<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 25, 2000
REGISTRATION NO. 333-43098
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
LTI HOLDINGS, INC.
(Exact Name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 2671 58-2044990
(State or other jurisdiction (Primary Standard (IRS Employer
of Industrial Identification Number)
incorporation or organization) Classification Code Number)
</TABLE>
5115 NEW PEACHTREE ROAD, SUITE 200
ATLANTA, GEORGIA 30341
(770) 454-7403
(Address, including zip code, and telephone number, including area code of
registrant's principal executive offices)
------------------------------
MICHAEL E. NOONAN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
LTI HOLDINGS, INC.
5115 NEW PEACHTREE ROAD, SUITE 200
ATLANTA, GEORGIA 30341
(770) 454-7403
(Name, address, including zip code and telephone number, including area code of
agent for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
THOMAS L. HANLEY, ESQ. EDWIN D. MASON, ESQ.
CHARLES A. BERARDESCO, ESQ. LINDA Y. KELSO, ESQ.
STEVEN E. FRIEDMAN, ESQ. CHARLES R. HAYWOOD, ESQ.
PIPER MARBURY RUDNICK & WOLFE LLP FOLEY & LARDNER
1200 19TH STREET, NW ONE IBM PLAZA
WASHINGTON, DC 20036 330 NORTH WABASH AVENUE
(202) 861-3900 CHICAGO, IL 60611
(312) 755-1900
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As promptly
as practicable after this Registration Statement becomes effective and upon
consummation of the Merger described herein.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value......... 11,989,551(1) N/A $1,230,778(2) $325(3)
</TABLE>
(1) Based upon the sum of the number of shares of LTI common stock expected to
be issued in the merger in exchange for issued and outstanding shares of
Speedcom Wireless International Corporation common stock issued and
outstanding, the number of shares of LTI common stock issuable pursuant to
outstanding stock options of Speedcom which, as a result of the merger, will
be converted into options to purchase LTI common stock, and the number of
shares of LTI common stock issuable pursuant to outstanding warrants of
Speedcom which, as a result of the merger, will be converted into warrants
to purchase LTI common stock.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f)(2) of the Securities Act, based upon the book value
of Speedcom common stock as of June 30, 2000.
(3) Previously paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
PROXY STATEMENT/PROSPECTUS
LTI HOLDINGS, INC.
We are sending you this document to describe a proposed merger transaction
in which LTI will acquire Speedcom Wireless International Corporation. If we
complete the merger, Speedcom stockholders will receive shares of LTI common
stock in exchange for their shares of Speedcom common stock according to
formulas specified in the merger agreement and described in the attached
materials. Cash will be paid to Speedcom stockholders in lieu of fractional
shares that would otherwise be issuable. Following completion of the merger,
current Speedcom stockholders will own shares, in the aggregate, representing
approximately 92% of the equity ownership interest in the post-merger combined
company (subject to certain adjustments based upon the cash position of LTI at
the closing of the merger). LTI's common stock is traded on the OTC-Bulletin
Board under the symbol "LAMT." On August 24, 2000 the closing price of LTI's
common stock was $3.437. There is no public market for the Speedcom common
stock.
We cannot complete the merger unless the stockholders of LTI and Speedcom
approve the merger. The board of directors of LTI also is submitting proposals
for approval of a 1 for 4.26 reverse stock split and certain changes to its
certificate of incorporation. If approved by the LTI stockholders, the 1 for
4.26 reverse stock split will be implemented just prior to completion of the
merger and the changes to the LTI certificate of incorporation will be
implemented at the time the merger is completed.
This document is a proxy statement of LTI to solicit the vote of
stockholders of LTI to adopt and approve the merger agreement and to approve the
other proposals, all of which are described in greater detail in this document.
Neither LTI nor Speedcom is asking Speedcom stockholders for a proxy and they
are requested not to send a proxy.
This document is also a prospectus of LTI for the issuance of the shares of
LTI common stock to Speedcom stockholders in connection with the merger,
including shares issuable upon the exercise of outstanding Speedcom options and
warrants that will be assumed by LTI upon completion of the merger.
We encourage you to read this entire document carefully.
