential order, any new product(s) currently
under development, any potential joint venture, any agreement either formally
entered into or contemplated to be entered into, or other business opportunity
that could materially affect the prospects of the Target, and are not otherwise
aware of any material developments or material changes with respect to the
prospects of the Target, that have not been disclosed to the Board of Directors
of the Target as of the date hereof.
SECTION FOUR
4. Conduct Prior to the Effective Time.
4.1 Conduct of Business of Target and Acquiror. During the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, each of Target and Acquiror
agrees (except to the extent expressly
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contemplated by this Agreement or as consented to in writing by the other), to
carry on its and its subsidiaries' business in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted, to pay and to
cause its subsidiaries to pay debts and Taxes when due subject (i) to good faith
disputes over such debts or Taxes and (ii) in the case of Taxes of Target or any
of its Subsidiaries, to Acquiror's consent to the filing of material Tax Returns
if applicable, to pay or perform other obligations when due, and to use all
reasonable efforts consistent with past practice and policies to preserve intact
its and its subsidiaries' present business organization, keep available the
services of its and its subsidiaries' present officers and key employees and
preserve its and its subsidiaries' relationships with customers, suppliers,
distributors, licensors, licensees, and others having business dealings with it
or its subsidiaries, to the end that its and its subsidiaries' goodwill and
ongoing businesses shall be unimpaired at the Effective Time. Each of Target and
Acquiror agrees to promptly notify the other of any event or occurrence not in
the ordinary course of its or its subsidiaries' business, and of any event which
could have a Material Adverse Effect. Without limiting the foregoing, except as
expressly contemplated by this Agreement, neither Target nor Acquiror shall do,
cause or permit any of the following, or allow, cause or permit any of its
subsidiaries to do, cause or permit any of the following, without the prior
written consent of the other:
(a) Charter Documents. Cause or permit any amendments to its
Certificate of Incorporation or Bylaws;
(b) Dividends; Changes in Capital Stock. As to Target only,
declare or pay any dividends on or make any other distributions (whether in
cash, stock or property) in respect of any of its capital stock, or split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or repurchase or otherwise acquire, directly or
indirectly, any shares of its capital stock except from former employees,
directors and consultants in accordance with agreements providing for the
repurchase of shares in connection with any termination of service to it or its
subsidiaries;
(c) Stock Option Plans, Etc. Accelerate, amend or change the
period of exercisability or vesting of options or other rights granted under its
stock plans or authorize cash payments in exchange for any options or other
rights granted under any of such plans.
(d) Other. Take, or agree in writing or otherwise to take, any
of the actions described in Sections 4.1(a) through (c) above, or any action
which would make any of its representations or warranties contained in this
Agreement untrue or incorrect or prevent it from performing or cause it not to
perform its covenants hereunder.
4.2 Conduct of Business of Target. Except as otherwise set forth in
this Agreement or in a schedule attached hereto, during the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, except as expressly contemplated by this
Agreement, Target shall not do, cause or permit any of the following, or allow,
cause or permit any of its subsidiaries to do, cause or permit any of the
following, without the prior written consent of Acquiror:
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(a) Material Contracts. Enter into any material contract or
commitment, or violate, amend or otherwise modify or waive any of the terms of
any of its Material Contracts, other than in the ordinary course of business
consistent with past practice;
(b) Issuance of Securities. Issue, deliver or sell or
authorize or propose the issuance, delivery or sale of, or purchase or propose
the purchase of, any shares of its capital stock or securities convertible into,
or subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue any such shares or other
convertible securities, other than the issuance of shares of its Common Stock
pursuant to the exercise of stock options, warrants or other rights therefor
outstanding as of the date of this Agreement;;
(c) Intellectual Property. Transfer to any person or entity
any rights to its Intellectual Property;
(d) Dispositions. Sell, lease, license or otherwise dispose of
or encumber any of its properties or assets which are material, individually or
in the aggregate, to its and its Subsidiaries' business, taken as a whole,
except in the ordinary course of business consistent with past practice;
(e) Indebtedness. Incur any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others;
(f) Leases. Enter into an operating lease in excess of
$10,000;
(g) Payment of Obligations. Pay, discharge or satisfy in an
amount in excess of $10,000 in any one case or $100,000 in the aggregate, any
claim, liability or obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise) arising other than in the ordinary course of business,
other than the payment, discharge or satisfaction of liabilities reflected or
reserved against in the Target Financial Statements;
(h) Capital Expenditures. Make any capital expenditures,
capital additions or capital improvements except in the ordinary course of
business and consistent with past practice;
(i) Insurance. Materially reduce the amount of any material
insurance coverage provided by existing insurance policies;
(j) Termination or Waiver. Terminate or waive any right of
substantial value, other than in the ordinary course of business;
(k) Employee Benefit Plans; New Hires; Pay Increases. Adopt or
amend any employee benefit or stock purchase or option plan, or hire any new
director level or officer level employee (except that it may hire a replacement
for any current director level or officer level employee if it first provides
Acquiror advance notice regarding such hiring decision), pay any special bonus
or special remuneration to any employee or director, or increase the salaries or
wage rates of its employees;
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(l) Severance Arrangement. Grant any severance or termination
pay (i) to any director or officer or (ii) to any other employee except (A)
payments made pursuant to standard written agreements outstanding on the date of
this Agreement or (B) grants which are made in the ordinary course of business
in accordance with its standard past practice;
(m) Lawsuits. Commence a lawsuit other than (i) for the
routine collection of bills, (ii) in such cases where it in good faith
determines that failure to commence suit would result in the material impairment
of a valuable aspect of its business, provided that it consults with Acquiror
prior to the filing of such a suit, or (iii) for a breach of this Agreement;
(n) Acquisitions. Acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof, or otherwise acquire or
agree to acquire any assets which are material, individually or in the
aggregate, to its and its Subsidiaries' business, taken as a whole;
(o) Taxes. Other than in the ordinary course of business, make
or change any material election in respect of Taxes, adopt or change any
accounting method in respect of Taxes, file any material Tax Return or any
amendment to a material Tax Return, enter into any closing agreement, settle any
claim or assessment in respect of Taxes, or consent to any extension or waiver
of the limitation period applicable to any claim or assessment in respect of
Taxes;
(p) Notices. Target shall give all notices and other
information required to be given to the employees of Target, any collective
bargaining unit representing any group of employees of Target, and any
applicable government authority under the WARN Act, the National Labor Relations
Act, the Internal Revenue Code, COBRA, and other applicable law in connection
with the transactions provided for in this Agreement;
(q) Revaluation. Revalue any of its assets, including without
limitation writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business; or
(r) Other. Take or agree in writing or otherwise to take, any
of the actions described in Sections 4.2(a) through (q) above, or any action
which would make any of its representations or warranties contained in this
Agreement untrue or incorrect or prevent it from performing or cause it not to
perform its covenants hereunder.
Notwithstanding the foregoing, Target may take any actions necessary to
effectuate a settlement of the Bushnell Litigation Matter without the consent of
Acquiror so long as Target first (i) notifies the Acquiror prior to entering
into any settlement of its intention to enter into a settlement and (ii)
provides the Acquiror with the opportunity to consult with Target on the
proposed terms of any such settlement.
4.3 No Solicitation. Target and its Subsidiaries and the officers,
directors, employees or other agents of Target and its Subsidiaries will not,
directly or indirectly, (i) take any action to solicit, initiate or encourage
any Takeover Proposal (as defined below), or (ii) subject to the terms of the
immediately following sentence, engage in discussions or negotiations
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with, or disclose any nonpublic information relating to Target or any of it
Subsidiaries to, or facilitate any effort to make or implement a Takeover
Proposal, or afford access to the properties, books or records of Target or any
of its Subsidiaries to, any person that has advised Target that it may be
considering making, or that has made, a Takeover Proposal, or (iii) approve or
recommend, or propose publicly to approve or recommend, any Takeover Proposal,
or (iv) approve or recommend, or execute or enter into, any letter of intent,
agreement in principle, merger agreement, acquisition agreement, option
agreement or other similar agreement or propose publicly or agree to do any of
the foregoing related to a Takeover Proposal.
Notwithstanding the immediately preceding sentence, if at any time
prior to the Special Meeting referenced in Section 5.8, an unsolicited bona fide
Takeover Proposal shall be received by the Board of Directors of Target, then,
to the extent the Board of Directors of Target believes in good faith (after
consultation with its financial advisor) that such Takeover Proposal would, if
consummated, result in a transaction more favorable to Target's stockholders
from a financial point of view than the transaction contemplated by this
Agreement, and that the Superior Proposal is reasonably capable of being
completed (any such more favorable Takeover Proposal being referred to in this
Agreement as a "Superior Proposal"), and the Board of Directors of Target
determines in good faith after consultation with outside legal counsel that it
is necessary for the Board of Directors of Target to comply with its fiduciary
duties to stockholders under applicable law, Target and its officers, directors,
employees, investment bankers, financial advisors, attorneys, accountants and
other representatives retained by it may furnish in connection therewith
information and take such other actions as are consistent with the fiduciary
obligations of Target's Board of Directors, and such actions shall not be
considered a breach of this Section 4.3 or any other provisions of this
Agreement; provided, however, that Target shall not, and shall not permit any of
its officers, directors, employees or other representatives to agree to or
endorse any Takeover Proposal unless Target shall have terminated this Agreement
pursuant to Section 7.1(d)(i) and paid Acquiror all amounts payable to Acquiror
pursuant to Section 7.3(b). Target will promptly notify Acquiror after receipt
of any Takeover Proposal or any notice that any person is considering making a
Takeover Proposal or any request for nonpublic information relating to Target or
any of its Subsidiaries or for access to the properties, books or records of
Target or any of its Subsidiaries by any person that has advised Target that it
may be considering making, or that has made, a Takeover Proposal and will keep
Acquiror fully informed of the status and details of any such Takeover Proposal
notice or request. For purposes of this Agreement, "Takeover Proposal" means any
offer or proposal for, or any indication of interest in, a merger,
reorganization, share exchange, recapitalization, liquidation, dissolution or
business combination involving Target or any of its Subsidiaries or the
acquisition of any significant equity interest in, or a significant portion of
the assets of, Target or any of its Subsidiaries, other than the transactions
contemplated by this Agreement.
4.4 Letter of Credit/Escrow Account. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, Acquiror shall keep the full amount of the
Merger Consideration and Option Termination Payments in either (i) a Letter of
Credit, (ii) an Escrow Account, or (iii) in such other form as may be acceptable
to either the Target or the Special Committee.
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SECTION FIVE
5. Additional Agreements.
5.1 Best Efforts and Further Assurances. Each of the parties to this
Agreement shall use its best efforts to effectuate the transactions contemplated
hereby and to fulfill and cause to be fulfilled the conditions to closing under
this Agreement. Each party hereto, at the reasonable request of another party
hereto, shall execute and deliver such other instruments and do and perform such
other acts and things as may be necessary or desirable for effecting completely
the consummation of this Agreement and the transactions contemplated hereby.
5.2 Consents; Cooperation.
(a) Each of Acquiror and Target shall use its reasonable best
efforts to promptly (i) obtain from any Governmental Entity any consents,
licenses, permits, waivers, approvals, authorizations or orders required to be
obtained or made by Acquiror or Target or any of their subsidiaries in
connection with the authorization, execution and delivery of this Agreement and
the consummation of the transactions contemplated hereunder, and (ii) make all
necessary filings, and thereafter make any other required submissions, with
respect to this Agreement and the Merger required under the Securities Act and
the Exchange Act and any other applicable federal, state or foreign securities
laws.
(b) Each of Acquiror and Target shall use all reasonable
efforts to resolve such objections, if any, as may be asserted by any
Governmental Entity with respect to the transactions contemplated by this
Agreement under the Sherman Act, as amended, the Clayton Act, as amended, the
Federal Trade Commission Act, as amended, and any other Federal, state or
foreign statutes, rules, regulations, orders or decrees that are designed to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade (collectively, "Antitrust Laws"). In
connection therewith, if any administrative or judicial action or proceeding is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Antitrust Law, each of
Acquiror and Target shall cooperate and use all reasonable efforts vigorously to
contest and resist any such action or proceeding and to have vacated, lifted,
reversed, or overturned any decree, judgment, injunction or other order, whether
temporary, preliminary or permanent (each an "Order"), that is in effect and
that prohibits, prevents, or restricts consummation of the Merger or any such
other transactions, unless by mutual agreement Acquiror and Target decide that
litigation is not in their respective best interests. The parties hereto will
consult and cooperate with one another, and consider in good faith the views of
one another, in connection with any analyses, appearances, presentations,
memoranda, briefs, arguments, opinions and proposals made or submitted by or on
behalf of any party hereto in connection with proceedings under or relating to
any Antitrust Laws. Notwithstanding the provisions of the immediately preceding
sentence, it is expressly understood and agreed that Acquiror shall have no
obligation to litigate or contest any administrative or judicial action or
proceeding or any Order beyond December 31, 2003. Each of Acquiror and Target
shall use all reasonable efforts to take such action as may be required to cause
the expiration of the notice periods under the Antitrust Laws with respect to
such transactions as promptly as possible after the execution of this Agreement.
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(c) Notwithstanding anything to the contrary in Section 5.2(a)
or (b), (i) neither Acquiror nor any of it subsidiaries shall be required to
divest any of their respective businesses, product lines or assets, or to take
or agree to take any other action or agree to any limitation that could
reasonably be expected to have a Material Adverse Effect on Acquiror or of
Acquiror combined with the Surviving Corporation after the Effective Time or
(ii) neither Target nor its Subsidiaries shall be required to divest any of
their respective businesses, product lines or assets, or to take or agree to
take any other action or agree to any limitation that could reasonably be
expected to have a Material Adverse Effect on Target.
(d) From the date of this Agreement until the earlier of the
Effective Time or the termination of this Agreement, each party shall promptly
notify the other party in writing of any pending or, to the knowledge of such
party, threatened action, proceeding or investigation by any Governmental Entity
or any other person (i) challenging or seeking material damages in connection
with this Agreement or the transactions contemplated hereunder or (ii) seeking
to restrain or prohibit the consummation of the Merger or the transactions
contemplated hereunder or otherwise limit the right of Acquiror or its
subsidiaries to own or operate all or any portion of the businesses or assets of
Target or its subsidiaries.
(e) Each of Acquiror and Target shall give or cause to be
given any required notices to third parties, and use its reasonable best efforts
to obtain all consents, waivers and approvals from third parties (i) necessary,
proper or advisable to consummate the transactions contemplated hereunder, (ii)
disclosed or required to be disclosed in the Target Disclosure Schedule or the
Acquiror Disclosure Schedule, or (iii) required to prevent a Material Adverse
Effect on Target or Acquiror from occurring prior or after the Effective Time.
In the event that Acquiror or Target shall fail to obtain any third party
consent, waiver or approval described in this Section 5.2(e), it shall use its
reasonable best efforts, and shall take any such actions reasonably requested by
the other party, to minimize any adverse effect upon Acquiror and Target, their
respective subsidiaries and their respective businesses resulting (or which
could reasonably be expected to result after the Effective Time) from the
failure to obtain such consent, waiver or approval.
(f) Each of Acquiror and Target will, and will cause their
respective subsidiaries to, take all reasonable actions necessary to comply
promptly with all legal requirements which may be imposed on them with respect
to the consummation of the transactions contemplated by this Agreement and will
promptly cooperate with and furnish information to any party hereto necessary in
connection with any such requirements imposed upon such other party in
connection with the consummation of the transactions contemplated by this
Agreement and will take all reasonable actions necessary to obtain (and will
cooperate with the other parties hereto in obtaining) any consent, approval,
order or authorization of, or any registration, declaration or filing with, any
Governmental Entity or other person, required to be obtained or made in
connection with the taking of any action contemplated by this Agreement.
5.3 Access to Information.
(a) Target shall afford Acquiror and its accountants, counsel
and other representatives, reasonable access during normal business hours during
the period prior to the Effective Time to (i) all of Target's and its
Subsidiaries' properties, books, contracts,
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commitments and records, and (ii) all other information concerning the business,
properties and personnel of Target and its Subsidiaries as Acquiror may
reasonably request. Target agrees to provide to Acquiror and its accountants,
counsel and other representatives copies of internal financial statements
promptly upon request.
(b) Subject to compliance with applicable law, from the date
hereof until the Effective Time, each of Acquiror and Target shall confer on a
regular and frequent basis with one or more representatives of the other party
to report operational matters of materiality and the general status of ongoing
operations.
(c) No information or knowledge obtained in any investigation
pursuant to this Section 5.3 shall affect or be deemed to modify any
representation or warranty contained herein or the conditions to the obligations
of the parties to consummate the Merger.
5.4 Confidentiality. The parties acknowledge that Acquiror and
Target have previously executed a non-disclosure agreement (the "Confidentiality
Agreement"), which Confidentiality Agreement shall continue in full force and
effect in accordance with its terms.
5.5 Public Disclosure. Unless otherwise permitted by this Agreement,
Acquiror and Target shall consult with each other before issuing any press
release or otherwise making any public statement or making any other public (or
non-confidential) disclosure (whether or not in response to an inquiry)
regarding the terms of this Agreement and the transactions contemplated hereby,
and neither shall issue any such press release or make any such statement or
disclosure without the prior approval of the other (which approval shall not be
unreasonably withheld), except as may be required by law or by obligations
pursuant to any listing agreement with any national securities exchange or with
the NASD.
5.6 State Statutes. If any state takeover law shall become
applicable to the transactions contemplated by this Agreement, Acquiror and its
Board of Directors or Target and its Board of Directors, as the case may be,
shall use their reasonable best efforts to grant such approvals and take such
actions as are necessary so that the transactions contemplated by this Agreement
may be consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effects of such state takeover law on
the transactions contemplated by this Agreement.