SEE THE SECTION ENTITLED "RISK FACTORS" BEGINNING ON PAGE 18 FOR A
DISCUSSION OF RISKS ASSOCIATED WITH THE MERGER AND AN INVESTMENT IN THE COMMON
STOCK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE LTI COMMON STOCK TO BE ISSUED IN
CONNECTION WITH THE MERGER OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROXY STATEMENT/PROSPECTUS IS NOT AN OFFER TO SELL SECURITIES AND IT IS
NOT SOLICITING AN OFFER TO BUY SECURITIES IN ANY JURISDICTION WHERE OFFERS OR
SALES ARE NOT PERMITTED.
The date of this proxy statement/prospectus is August 28, 2000, and it is being
first mailed or delivered to LTI stockholders on or about August 29, 2000.
<PAGE>
LTI HOLDINGS, INC.
5115 NEW PEACHTREE ROAD, SUITE 200
ATLANTA, GEORGIA 30341
------------------------
SPECIAL MEETING OF STOCKHOLDERS
YOUR VOTE IS VERY IMPORTANT
------------------------
Dear LTI Stockholders:
On behalf of the board of directors of LTI Holdings, Inc., I cordially
invite you to attend a Special Meeting of the stockholders of LTI, to be held on
September 26, 2000, at 9:00 a.m., local time, at LTI's offices at 5115 New
Peachtree Road, Suite 200, Atlanta, Georgia 30341. As previously announced, LTI
has agreed to merge with Speedcom Wireless International Corporation. The terms
of the merger are described more fully in the attached document. Your board of
directors is soliciting your approval of a proposal to approve and adopt the
merger agreement dated August 4, 2000 by and between Speedcom and LTI. We are
also soliciting your approval of certain additional proposals that are related
to the proposed merger with Speedcom, including a 1 for 4.26 reverse stock split
and certain changes to our certificate of incorporation (including a change in
the company's name to Speedcom Wireless Corporation). These additional proposals
will be implemented only if the merger is approved and, if approved, the reverse
stock split will be implemented just prior to completion of the merger and the
other changes to the certificate of incorporation will be implemented at the
time the merger is completed.
We believe that the merger is a positive development for LTI. After careful
consideration, your Board of Directors has unanimously determined that the
merger is advisable, fair to and in the best interests of LTI and its
stockholders and unanimously recommends that LTI stockholders vote "FOR" the
merger and "FOR" each of the other proposals. Please take the time to vote by
completing and mailing the enclosed proxy card. If you do not vote, it will have
the same effect as if you voted against the merger.
The attached document describes the terms and conditions of the merger
agreement and the other proposals, and includes the complete text of the merger
agreement as Appendix A. We urge you to read the enclosed materials carefully
for a complete description of the merger and the other proposals.
In arriving at our recommendation regarding the merger, your board of
directors has given careful consideration to a number of factors which are
described in the attached document, including an opinion of Marshall & Stevens
Incorporated, the company's financial advisor, that the transaction is fair to
the stockholders of LTI from a financial point of view.
Whether or not you plan to attend the meeting, please take the time to vote
by completing and mailing the enclosed proxy card to us. YOUR VOTE IS VERY
IMPORTANT.
Very truly yours
/s/ MICHAEL E. NOONAN
Michael E. Noonan
Chairman of the Board, President and Chief Executive Officer
2
<PAGE>
LTI HOLDINGS, INC.
5115 NEW PEACHTREE ROAD, SUITE 200
ATLANTA, GEORGIA 30341
(770) 454-7403
------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 26, 2000
------------------------
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of LTI
Holdings, Inc. will be held on September 26, 2000, at 9:00 a.m., local time, at
LTI's offices at 5115 New Peachtree Road, Suite 2000, Atlanta Georgia 30341 for
the following purposes:
1. To approve and adopt an Agreement and Plan of Merger dated as of August
4, 2000 by and between Speedcom Wireless International Corporation and
LTI Holdings, Inc.;
2. To approve an amendment to the certificate of incorporation to provide
for a 1 for 4.26 reverse stock split of the outstanding common stock, to
become effective just prior to completion of the merger, and to authorize
the filing of an amendment to the Certificate of Incorporation in
connection herewith;
3. To approve certain additional changes to the certificate of
incorporation, to become effective on the completion of the merger, and
to authorize the filing of an Amended and Restated Certificate of
Incorporation in connection therewith; and
4. To transact such other business as may properly come before the Special
Meeting and any adjournment or postponement thereof, including potential
adjournments for the purpose of soliciting additional proxies.
A copy of the Agreement and Plan of Merger is attached as Appendix A. A copy
of the form of the Amended and Restated Certificate of Incorporation is attached
as Appendix B.
The Board of Directors of LTI has fixed the close of business on August 24,
2000 as the record date for the determination of LTI stockholders entitled to
notice of, and to vote at, the Special Meeting and any adjournment or
postponement thereof. You may examine a list of the LTI stockholders who are
entitled to vote at the Special Meeting during ordinary business hours at LTI's
principal offices during the ten days prior to the Special Meeting. Pursuant to
Delaware law, holders of LTI common stock are entitled to appraisal rights in
connection with the merger.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" APPROVAL
OF EACH OF THE PROPOSALS LISTED ABOVE.
YOUR VOTE IS IMPORTANT. All LTI stockholders are cordially invited to attend
the Special Meeting. Whether or not you expect to attend, please sign, date and
return the enclosed proxy card(s) as soon as possible. No postage is necessary
if the proxy is mailed in the United States. Sending in your proxy will not
prevent you from voting in person at the Special Meeting, but will assure that
your vote is counted if you are unable to attend. Properly executed proxies will
be voted in the manner you direct. If no direction is specified, those proxies
will be voted "FOR" the proposals listed above.
By Order of the Board of Directors
/s/ Donald Aldridge
SECRETARY
Atlanta, Georgia
August 28, 2000
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Questions and Answers About the Merger...................... 6
Summary..................................................... 8
Summary Financial Information............................... 14
Comparative Per Share Data.................................. 15
Comparative Market Price Data............................... 16
Note Regarding Forward-Looking Statements................... 17
Risk Factors................................................ 18
General Information About the LTI Special Meeting of
Stockholders.............................................. 24
Date, Time and Place of the Special Meeting............... 24
Record Date and Outstanding Shares........................ 24
Purpose of the Special Meeting............................ 24
Vote Required............................................. 25
Voting of Proxies......................................... 25
Revocation of Proxies..................................... 25
Solicitation of Proxies................................... 26
Proposal 1: The Merger...................................... 27
General................................................... 27
Background of the Merger.................................. 27
LTI's Reasons for the Merger; Recommendation of the Board
of Directors............................................ 28
Opinion of LTI's Financial Advisor........................ 30
Speedcom's Reasons for the Merger......................... 32
Interests of Certain Persons in the Merger................ 32
What Speedcom Stockholders Will Receive in the Merger..... 32
Treatment of Speedcom Options and Warrants in the
Merger.................................................. 33
Effective Time of the Merger.............................. 33
Government and Regulatory Matters......................... 33
Accounting Treatment...................................... 33
Certain Material United States Federal Income Tax
Consequences of the Merger.............................. 33
Resale of LTI Common Stock Following the Merger........... 36
Appraisal Rights of LTI Stockholders...................... 37
Nasdaq SmallCap Market Listing............................ 39
Procedures for Exchange of Speedcom Common Stock
Certificates............................................ 39
The Merger Agreement........................................ 41
General................................................... 41
Conversion Ratio; Fractional Shares....................... 41
Speedcom Options and Warrants............................. 41
Certain Representations and Warranties.................... 42
Certain Covenants and Agreements.......................... 43
Conditions to Completion of the Merger.................... 44
Termination............................................... 45
Amendment; Waiver......................................... 46
Expenses.................................................. 46
Proposal 2: Reverse Stock Split............................. 47
General................................................... 47
Reasons for the Reverse Split............................. 47
Effective Time of the Reverse Split; Certain Effects of
the Reverse Split....................................... 48
Certain United States Federal Income Tax Consequences of
the Reverse Split....................................... 49
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Exchange of Stock Certificates--Holders of LTI Stock Prior
to the Merger........................................... 50
Recommendation of the Board of Directors; Vote Required
for Approval............................................ 50
Proposal 3: Amendments to the LTI Certificate of
Incorporation............................................. 51
General................................................... 51
Summary of the Proposed Changes........................... 51
Recommendation of the Board of Directors; Vote Required
for Approval............................................ 52
Description of LTI Capital Stock............................ 53
General................................................... 53
Common Stock.............................................. 53
Preferred Stock........................................... 54
Warrants.................................................. 54
Unit Purchase Options..................................... 55
Registration Rights....................................... 55
Delaware General Corporation Law.......................... 55
Comparison of the Rights of LTI Stockholders and Speedcom
Stockholders.............................................. 57
Business of LTI............................................. 65
LTI Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 67
Principal Stockholders of LTI............................... 69
Business of Speedcom........................................ 71
Speedcom Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 73
Changes In and Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 74
Management Following the Merger............................. 75
Principal Stockholders of Speedcom.......................... 78
Other Matters............................................... 79
Legal Matters............................................... 79
Experts..................................................... 79
Where You Can Find More Information......................... 80
Index to Financial Statements............................... F-1
Appendices
Appendix A--Agreement and Plan of Merger.................. A-1
Appendix B--Amended and Restated Certificate of
Incorporation........................................... B-1
Appendix C--Opinion of Marshall & Stevens Incorporated.... C-1
Appendix D--Section 262 of the Delaware General
Corporation Law......................................... D-1
</TABLE>
5
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHEN DO YOU EXPECT TO COMPLETE THE MERGER?