5.7 Stockholder Approval.
(a) Proxy Statement. As soon as practicable after the
execution of this Agreement, Target shall prepare, with the cooperation of
Acquiror, and file with the SEC preliminary proxy materials relating to the
meeting of Target's stockholders to be held in connection with the approval of
this Agreement, the Certificate of Merger and the transactions contemplated
hereby and thereby (collectively with any amendments or supplements thereto, the
"Proxy Statement"). The Proxy Statement shall constitute a disclosure document
for the offer and payment of the Merger Consideration to be received by the
holders of the Common Stock of Target in the Merger. As promptly as practicable
after comments, if any, are received from the SEC with respect to such
preliminary proxy materials and after the furnishing by Target and Acquiror of
all information required to be contained therein, Target shall mail or cause to
be
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mailed the Proxy Statement to its stockholders, which shall include a copy of
the fairness opinion related to such offer.
(b) Acquiror and Target shall each use its best efforts to
cause the Proxy Statement to comply with applicable federal and state securities
laws requirements. Each of Acquiror and Target agrees to provide promptly to the
other such information concerning its business and financial statements and
affairs as, in the reasonable judgment of the providing party or its counsel,
may be required or appropriate for inclusion in the Proxy Statement, or in any
amendments or supplements thereto, and to cause its counsel and auditors to
cooperate with the other's counsel and auditors in the preparation of the Proxy
Statement. The information supplied by each of Acquiror and Target for inclusion
in the Proxy Statement shall not, at (i) the time the Proxy Statement is first
mailed to the holders of Common Stock of Target, (ii) the time of the Special
Meeting (as defined below), and (iii) the Effective Time, 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 not
misleading. Target will promptly advise Acquiror, and Acquiror will promptly
advise Target, in writing if at any time prior to the Effective Time either
Target or Acquiror shall obtain knowledge of any facts that might make it
necessary or appropriate to amend or supplement the Proxy Statement in order to
make the statements contained or incorporated by reference therein not
misleading or to comply with applicable law.
(c) The Proxy Statement shall contain the unanimous
recommendation of the Board of Directors of Target, and the recommendation of
the Special Committee, that the Target stockholders approve the Merger and this
Agreement and the conclusion of the Board of Directors that the terms and
conditions of the Merger are fair and reasonable to the stockholders of Target.
Anything to the contrary contained herein notwithstanding, Target shall not
include in the Proxy Statement any information with respect to Acquiror or its
affiliates or associates, the form and content of which information shall not
have been approved by Acquiror prior to such inclusion.
5.8 Special Meeting of Stockholders. As promptly as practicable
after the date hereof, Target shall take all action necessary in accordance with
Delaware Law and its Certificate of Incorporation and Bylaws to convene a
special meeting of its stockholders (the "Special Meeting") for the purposes of
voting upon the adoption of this Agreement, the Certificate of Merger and the
transactions contemplated hereby and thereby. Target shall consult with Acquiror
regarding the date of the Special Meeting and shall not postpone or adjourn
(other than for the absence of a quorum) the Special Meeting without the consent
of Acquiror. Target shall use its best efforts to solicit from the stockholders
of Target proxies in favor of the Merger and shall take all other action
necessary or advisable to secure the vote or consent of stockholders required
under Delaware Law and its Certificate of Incorporation and Bylaws to effect the
Merger, unless otherwise necessary under the applicable fiduciary duties of the
directors of Target, as determined by such directors in good faith after
consultation with and based upon the advice of independent legal counsel.
5.9 Maintenance of Target Indemnification Obligations.
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(a) Subject to and following the Effective Time, the Surviving
Corporation shall, and Acquiror shall cause the Surviving Corporation to,
indemnify and hold harmless the Indemnified Target Parties (as defined below) to
the extent provided in the Bylaws, the Certificate of Incorporation, or other
indemnity agreements of Target, in each case as in effect as of the date of this
Agreement. The Surviving Corporation shall, and Acquiror shall cause the
Surviving Corporation to, keep in effect such provisions, which shall not be
amended except as required by applicable law or to make changes permitted by
Delaware Law that would enlarge the rights to indemnification available to the
Indemnified Target Parties (as defined below) and changes to provide for
exculpation of director and officer liability to the fullest extent permitted by
Delaware Law and pursuant to (i) the directors' and officers' policies between
the Target and the Indemnified Target Parties and (ii) any indemnity agreements
between Target and certain indemnitees. For purposes of this Section 5.9,
"Indemnified Target Parties" shall mean the individuals who were officers,
directors, employees and agents of Target on or prior to the Effective Time.
(b) Subject to and following the Effective Time, Acquiror and
the Surviving Corporation shall be jointly and severally obligated to pay the
reasonable expenses, including reasonable attorney's fees, that may be incurred
by any Indemnified Target Party in enforcing the rights provided in this Section
5.9 and shall make any advances of such expenses to the Indemnified Target Party
that would be available under the Bylaws, Certificate of Incorporation or other
indemnity agreements of Target (in each case as in effect as of the date of this
Agreement) with regard to the advancement of indemnifiable expenses, subject to
the undertaking of such party to repay such advances in the event that it is
ultimately determined that such party is not entitled to indemnification.
(c) The provisions of this Section 5.9 shall be in addition to
any other rights available to the Indemnified Target Parties, shall survive the
Effective Time of the Merger, and are expressly intended for the benefit of the
Indemnified Target Parties.
(d) Subject to and following the Effective Time, the Surviving
Corporation shall, and Acquiror shall cause the Surviving Corporation to, use
its reasonable best efforts to maintain in effect for a period of 3 years
following the Effective Time the occurrence-based directors' and officers'
liability insurance policies maintained by Target (provided that the Surviving
Corporation may substitute therefore policies of at least the same amount of
coverage containing terms and conditions not materially less favorable) with
respect to matters occurring prior to the Effective Time; provided, however,
that in no event shall the Surviving Corporation be required to expend under
this Section 5.9(d) more than an amount per year equal to 150% of current annual
premiums paid by Target for such insurance (which premiums Target believes to
the best of its knowledge to be $194,000 in the aggregate).
SECTION SIX
6. Conditions to the Merger.
6.1 Conditions to Obligations of Each Party to Effect the Merger.
The respective obligations of each party to this Agreement to consummate and
effect this Agreement and the transactions contemplated hereby shall be subject
to the satisfaction on or prior to the
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Effective Time of each of the following conditions, any of which may be waived,
in writing, by agreement of all the parties hereto:
(a) Stockholder Approval. This Agreement and the Merger shall
have been duly approved and adopted by the requisite holders of shares of the
capital stock of Target outstanding as of the record date set for the Special
Meeting as required under Delaware Law.
(b) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the Merger shall be in effect, nor
shall any proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending; nor shall there be any action taken, or any statute,
rule, regulation or order enacted, entered, enforced or deemed applicable to the
Merger, which makes the consummation of the Merger illegal. In the event an
injunction or other order shall have been issued, each party agrees to use its
reasonable diligent efforts to have such injunction or other order lifted.
(c) Governmental Approval. Acquiror, Target and Merger Sub and
their respective subsidiaries shall have timely obtained from each Governmental
Entity all approvals, waivers and consents, if any, necessary for consummation
of or in connection with the Merger and the several transactions contemplated
hereby, including, without limitation, such approvals, waivers and consents as
may be required under the Securities Act and under any state securities laws.
6.2 Additional Conditions to Obligations of Target. The obligations
of Target to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Effective Time of each of the following conditions, any of which may be waived,
in writing, by Target:
(a) Representations, Warranties and Covenants (i) Each of the
representations and warranties of Acquiror, Merger Sub and the Acquiror
Shareholders in this Agreement that is expressly qualified by a reference to
materiality shall be true in all respects as so qualified, and each of the
representations and warranties of Acquiror, Merger Sub and Acquiror Shareholders
in this Agreement that is not so qualified shall be true and correct in all
material respects, on and as of the Effective Time as though such representation
or warranty had been made on and as of such time (except that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date), and (ii) Acquiror, Merger
Sub and the Acquiror Shareholders shall have performed and complied in all
material respects with all covenants, obligations and conditions of this
Agreement required to be performed and complied with by them as of the Effective
Time.
(b) Certificates of Acquiror.
(i) Compliance Certificate of Acquiror. Target shall
have been provided with a certificate executed on behalf of Acquiror by its
President or its Chief
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Financial Officer to the effect that, as of the Effective Time, each of the
conditions set forth in Section 6.2(a) and (d) herein have been satisfied with
respect to Acquiror.
(ii) Certificate of Secretary of Acquiror. Target shall
have been provided with a certificate executed by the Secretary or Assistant
Secretary of Acquiror certifying:
(A) Resolutions duly adopted by the Board of
Directors and the stockholders of Acquiror authorizing the execution of this
Agreement and the execution, performance and delivery of all agreements,
documents and transactions contemplated hereby; and
(B) the incumbency of the officers of Acquiror
executing this Agreement and all agreements and documents contemplated hereby.