A: We are working to complete the merger as quickly as possible. We hope to
complete the merger shortly after the LTI stockholder meeting.
Q: AS A SPEEDCOM STOCKHOLDER, WHAT WILL I RECEIVE IN THE MERGER?
A: Common stockholders of Speedcom will receive one share of LTI common stock
for each share of Speedcom common stock that you own. The number of shares
you receive may be increased if LTI does not meet certain financial tests at
the time of closing of the merger. This exchange ratio assumes that LTI
stockholders approve the proposed 1 for 4.26 reverse stock split.
Speedcom stockholders will not receive any fractional shares of LTI common
stock. Instead, you will receive cash in an amount equal to $4.00 multiplied
by the appropriate fraction.
Each outstanding Speedcom option and warrant will be converted into an
option or a warrant, as appropriate, to acquire, on substantially the same
terms and conditions currently applicable to the Speedcom option or warrant,
shares of LTI common stock equal to the number of shares that the holder
would have been entitled to receive in the merger had the holder fully
exercised the option or warrant immediately prior to the effective date of
the merger.
Q: AS AN LTI STOCKHOLDER, WILL I RECEIVE ADDITIONAL SHARES OF LTI COMMON STOCK
IN THE MERGER?
A: No, we will issue LTI common stock only to Speedcom stockholders in the
merger. You will continue to hold shares of LTI common stock after the
merger, provided that if the proposed 1 for 4.26 reverse split is approved,
each share of LTI that you currently own will automatically be converted
into .235 of a share of stock in the post-merger combined company. The
merger exchange ratio assumes that LTI stockholders approve the proposed 1
for 4.26 reverse stock split.
Q: WILL THE MERGER DILUTE THE OWNERSHIP OF LTI STOCKHOLDERS?
A. Yes. The issuance of shares of LTI common stock to Speedcom stockholders
will dilute the ownership of existing LTI stockholders. Immediately after
the merger, the current stockholders of LTI will hold approximately 8% of
the outstanding LTI common stock. The number of shares that will be issued
to Speedcom stockholders may be increased if LTI does not meet certain
financial tests at the time of closing of the merger. If this occurs, you
will experience additional dilution.
The proposed reverse split, in and of itself, if approved and completed,
will not have a dilutive effect on the ownership of LTI stockholders.
Q: WHO WILL MANAGE THE COMBINED COMPANY AFTER THE MERGER?
A. At the effective time of the merger, the current management of Speedcom
Wireless International Corporation will serve as the management of the
combined company. One member of the board of directors of the post-merger
combined company will be designated by the current LTI board of directors.
Q: WHO MAY VOTE AT THE LTI STOCKHOLDER MEETING?
A: All LTI stockholders of record as of the close of business on August 24,
2000 may vote at the LTI stockholder meeting.
Q: WHAT ARE LTI STOCKHOLDERS BEING ASKED TO VOTE UPON IN CONNECTION WITH THE
STOCKHOLDER MEETING?
A: LTI stockholders are being asked to vote for the approval and adoption of
the merger agreement. LTI stockholders also are being asked to vote on two
additional proposals, each related to the merger, including the reverse
stock split and certain amendments to the certificate of incorporation.
Approval of these additional proposals is a condition to closing of the
merger.
Q: WHAT DO I NEED TO DO NOW IF I AM AN LTI STOCKHOLDER?
A: After you have read this proxy statement/ prospectus carefully, please
complete and sign your proxy card and return it in the enclosed envelope.
This will enable your
6
<PAGE>
shares to be represented at the LTI stockholder meeting. If you fail to
return a proxy card or abstain from voting, the effect will be the same as a
vote against the merger.
Q: IF MY LTI SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE
MY SHARES FOR ME?
A: No. Your broker will not be able to vote your shares without instructions
from you. You should instruct your broker to vote your shares and then
follow the directions your broker provides. Without instructions, your LTI
shares will not be voted by your broker and the effect will be the same as a
vote against the merger.
Q: CAN I CHANGE MY VOTE AFTER I HAVE SUBMITTED MY PROXY WITH VOTING
INSTRUCTIONS?
A: Yes. There are three ways you can change your vote. First, you may send a
written notice to the secretary of LTI stating that you wish to revoke your
proxy. Second, you may complete and submit a new proxy card with new voting
instructions. The proxy card dated latest and actually received prior to the
LTI stockholder meeting will be your vote. Any earlier proxies or votes will
be revoked. Third, you may attend the stockholder meeting and vote in
person. Any earlier votes will be revoked by your vote at the meeting.
Simply attending the LTI stockholder meeting without voting, however, will
not revoke your proxy.
If you have instructed a broker to vote your shares, you must follow your
broker's directions to change or revoke your proxy or vote your shares at
the special meeting.
Q: HOW WILL MY LTI SHARES BE VOTED IF I RETURN A BLANK PROXY CARD?
A. If you sign and send in your proxy card and do not indicate how you want to
vote, your proxy will be counted as a vote in favor of the proposals
submitted at the LTI stockholder meeting.
Q: SHOULD I SEND IN MY SPEEDCOM STOCK CERTIFICATES NOW?
A: No. After the merger, the exchange agent acting on behalf of LTI will send
Speedcom stockholders written instructions for exchanging their stock
certificates. Speedcom stockholders should not send in their stock
certificates now.
Q: WHAT ARE THE TAX CONSEQUENCES OF THE MERGER TO SPEEDCOM AND LTI
STOCKHOLDERS?
A. The exchange of shares by Speedcom stockholders generally will be tax-free
to them for U.S. federal income tax purposes, except for taxes payable on
any gain recognized as a result of receiving cash in lieu of fractional
shares of LTI common stock. The merger generally will have no tax
consequences to LTI stockholders.
Q: WHO CAN ANSWER MY QUESTIONS?
A: LTI stockholders should contact the following person with any questions
about the merger and the related transactions:
Michael Noonan
LTI Holdings, Inc.
5115 New Peachtree Road, Suite 200
Atlanta, Georgia 30341
770-454-7403
Speedcom stockholders should contact the following person with any questions
about the merger and the related transactions:
Jay O. Wright
Speedcom Wireless
International Corporation
1748 Independence Blvd. D-4
Sarasota, FL 34234
941-358-9283
Q: WHERE CAN I FIND MORE INFORMATION ABOUT LTI?
A: LTI files reports and other information with the SEC. You may read and copy
this information at the SEC's public reference facilities. Please call the
SEC at 1-800-SEC-0330 for information about these facilities. This
information is also available at the Internet site the SEC maintains at
WWW.SEC.GOV. You can also request copies of these documents from us.
7
<PAGE>
SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROXY
STATEMENT/PROSPECTUS AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS
IMPORTANT TO YOU. TO UNDERSTAND THE MERGER AND THE OTHER PROPOSALS FULLY, YOU
SHOULD READ CAREFULLY THE ENTIRE DOCUMENT, INCLUDING THE DOCUMENTS ATTACHED AS
APPENDICES. THE MERGER AGREEMENT IS ATTACHED AS APPENDIX A AND THE FORM OF
PROPOSED AMENDED AND RESTATED CERTIFICATE OF INCORPORATION IS ATTACHED AS
APPENDIX B TO THIS PROXY STATEMENT/PROSPECTUS. WE HAVE INCLUDED PAGE REFERENCES
PARENTHETICALLY IN THIS SUMMARY TO DIRECT YOU TO A MORE COMPLETE DESCRIPTION OF
THE TOPICS DISCUSSED HEREIN.
THE COMPANIES
LTI HOLDINGS, INC. (PAGE 65)
5115 NEW PEACHTREE ROAD, SUITE 200
ATLANTA, GEORGIA 30341
(770) 454-7403
Laminating Technologies, Inc. was incorporated in Georgia in March 1993, as
New Cooler Corp., and subsequently changed its name to Laminating
Technologies, Inc. In April 1996, the company was merged into Laminating Merger
Corporation, a Delaware corporation, which changed its name to Laminating
Technologies, Inc. On June 30, 1999, Laminating Technologies, Inc. sold all of
its operating assets to Packaging Atlanta Corporation and changed its name to
LTI Holdings, Inc. Prior to the asset sale, the company was a development stage
company organized to research, develop, design and market value-added packaging
and specialty display products manufactured using a proprietary processing
method known as "LTI Processed-Registered Trademark-".