(c) Certificates of Merger Sub.
(i) Compliance Certificate of Merger Sub. Target shall
have been provided with a certificate executed on behalf of Merger Sub by its
President or its Chief Financial Officer to the effect that, as of the Effective
Time, each of the conditions set forth in Section 6.2(a) and (d) herein have
been satisfied with respect to Merger Sub.
(ii) Certificate of Secretary of Merger Sub. Target
shall have been provided with a certificate executed by the Secretary or
Assistant Secretary of Merger Sub certifying:
(A) Resolutions duly adopted by the Board of
Directors and the sole stockholder of Merger Sub authorizing the execution of
this Agreement and the execution, performance and delivery of all agreements,
documents and transactions contemplated hereby; and
(B) the incumbency of the officers of Merger Sub
executing this Agreement and all agreements and documents contemplated hereby.
(d) No Material Adverse Changes. There shall not have
occurred any material adverse change in the condition (financial or otherwise),
properties, assets (including intangible assets), liabilities, business,
operations, results of operations or prospects of Acquiror and its subsidiaries,
taken as a whole.
6.3 Additional Conditions to the Obligations of Acquiror and Merger
Sub. The obligations of Acquiror and Merger Sub to consummate and effect this
Agreement and the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, by Acquiror:
(a) Representations, Warranties and Covenants. (i) Each of the
representations and warranties of Target in this Agreement that is expressly
qualified by a reference to materiality shall be true in all respects as so
qualified, and each of the
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representations and warranties of Target in this Agreement that is not so
qualified shall be true and correct in all material respects, on and as of the
Effective Time as though such representation or warranty had been made on and as
of such time (except that those representations and warranties which address
matters only as of a particular date shall remain true and correct as of such
date), and (ii) Target shall have performed and complied in all material
respects with all covenants, obligations and conditions of this Agreement
required to be performed and complied with by it as of the Effective Time.
(b) Certificates of Target.
(i) Compliance Certificate of Target. Acquiror and
Merger Sub shall have been provided with a certificate executed on behalf of
Target by its President or its Chief Financial Officer to the effect that, as of
the Effective Time, each of the conditions set forth in Section 6.3(a) and (d)
herein have been satisfied.
(ii) Certificate of Secretary of Target. Acquiror and
Merger Sub shall have been provided with a certificate executed by the Secretary
of Target certifying:
(A) Resolutions duly adopted by the Board of
Directors and the stockholders of Target authorizing the execution of this
Agreement and the execution, performance and delivery of all agreements,
documents and transactions contemplated hereby;
(B) The Certificate of Incorporation and Bylaws of
Target, as in effect immediately prior to the Effective Time, including all
amendments thereto; and
(C) the incumbency of the officers of Target
executing this Agreement and all agreements and documents contemplated hereby.
(c) Third Party Consents. Acquiror shall have been furnished
with evidence satisfactory to it that Target has obtained those consents,
waivers, approvals or authorizations of those Governmental Entities and third
parties whose consent or approval are required in connection with the Merger as
set forth in Section 5.2 herein.
(d) No Material Adverse Changes. There shall not have occurred
any material adverse change in the condition (financial or otherwise),
properties, assets (including intangible assets), liabilities, business,
operations or results of operations of Target and its subsidiaries, taken as a
whole. Notwithstanding the foregoing, it is understood and agreed that the
non-renewal of that certain license agreement entered into between the Target
and Bushnell, Inc. shall not be deemed to be a material adverse change for the
purposes of this Agreement.
(e) Injunctions or Restraints on Merger and Conduct of
Business. No proceeding brought by any administrative agency or commission of
other governmental authority or instrumentality, domestic or foreign, seeking to
prevent the consummation of the Merger shall be pending. In addition, no
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal or regulatory
restraint provision limiting or restricting Acquiror's conduct or operation of
the business of Target and its subsidiaries, following the Merger shall be in
effect, nor shall any
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proceeding brought by an administrative agency or commission or other
Governmental Entity, domestic or foreign, seeking the foregoing be pending.
(f) Legal Opinion. Acquiror shall have received a legal
opinion from Target's legal counsel, in substantially the form of Exhibit C.
(g) Voting Agreements. Acquiror shall have received from each
of the Affiliates of Target an executed Voting Agreement in substantially the
form attached hereto as Exhibit B.
(h) Certain Information Required by the Code. Each holder of
Target Stock or Target Options who holds 10% or more (by value) of the interests
in Target immediately prior to the Merger, within the meaning of Section 1060(e)
of the Code, and who, in connection with the Merger, enters into a
Non-Competition Agreement or other agreement with Target or the Surviving
Corporation (or is related to any person who enters into any such contract or
agreement, within the meaning of Section 267(b) or Section 707(b)(1) of the
Code) shall furnish Acquiror with any information required pursuant to Section
1060(e) of the Code at such time and in such manner as Acquiror may reasonably
request in order to comply with Section 1060(e) and any regulations promulgated
thereunder.
SECTION SEVEN
7. Termination, Amendment and Waiver.
7.1 Termination. At any time prior to the Effective Time, whether
before or after approval of the matters presented in connection with the Merger
by the stockholders of Target, this Agreement may be terminated and the Merger
may be abandoned:
(a) by mutual consent duly authorized by the Boards of
Directors of each of Acquiror and Target;
(b) by either Acquiror or Target, if, without fault of the
terminating party,
(i) the Effective Time shall not have occurred on or
before December 31, 2003 (or such later date as may be agreed upon in writing by
the parties);
(ii) there shall be any applicable federal or state law
that makes consummation of the Merger illegal or otherwise prohibited or if any
court of competent jurisdiction or Governmental Entity shall have issued an
order, decree, ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or other action
shall have become final and nonappealable; or
(iii) the Special Meeting shall have been held, and the
required approval of the stockholders of Target shall not have been obtained by
reason of the failure to obtain the required vote upon a vote duly held at the
Special Meeting or at any adjournment thereof;
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(c) by Acquiror, if:
(i) the Board of Directors of Target shall have
withdrawn or modified, or shall have resolved to withdraw or modify, its
recommendation of this Agreement or the Merger in a manner adverse to Acquiror,
or the Board of Directors of Target shall have recommended any Superior
Proposal;
(ii) Target receives an unsolicited bona fide proposal
that constitutes a Superior Proposal, and (A) Target either notifies Acquiror in
writing that it intends to enter into such an agreement, or Target breaches its
obligation to promptly notify Acquiror of such Superior Proposal pursuant to
Section 4.3, or (B) the Board of Directors of Target fails to terminate
discussions with the maker of such proposal and its agents within ten calendar
days after such proposal is first received by Target or any of its officers,
directors or agents; or
(iii) a tender offer or exchange offer for 50% or more
of the outstanding shares of capital stock of Target is commenced, and the Board
of Directors of Target, concludes that such tender offer is a Superior Proposal
and fails, within ten calendar days after such proposal is first received by
Target or any of its officers, directors or agents, to recommend against
acceptance of, or takes no position with respect to the acceptance of, such
tender offer or exchange offer by Target's stockholders; or
(iv) Target shall materially breach any of its
representations, warranties or obligations hereunder and such breach shall not
have been cured within ten calendar days of receipt by Target of written notice
of such breach, provided that Acquiror is not in material breach of any of its
representations, warranties or obligations hereunder, and provided further, that
no cure period shall be required for a breach which by its nature cannot be
cured; or
(v) for any reason Target fails to call and hold the
Special Meeting as soon as practicable;
(d) by Target, if:
(i) The Board of Directors of Target authorizes Target
to enter into a binding written agreement concerning a transaction that
constitutes a Superior Proposal and Target notifies Acquiror in writing that it
intends to enter into such an agreement ("Notification"), attaching the most
current version of such agreement to such notice (which version shall be updated
on a current basis), and Acquiror does not make, within five (5) business days
of receipt of Notification, a non-revocable binding offer that the board of
directors of Target determine, in good faith, is at least as favorable to the
stockholders of Target as the Superior Proposal; or
(ii) Acquiror shall materially breach any of its
representations, warranties or obligations hereunder, including but not limited
to its obligations under Section 4.4 herein, and such breach shall not have been
cured within ten calendar days following receipt by Acquiror of written notice
of such breach, provided that Target is not in material breach of any of its
representations, warranties or obligations hereunder, and provided further, that
no cure period shall be required for a breach which by its nature cannot be
cured.
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7.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 7.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of Acquiror, Merger
Sub or Target or their respective officers, directors, stockholders or
affiliates, except to the extent that such termination results from the breach
by a party hereto of any of its representations, warranties or covenants set
forth in this Agreement; provided that, the provisions of Section 5.4
(Confidentiality), Section 7.3 (Expenses and Termination Fees) and this Section
7.2 shall remain in full force and effect and survive any termination of this
Agreement.
7.3 Expenses and Termination Fees.
(a) Subject to subsections (b), (c) and (d) of this Section
7.3, whether or not the Merger is consummated, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated including,
without limitation, filing fees and the fees and expenses of advisors,
accountants, legal counsel and financial printers, shall be paid by the party
incurring such expense.
(b) In the event that this Agreement is terminated
(i) by Acquiror pursuant to Section 7.1(c), or
(ii) by either Acquiror or Target pursuant to Section
7.1(b)(i) or (iii) and, prior to the time of the Special Meeting, Target shall
have received an unsolicited proposal that constitutes a Superior Proposal or a
tender offer or exchange offer for 50% or more of the outstanding capital stock
of Target is commenced, which proposal or offer at the time of the meeting of
Target's stockholders shall not have been (x) rejected by Target or (y)
withdrawn by the third party making such proposal or offer, or
(iii) by Target pursuant to Section 7.1(d)(i), then
Target shall reimburse Acquiror for all out-of-pocket costs and expenses
incurred by Acquiror in connection with this Agreement and the transactions
contemplated hereby (including, without limitation, filing fees and the fees and
expenses of its advisors, accountants, legal counsel and financial printers).
(c) In the event that Acquiror shall terminate this Agreement
pursuant to Section 7.1(b)(i) or (ii), and the provisions of Section 7.3(b)(ii)
do not apply to such termination, then Target shall promptly reimburse Acquiror
for all out-of-pocket costs and expenses incurred by Acquiror in connection with
this Agreement and the transactions contemplated hereby (including, without
limitation, filing fees and the fees and expenses of its advisors, accountants,
legal counsel and financial printers).
(d) In the event that Target shall terminate this Agreement
pursuant to Section 7.1(d)(ii), Acquiror shall promptly reimburse Target for all
out-of-pocket costs and expenses incurred by Target in connection with this
Agreement and the transactions contemplated hereby (including, without
limitation, filing fees and the fees and expenses of its advisors, accountants,
legal counsel and financial printers).
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7.4 Amendment. The boards of directors of the parties may cause this
Agreement to be amended at any time by execution of an instrument in writing
signed on behalf of each of the parties; provided that an amendment made
subsequent to adoption of the Agreement by the stockholders of Target or Merger
Sub shall not (i) alter or change the amount or kind of consideration to be
received on conversion of the Target Common Stock, (ii) alter or change any term
of the Certificate of Incorporation of the Surviving Corporation to be effected
by the Merger, or (iii) alter or change any of the terms and conditions of the
Agreement if such alteration or change would adversely affect the stockholders
of Target or Merger Sub.
7.5 Extension; Waiver. At any time prior to the Effective Time any
party may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties, (ii)
waive any inaccuracies in the representations and warranties made to such party
contained herein or in any document delivered pursuant hereto, and (iii) waive
compliance with any of the agreements or conditions for the benefit of such
party contained herein. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
SECTION EIGHT
8. General Provisions.
8.1 Survival of Representations and Warranties. All covenants to be
performed prior to the Effective Time, and all representations, warranties and
agreements set forth in this Agreement or in any instrument delivered pursuant
to this Agreement shall not survive beyond the Closing. All covenants to be
performed after the Effective Time shall continue indefinitely.
8.2 Notices. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
48 hours after being deposited in the regular mail as certified or registered
mail (airmail if sent internationally) with postage prepaid, if such notice is
addressed to the party to be notified at such party's address or facsimile
number as set forth below, or as subsequently modified by written notice,
(a) if to Acquiror or Merger Sub, to:
Laser Acquisition Corp. 4875 DTC
Boulevard, #5-203 Denver, Colorado
80237 Attention: David Williams
Facsimile No.: (303) 551-0671
Telephone No.: (303) 551-0670
with a copy to:
James C. Lewis, Esq.
615 Crandall Building
10 West 100 South
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Salt Lake City, Utah 84101
Facsimile No.: (801) 355-0289
Telephone No.: (801) 994-3846
(b) if to Target, to: Laser Technology,
Inc. 7070 South Tucson Way Englewood,
Colorado 80112 Attention: Eric A.
Miller Facsimile No.: (303) 649-9710
Telephone No.: (303) 649-1000
with a copy to:
Leonard E. Neilson
8160 Highland Drive, Suite 209
Sandy, Utah 84093
Facsimile No.: (801) 733-0808
Telephone No.: (801) 733-0800
8.3 Interpretation. When a reference is made in this Agreement to
Exhibits or Schedules, such reference shall be to an Exhibit or Schedule to this
Agreement unless otherwise indicated. The words "include," "includes" and
"including" when used herein shall be deemed in each case to be followed by the
words "without limitation." The phrase "made available" in this Agreement shall
mean that the information referred to has been made available if requested by
the party to whom such information is to be made available. The phrases "the
date of this Agreement," "the date hereof," and terms of similar import, unless
the context otherwise requires, shall be deemed to refer to July 31, 2003. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
8.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
8.5 Entire Agreement; Nonassignability; Parties in Interest. This
Agreement and the documents and instruments and other agreements specifically
referred to herein or delivered pursuant hereto, including the Exhibits, the
Schedules, including the Target Disclosure Schedule and the Acquiror Disclosure
Schedule (a) constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, except for the Confidentiality Agreement, which shall continue in full
force and effect, and shall survive any termination of this Agreement or the
Closing, in accordance with its terms; (b) are not intended to confer upon any
other person any rights or remedies hereunder, except as set forth in Sections
1.6(a)-(c), 1.7. 1.8, and 1.11; and (c) shall not be assigned by operation of
law or otherwise except as otherwise specifically provided.
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8.6 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith, in order to maintain the economic position enjoyed
by each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.
8.7 Remedies Cumulative. Except as otherwise provided herein, any
and all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby, or by
law or equity upon such party, and the exercise by a party of any one remedy
will not preclude the exercise of any other remedy.
8.8 Governing Law. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
Delaware, without giving effect to principles of conflicts of law. Each of the
parties to this Agreement consents to the exclusive jurisdiction and venue of
the courts of the state and federal courts of Delaware.
8.9 Rules of Construction. The parties hereto agree that they have
been represented by counsel during the negotiation, preparation and execution of
this Agreement and, therefore, waive the application of any law, regulation,
holding or rule of construction providing that ambiguities in an agreement or
other document will be construed against the party drafting such agreement or
document.
8.10 Amendments and Waivers. Any term of this Agreement may be
amended or waived only with the written consent of the parties or their
respective successors and assigns. Any amendment or waiver effected in
accordance with this Section 8.10 shall be binding upon the parties and their
respective successors and assigns.
[Signature Page Follows]
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Target, Acquiror, Merger Sub and the Acquiror Shareholder have
executed this Agreement as of the date first written above.
TARGET
LASER TECHNOLOGY, INC.
By: /s/ Eric A. Miller
----------------------------------------
Name: Eric A. Miller
--------------------------------------
(Print)
Title: President and CEO
-------------------------------------
Address: 7070 South Tuscon Way
-----------------------------------
Englewood, CO 80112
ACQUIROR
LTI ACQUISITION CORP.
By: /s/ David Williams
----------------------------------------
Name: David Williams
--------------------------------------
(Print)
Title: President
-------------------------------------
Address: 4875 DTC Blvd. #5-203
-----------------------------------
Denver, CO 80237
MERGER SUB:
LTI MERGER SUB, INC.
By: /s/ David Williams
----------------------------------------
Name: David Williams
--------------------------------------
(Print)
Title: President
-------------------------------------
Address: 4875 DTC Blvd. #5-203
-----------------------------------
Denver, CO 80237
ACQUIROR SHAREHOLDERS
/s/ David Williams 320,436
- ----------------------------- ------------------------------------
David Williams Number of shares, Beneficially Owned
/s/ Pamela Sevy 33,509
- ----------------------------- ------------------------------------
Pamela Sevy Number of shares, Beneficially Owned
/s/ Deworth Williams 579,007
- ----------------------------- ------------------------------------
Deworth Williams Number of shares, Beneficially Owned
/s/ Edward F. Cowle 196,625
- ----------------------------- ------------------------------------
Edward F. Cowle Number of shares, Beneficially Owned
/s/ Jeremy G. Dunne 348,625
- ----------------------------- ------------------------------------
Jeremy G. Dunne Number of shares, Beneficially Owned
KAMA-TECH CORPORATION
By /s/ Toshiya Kamakura 85,700
-------------------------- ------------------------------------
Name: Toshiya Kamakura Number of shares, Beneficially Owned
Title: President
KAMA-TECH (HK) LTD.
By /s/ Ichiro Kamakura 90,400
- ----------------------------- ------------------------------------
Name: Ichiro Kamakura Number of shares, Beneficially Owned
Title: President
EXHIBITS
Exhibit A - Certificate of Merger
Exhibit B Voting Agreement
Exhibit C Legal Opinion from Target's Counsel
2
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
This Amendment is made and entered into this day of August, 2003, by and
among LTI Acquisition Corp., a Delaware corporation ("Acquiror"), LTI Merger
Sub, Inc., a Delaware corporation ("Merger Sub") and wholly owned subsidiary of
Acquiror, Laser Technology, Inc., a Delaware corporation ("Target") and certain
shareholders of Acquiror (the "Acquiror Shareholders"), as set forth on the
signature page attached hereto.
RECITALS
A. On July 31, 2003, the parties entered into an Agreement and Plan of
Merger (the "Merger Agreement"), providing for the merger of Merger Sub into
Target (the "Merger"), and, in connection therewith, the conversion of the
outstanding shares of Target held by non-affiliates of Acquiror, into the right
to receive cash at the price set forth in the Merger Agreement.
B. Under Section 3.8 of the Merger Agreement, Acquiror is required to
establish financial arrangements for the purpose of demonstrating to Target that
it has secured the entire Merger Consideration to complete the Merger. To
satisfy the requirements of Section 3.8 of the Merger Agreement, Acquiror,
Target and Kama-Tech (HK) Ltd., entered into an agreement attached hereto as
Exhibit "A."
C. Following the execution of the Merger Agreement, one of the principals
of Acquiror, Edward Cowle, gifted a total of 94,405 shares of Target's common
stock to his brother, Tod Cowle (the "Gifted Shares"). As a result of this
transaction, the total Merger Consideration has increased in an amount equal to
the number of Gifted Shares, multiplied by the purchase price per share of
$2.06, or a total of $194,474.30.
D. Due to the change described in paragraph C above, this Amendment is
being entered into to properly reflect the correct Merger Consideration in the
Merger Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements contained in this Amendment, and other good and
valuable consideration, and intending to be legally bound hereby, the parties
hereby agree as follows:
1. Section 3.8 of the Merger Agreement is hereby amended to add the
following paragraphs:
As of August 13, 2003, the Acquiror deposited into a bank account at
Wells Fargo Bank West N.A., Greenwood Village, Colorado, Account No.
2153813775 ("Account"), an additional $194,474.30, over and above the sum
of $3,437,234 deposited as of the date of the Merger Agreement.
As of August 13, 2003, the Acquiror further represents and warrants
that, pursuant to this Section 3.8, it has sufficient funds, in cash,
pursuant to the Letter of
3
Credit, or in such form as otherwise approved by the Target or the Special
Committee, to pay the amount of the Merger Consideration due at Closing.
2. Except as modified and amended in paragraph 1 above, the Merger
Agreement shall remain unchanged and in full force and effect.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be signed as of the date first above written.
TARGET:
LASER TECHNOLOGY, INC.
By:
-----------------------------------
Name:
-----------------------------------
(Print)
Title:
-------------------------------------
Address:
-----------------------------------
ACQUIROR:
LTI ACQUISITION CORP.
By:
-----------------------------------
Name:
-----------------------------------
(Print)
Title:
-------------------------------------
Address:
-----------------------------------
MERGER SUB:
LTI MERGER SUB, INC.
By:
-----------------------------------
Name:
-----------------------------------
(Print)
Title:
-------------------------------------
Address:
-----------------------------------
4
ACQUIROR SHAREHOLDERS
320,436
- --------------------------- -------------------------------------
David Williams Number of shares, Beneficially Owned
33,509
- --------------------------- -------------------------------------
Pamela Sevy Number of shares, Beneficially Owned
579,007
- --------------------------- -------------------------------------
Deworth Williams Number of shares, Beneficially Owned
102,220
- --------------------------- -------------------------------------
Edward F. Cowle Number of shares, Beneficially Owned
348,750
- --------------------------- -------------------------------------
Jeremy G. Dunne Number of shares, Beneficially Owned
KAMA-TECH CORPORATION
By 85,700
------------------------- -------------------------------------
Name: Number of shares, Beneficially Owned
Title:
KAMA-TECH (HK) LTD.
By 90,400
------------------------- -------------------------------------
Name: Number of shares, Beneficially Owned
Title:
5
APPENDIX B
July 31, 2003
Board of Directors
Attention: Special Committee of Directors
Laser Technology, Inc.
7070 South Tucson Way
Englewood, CO 80112
Members of the Special Committee:
You have requested our opinion as to the fairness from a financial point
of view to the holders of the outstanding shares of Common Stock, par value $.01
per share (the "Shares") of Laser Technology, Inc. (the "Company") of the $2.06
per Share in cash proposed to be paid by LTI Acquisition Corp. (the "Purchaser")
in a cash merger (the "Transaction") pursuant to the proposed Agreement and Plan
of Merger as of today's date (the "Agreement"), among the Purchaser and the
Company.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and
other business and financial information of the Company;
(ii) reviewed certain internal financial statements and other
financial and operating data concerning the Company;
(iii) analyzed certain financial forecasts of the Company prepared
by the management of the Company;
(iv) discussed the past and current operations, financial condition
and prospects of the Company with senior executives of the
Company;
(v) at the request of the Special Committee, spoke with a number
of potential purchasers concerning their possible interest in
the Company;
(vi) compared the financial and operating performance of the
Company with that of certain other publicly traded companies
we deemed relevant;
(vii) reviewed the reported prices and trading activity for the
common stock of the Company and certain other publicly traded
companies we deemed relevant;
(viii) reviewed the financial terms, to the extent publicly
available, of certain other business combination transactions
we deemed relevant;
(ix) participated in discussions and negotiations among
representatives of the Company and the Purchaser and their
financial and legal advisors;
(x) reviewed the Agreement and certain related documents;
(xi) performed such other analyses and considered such factors as
we have deemed appropriate.
6
We have assumed and relied upon, without independent verification, the
accuracy and completeness of the financial and other information, including
financial forecasts, reviewed by us for the purposes of this opinion. With
respect to the financial forecasts, we have assumed, and relied upon, without
independent verification, the views of management of the Company that they have
been reasonably prepared on bases reflecting the best currently available
estimates and good faith judgements of the future financial performance of the
Company. We have not made any independent valuation or appraisal of the assets
or liabilities of the Company, nor have we been furnished with any such
appraisals.
We have acted as financial advisor to the Company in connection with this
transaction and will receive a fee for our services.
Our advisory services and the opinion expressed herein are provided for
the benefit and use of the Special Committee of the Company in connection with
its consideration of the Transaction and such opinion does not constitute a
recommendation as to how any holder of the Shares should vote with respect to
the Merger. Our opinion is necessarily based on economic, market and other
considerations as in effect on, and the information made available to us as of,
the date hereof.
Based upon and subject to the foregoing, including the various assumptions
and limitations set forth herein, we are of the opinion on the date hereof that
the $2.06 in cash to be received by the holders of the Shares in the Merger is
fair from a financial point of view to such holders.
Very truly yours,
Andersen, Weinroth & Partners, LLC
By:
---------------------
Stephen D. Weinroth
7
APPENDIX C
DELAWARE GENERAL CORPORATION LAW
ss.262. Appraisal rights.
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of
this section with respect to such shares, who continuously holds such
shares through the effective date of the merger or consolidation, who has
otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in
writing pursuant to ss. 228 of this title shall be entitled to an
appraisal by the Court of Chancery of the fair value of the stockholder's
shares of stock under the circumstances described in subsections (b) and
(c) of this section. As used in this section, the word "stockholder" means
a holder of record of stock in a stock corporation and also a member of
record of a nonstock corporation; the words "stock" and "share" mean and
include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions
thereof, solely of stock of a corporation, which stock is deposited with
the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation
to be effected pursuant to ss. 251 (other than a merger effected pursuant
to ss. 251(g) of this title), ss. 252, ss. 254, ss. 257, ss. 258, ss. 263
or ss. 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock,
which stock, or depository receipts in respect thereof, at the
record date fixed to determine the stockholders entitled to receive
notice of and to vote at the meeting of stockholders to act upon the
agreement of merger or consolidation, were either (i) listed on a
national securities exchange or designated as a national market
system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or (ii) held of record by
more than 2,000 holders; and further provided that no appraisal
rights shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require for its
approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of ss. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal
rights under this section shall be available for the shares of any
class or series of stock of a constituent corporation if the holders
thereof are required by the terms of an agreement of merger or
consolidation pursuant to ss.ss. 251, 252, 254, 257, 258, 263 and
264 of this title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting
from such merger or consolidation, or depository receipts in
respect thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or
depository receipts in respect thereof) or depository receipts
at the effective date of the merger or consolidation will be
either listed on a national securities exchange or designated
as a national market system security on an interdealer
quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of
this paragraph; or
d. Any combination of the shares of stock, depository receipts
and cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a., b. and
c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under ss. 253 of this title
is not owned by the parent corporation immediately prior to the
merger, appraisal rights shall be available for the shares of the
subsidiary Delaware corporation.
8
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of
any class or series of its stock as a result of an amendment to its
certificate of incorporation, any merger or consolidation in which the
corporation is a constituent corporation or the sale of all or
substantially all of the assets of the corporation. If the certificate of
incorporation contains such a provision, the procedures of this section,
including those set forth in subsections (d) and (e) of this section,
shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days
prior to the meeting, shall notify each of its stockholders who was
such on the record date for such meeting with respect to shares for
which appraisal rights are available pursuant to subsection (b) or
(c) hereof that appraisal rights are available for any or all of the
shares of the constituent corporations, and shall include in such
notice a copy of this section. Each stockholder electing to demand
the appraisal of such stockholder's shares shall deliver to the
corporation, before the taking of the vote on the merger or
consolidation, a written demand for appraisal of such stockholder's
shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such
stockholder's shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder
electing to take such action must do so by a separate written demand
as herein provided. Within 10 days after the effective date of such
merger or consolidation, the surviving or resulting corporation
shall notify each stockholder of each constituent corporation who
has complied with this subsection and has not voted in favor of or
consented to the merger or consolidation of the date that the merger
or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to ss. 228
or ss. 253 of this title, then either a constituent corporation
before the effective date of the merger or consolidation or the
surviving or resulting corporation within 10 days thereafter shall
notify each of the holders of any class or series of stock of such
constituent corporation who are entitled to appraisal rights of the
approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock
of such constituent corporation, and shall include in such notice a
copy of this section. Such notice may, and, if given on or after the
effective date of the merger or consolidation, shall, also notify
such stockholders of the effective date of the merger or
consolidation. Any stockholder entitled to appraisal rights may,
within 20 days after the date of mailing of such notice, demand in
writing from the surviving or resulting corporation the appraisal of
such holder's shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation,
either (i) each such constitutent corporation shall send a second
notice before the effective date of the merger or consolidation
notifying each of the holders of any class or series of stock of
such constitutent corporation that are entitled to appraisal rights
of the effective date of the merger or consolidation or (ii) the
surviving or resulting corporation shall send such a second notice
to all such holders on or within 10 days after such effective date;
provided, however, that if such second notice is sent more than 20
days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal
rights and who has demanded appraisal of such holder's shares in
accordance with this subsection. An affidavit of the secretary or
assistant secretary or of the transfer agent of the corporation that
is required to give either notice that such notice has been given
shall, in the absence of fraud, be prima facie evidence of the facts
stated therein. For purposes of determining the stockholders
entitled to receive either notice, each constitutent corporation may
fix, in advance, a record date that shall be not more than 10 days
prior to the date the notice is given, provided, that if the notice
is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no
record date is fixed and the notice is given prior to the effective
date, the record date shall be the close of business on the day next
preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder
who has complied with subsections (a) and (d) hereof and who is otherwise
9
entitled to appraisal rights, may file a petition in the Court of Chancery
demanding a determination of the value of the stock of all such
stockholders. Notwithstanding the foregoing, at any time within 60 days
after the effective date of the merger or consolidation, any stockholder
shall have the right to withdraw such stockholder's demand for appraisal
and to accept the terms offered upon the merger or consolidation. Within
120 days after the effective date of the merger or consolidation, any
stockholder who has complied with the requirements of subsections (a) and
(d) hereof, upon written request, shall be entitled to receive from the
corporation surviving the merger or resulting from the consolidation a
statement setting forth the aggregate number of shares not voted in favor
of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within
10 days after such stockholder's written request for such a statement is
received by the surviving or resulting corporation or within 10 days after
expiration of the period for delivery of demands for appraisal under
subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation,
which shall within 20 days after such service file in the office of the
Register in Chancery in which the petition was filed a duly verified list
containing the names and addresses of all stockholders who have demanded
payment for their shares and with whom agreements as to the value of their
shares have not been reached by the surviving or resulting corporation. If
the petition shall be filed by the surviving or resulting corporation, the
petition shall be accompanied by such a duly verified list. The Register
in Chancery, if so ordered by the Court, shall give notice of the time and
place fixed for the hearing of such petition by registered or certified
mail to the surviving or resulting corporation and to the stockholders
shown on the list at the addresses therein stated. Such notice shall also
be given by 1 or more publications at least 1 week before the day of the
hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The
forms of the notices by mail and by publication shall be approved by the
Court, and the costs thereof shall be borne by the surviving or resulting
corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become
entitled to appraisal rights. The Court may require the stockholders who
have demanded an appraisal for their shares and who hold stock represented
by certificates to submit their certificates of stock to the Register in
Chancery for notation thereon of the pendency of the appraisal
proceedings; and if any stockholder fails to comply with such direction,
the Court may dismiss the proceedings as to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the
merger or consolidation, together with a fair rate of interest, if any, to
be paid upon the amount determined to be the fair value. In determining
such fair value, the Court shall take into account all relevant factors.
In determining the fair rate of interest, the Court may consider all
relevant factors, including the rate of interest which the surviving or
resulting corporation would have had to pay to borrow money during the
pendency of the proceeding. Upon application by the surviving or resulting
corporation or by any stockholder entitled to participate in the appraisal
proceeding, the Court may, in its discretion, permit discovery or other
pretrial proceedings and may proceed to trial upon the appraisal prior to
the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or
resulting corporation pursuant to subsection (f) of this section and who
has submitted such stockholder's certificates of stock to the Register in
Chancery, if such is required, may participate fully in all proceedings
until it is finally determined that such stockholder is not entitled to
appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation
to the stockholders entitled thereto. Interest may be simple or compound,
as the Court may direct. Payment shall be so made to each such
stockholder, in the case of holders of uncertificated stock forthwith, and
the case of holders of shares represented by certificates upon the
surrender to the corporation of the certificates representing such stock.
The Court's decree may be enforced as other decrees in the Court of
Chancery may be enforced, whether such surviving or resulting corporation
be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including,
10
without limitation, reasonable attorney's fees and the fees and expenses
of experts, to be charged pro rata against the value of all the shares
entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection
(d) of this section shall be entitled to vote such stock for any purpose
or to receive payment of dividends or other distributions on the stock
(except dividends or other distributions payable to stockholders of record
at a date which is prior to the effective date of the merger or
consolidation); provided, however, that if no petition for an appraisal
shall be filed within the time provided in subsection (e) of this section,
or if such stockholder shall deliver to the surviving or resulting
corporation a written withdrawal of such stockholder's demand for an
appraisal and an acceptance of the merger or consolidation, either within
60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an
appraisal shall cease. Notwithstanding the foregoing, no appraisal
proceeding in the Court of Chancery shall be dismissed as to any
stockholder without the approval of the Court, and such approval may be
conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of
authorized and unissued shares of the surviving or resulting corporation.
11
APPENDIX D
VOTING AGREEMENT
THIS VOTING AGREEMENT, dated as of July 31, 2003 (the "Agreement"), is
made by and between Laser Technology, Inc., a Delaware corporation ("LTI"), LTI
Acquisition Corp., a Delaware corporation ("LAC"), and ___________________ (the
"Stockholder"). Capitalized terms not otherwise defined herein shall have the
respective meanings set forth in the Merger Agreement (as defined below).
WHEREAS, simultaneously herewith, LTI and LAC have entered into an
Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), pursuant to which LTI has agreed to engage in a business
combination with LAC on the terms set forth therein (the "Merger");
WHEREAS, the Stockholder is a stockholder of LTI and has voting power with
respect to the number of shares (the "Shares") of common stock of LTI (the "LTI
Common Stock") set forth below the Stockholder's signature hereto; and
WHEREAS, in order to induce LAC to enter into the Merger Agreement and to
provide reasonable assurances that the transactions contemplated by the Merger
Agreement will be consummated, the Stockholder is making certain agreements
regarding the Shares upon the terms and subject to the conditions set forth
below.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained in this Agreement, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. VOTING OF SHARES; GRANT OF IRREVOCABLE PROXY; APPOINTMENT OF PROXY. The
Stockholder agrees to vote all of its Shares of LTI Common Stock, Shares of LTI
Common Stock of any person the voting of which is controlled by the Stockholder
and any Shares of LTI Common Stock hereafter acquired by the Stockholder or by
any person controlled by the Stockholder (collectively, the "Stockholder's
Shares") as follows:
(a) At any meeting of LTI stockholders called to vote upon the
merger, as defined in the Merger Agreement ("Merger"), or the Merger
Agreement, or at any adjournment thereof or in any other circumstances
upon which a vote, consent or other approval with respect to the Merger or
the Merger Agreement is sought (the "Stockholders' Meeting"), the
Stockholder shall vote (or cause to be voted) all of the Stockholder's
Shares in favor of the Merger, the execution and delivery by LTI of the
Merger Agreement and the approval of the terms thereof, and each of the
other transactions contemplated by the Merger Agreement.
(b) At any meeting of LTI stockholders or at any adjournment thereof
or in any other circumstances upon which their vote, consent or other
approval is sought, the
12
Stockholder shall vote (or cause to be voted) all of the Stockholder's
Shares against (A) the approval of any recapitalization, merger, sale of
assets or other business combination (other than the Merger) or (B) any
amendment of LTI's Certificate of Incorporation or Bylaws or other
proposal or transaction involving LTI or any of its subsidiaries which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify the Merger, the Merger Agreement or any of
the other transactions contemplated by the Merger Agreement.
2. CERTAIN EVENTS. The Stockholder agrees that this Agreement and the
obligations hereunder shall attach to the Stockholder's Shares and be binding
upon any transferee of such shares. In the event of any stock split, stock
dividend, merger, reorganization, recapitalization or other change in the
capital structure of LTI affecting the LTI capital stock, or the acquisition of
additional shares of LTI capital stock or other voting securities of LTI by the
Stockholder, the number of the Stockholder's Shares subject to the terms of this
Agreement shall be adjusted appropriately and this Agreement and the obligations
hereunder shall attach to any additional shares of LTI capital stock or other
voting securities of LTI issued to or acquired by the Stockholder.
3. REPRESENTATION AND WARRANTIES OF THE STOCKHOLDER. The Stockholder
hereby represents and warrants to LTI and LAC that:
(a) The Stockholder is the record and/or beneficial owner of the number of
Shares listed below its signature hereto and does not beneficially own any
shares of capital stock of LTI other than the Shares.
(b) This Agreement has been duly authorized, executed and delivered by,
and constitutes a valid and binding agreement of, the Stockholder, enforceable
against the Stockholder in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws of general application respecting creditors' rights and by
general equitable principles.
(c) Neither the execution and delivery of this Agreement nor the
consummation by the Stockholder of the transactions contemplated hereby will
result in a violation of, or a default under, or conflict with, any contract,
trust, commitment, agreement, understanding, arrangement or restriction of any
kind to which the Stockholder is a party or bound or to which the Stockholder's
Shares are subject, other than a violation, default or conflict which does not
materially impair the ability of the Stockholder to perform its obligations
under this Agreement. If the Stockholder is married and the Stockholder's Shares
constitute community property, this Agreement has been duly authorized, executed
and delivered by, and constitutes a valid and binding agreement of, the
Stockholder's spouse, enforceable against such person in accordance with its
terms. Consummation by the Stockholder of the transactions contemplated hereby
will not violate, or require any consent, approval, or notice under, any
provision of any judgment, order, decree, statute, law, rule or regulation
applicable to the Stockholder or the Stockholder's Shares.
13
(d) The Stockholder's Shares and the certificates representing the
Stockholder's Shares are now, and at all times all such shares then held will
be, held by the Stockholder, or by a nominee or custodian for the benefit of
such Stockholder, free and clear of all liens, security interest, proxies,
voting trusts or voting agreements or any other encumbrances whatsoever, except
for (i) any such encumbrances or proxies arising hereunder and (ii) any
arrangements that do not materially impair the ability of the Stockholder to
perform its obligations hereunder.
(e) The Stockholder understands and acknowledges that LTI and LAC are
entering into the Merger Agreement in reliance upon the Stockholder's execution
and delivery of this Agreement. The Stockholder acknowledges that the
irrevocable proxy set forth in Section 1 is granted in consideration for the
execution and delivery of the Merger Agreement by LTI.
4. COVENANTS.
(a) The Stockholder agrees with, and covenants to, LTI and LAC that it
shall not (i) sell, transfer, convey or otherwise dispose of the Shares, (ii)
grant any proxy, power of attorney or other authorization in or with respect to
such shares, except for this Agreement or (iii) deposit such shares into a
voting trust or enter into a voting agreement or arrangement with respect to
such shares, except for any arrangements which do not materially impair the
ability of the Stockholder to perform its obligations under this Agreement.
(b) The Stockholder shall use commercially reasonable efforts to take, or
cause to be taken, all necessary actions, and to do, or cause to be done all
things necessary, proper or advisable under this Agreement to consummate the
transactions contemplated by this Agreement, including, without limitation,
executing and delivering, or causing to be executed and delivered (including by
any record holder of any of the Stockholder's Shares), such additional or
further consents, documents and other instruments, as LAC may reasonably
request, for the purpose of effectively carrying out the transactions
contemplated by this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF LTI AND LAC. LTI and LAC represent
and warrant that this Agreement has been duly authorized, executed and delivered
by, and constitutes a valid and binding agreement of, LTI and LAC, enforceable
against LTI and LAC in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws of general application respecting creditors' rights and by
general equitable principles, and that LAC is simultaneously entering into
similar voting agreements with the following individuals:
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6. MISCELLANEOUS.
(a) BENEFIT AND ASSIGNMENT. This Agreement shall be binding upon each
party hereto and such party's successors and assigns. This Agreement shall not
be assignable by
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the Stockholder, but may be assigned by LTI in whole or in part to any direct or
indirect wholly-owned subsidiary of LTI, provided that LTI shall remain liable
for any obligations so assigned.
(b) HEADINGS. The section headings herein are for convenience only and
shall not affect the construction hereof.
(c) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado. Any suit, action or
proceeding seeking to enforce any provision of, or based on any matter arising
out of or in connection with, this Agreement or the transactions contemplated
hereby or thereby may be brought in any federal or state court located in the
State of Colorado, and each of the parties hereby consents to the jurisdiction
of such courts (and of the appropriate appellate courts therefrom) in any such
suit, action or proceeding and irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding in any such court or that
any such suit, action or proceeding which is brought in any such court has been
brought in an inconvenient forum. Process in any such suit, action or proceeding
may be served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting foregoing, each party agrees
that service of process on such party as provided in Section 6(h) shall be
deemed effective service of process on such party.
(d) SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
(e) ENFORCEMENT OF AGREEMENT. The parties agree that LTI and LAC would be
irreparably damaged if for any reason the Stockholder failed, in breach of its
obligations hereunder, to perform any of its obligations under this Agreement,
and that LTI and LAC would not have an adequate remedy at law for money damages
in such event. Accordingly, LTI and LAC, or either of them, shall be entitled to
specific performance and injunctive and other equitable relief to enforce the
performance of this Agreement by the Stockholder; and, if LTI and/or LAC should
institute an action or proceeding seeking specific enforcement of the provisions
hereof, the Stockholder hereby waives the claim or defense that LTI and/or LAC
has an adequate remedy at law and hereby agrees not to assert in any such action
or proceeding the claim or defense that such a remedy at law exists. The
Stockholder further agrees to waive any requirements for the securing or posting
of any bond in connection with obtaining any such equitable relief. This
provision is without prejudice to any other rights that LTI and/or LAC may have
against the Stockholder for any failure to perform its respective obligations
under this Agreement.
(f) AMENDMENTS; ENTIRE AGREEMENT. This Agreement may not be modified,
amended, altered or supplemented, except upon the execution and delivery of a
written agreement executed by the parties hereto. This Agreement contains the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior and
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contemporaneous agreements and understandings, oral or written, with respect to
such transactions.
(g) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same Agreement.
(h) NOTICES. All notices, requests and other communications to either
party hereunder shall be in writing (including facsimile or similar writing) and
shall be given,
(i) if to LTI:
Laser Technology, Inc.
7070 South Tuscon Way, Garden Level B
Englewood, CO 80112
Attention: Eric A. Miller
Telephone: (303) 649-1000
Facsimile: (303) 649-9710
with a copy (which shall not constitute notice) to:
Leonard Neilson, Esq.
8160 South Highland Drive, Suite 209
Sandy, UT 84093
Telephone: (801) 733-0800
Facsimile: (801) 733-0808
(ii) if to LAC:
Laser Acquisition Corp.
4875 DTC Boulevard #5-203
Denver, CO 80237
Attention: David Williams
Telephone: (303) 551-0670
Facsimile: (303) 551-0671
with a copy (which shall not constitute notice) to:
James C. Lewis, Esq.
10 West 100 South #615
Salt Lake City, UT 84101
Telephone: (801) 994-3846
Facsimile: (801) 355-0289
(iii) if to Stockholder, to its address shown below its signature on
the last page hereof;
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or to such other address or facsimile number as either party may hereafter
specify for the purpose by notice to the other party hereto. Each such notice,
request or other communication shall be effective (i) if given by facsimile,
when such facsimile is transmitted to the facsimile number specified in this
Section 6(h) and the appropriate facsimile confirmation is received or (ii) if
given by any other means, when delivered at the address specified in this
Section 6(h).
(i) EXPENSES. Each party hereto shall pay its own expenses incurred in
connection with this Agreement, except as otherwise specifically provided
herein.
(j) SURVIVAL. All representations, warranties and covenants contained
herein shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
(k) TERMINATION. This Agreement shall terminate upon the earliest to occur
of (a) the termination of the Merger Agreement in accordance with its terms or
(b) consummation of the Merger.
(l) ACTION IN STOCKHOLDER CAPACITY ONLY. No Stockholder who is a director
or officer of LTI makes any agreement in this Agreement in his or her capacity
as such director or officer. The Stockholder signs solely in its capacity as a
record holder and beneficial owner of Shares. The provisions of this Agreement
shall not apply to actions taken or omitted to be taken by any such person in
his or her capacity as a director or officer of LTI.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be signed as of the date first above written.
LASER TECHNOLOGY, INC.
By:
----------------------------
Name:
Title:
LTI ACQUISITION CORP.
By:
----------------------------
Name:
Title:
STOCKHOLDER:
By:
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Name:
Title:
Number of Shares Beneficially Owned: _____________