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION (PAGE 71)
1748 INDEPENDENCE BOULEVARD C-5 SARASOTA, FL 34234 (941) 358-9283
Speedcom was incorporated in Florida in 1994 as M-Com Network Systems,
Corporation. The company initially served as a reseller of computer equipment
and wireless communications equipment. In 1997, Speedcom changed its name to
Speedcom Wireless International Corporation and started selling its own branded
products. Speedcom does business under the tradenames Wave Wireless Networking
and Installguys.com.
LTI'S REASONS FOR THE MERGER (page 28)
Since the completion of the sale of all of LTI's operating assets to
Packaging Atlanta Corporation last June, LTI's management has been focusing its
efforts on identifying suitable candidates for a business combination with the
company. At that time, the board of directors of LTI determined not to liquidate
the company or otherwise distribute any of its remaining assets because the
board believed that a business combination with a suitable operating company had
the potential to create a greater value for LTI stockholders than a liquidation
or similar distribution. The board believes that the proposed merger with
Speedcom presents a significant opportunity to enhance stockholder value by
enabling our stockholders to participate in an operating business with growth
potential.
SPEEDCOM'S REASONS FOR THE MERGER (page 32)
Speedcom has been evaluating methods of obtaining access to significant
amounts of financial capital for some time. Speedcom has determined that
becoming a publicly traded corporation presents significant advantages at this
time relative to other financing alternatives such as venture capital. Speedcom
believes that merging with LTI presents several advantages, including:
- Obtaining approximately $1.5 million in working capital pursuant to the
merger;
8
<PAGE>
- Utilizing its common stock as a currency to acquire one or more companies
which complement its product offerings;
- Raising additional capital at more favorable prices, assuming an increase
in Speedcom's valuation;
- Enhancing its ability to: recruit employees, obtain favorable terms from
suppliers and promote its brand name; and
- Creating liquidity for its common shareholders by providing them with the
option of selling part or all of their holdings.
In sum, Speedcom believes that a merger with LTI presents an excellent
opportunity to enhance shareholder value for Speedcom shareholders.
STRUCTURE OF THE MERGER (page 27)
Speedcom will merge with and into LTI, with LTI as the surviving
corporation. Assuming that the merger and Proposal 3 relating to changes to the
current LTI certificate of incorporation are approved, in conjunction with the
closing of the merger, LTI will change its name to Speedcom Wireless
Corporation.
A copy of the merger agreement is attached to this proxy
statement/prospectus as Appendix A.
WHAT SPEEDCOM STOCKHOLDERS WILL RECEIVE IN THE MERGER (page 32)
Common stockholders of Speedcom will receive one share of LTI common stock
for each share of Speedcom common stock that they own. The number of shares to
be received by Speedcom stockholders may be increased if LTI does not meet
certain financial tests at the time of closing of the merger. This exchange
ratio assumes that LTI stockholders approve the proposed 1 for 4.26 reverse
stock split.
Speedcom stockholders will not receive any fractional shares of LTI common
stock. Instead, they will receive cash in an amount equal to $4.00 multiplied by
the appropriate fraction. Following completion of the merger, current Speedcom
stockholders will own shares, in the aggregate, representing approximately 92%
of the equity ownership interest in the post-merger company.
Speedcom stockholders should not send in their stock certificates now. After
the merger, the exchange agent acting on behalf of LTI will send Speedcom
stockholders written instructions for exchanging their stock certificates.
TREATMENT OF SPEEDCOM OPTIONS AND WARRANTS IN THE MERGER (page 33)
Each outstanding option and warrant to acquire shares of Speedcom common
stock will be converted into an option or a warrant, as appropriate, to acquire,
on substantially the same terms and conditions currently applicable to the
Speedcom option or warrant, the number of shares of LTI common stock equal to
the number of shares that the holder would have been entitled to receive in the
merger had the holder fully exercised the option or warrant immediately prior to
the effective date of the merger.
DETERMINATION OF BOARD OF DIRECTORS OF LTI AND RECOMMENDATION TO LTI
STOCKHOLDERS (page 28)
The LTI board of directors believes that the merger is advisable, fair to
and in the best interests of LTI and its stockholders and the LTI board
unanimously approved the merger agreement and the merger. The board recommends
that LTI stockholders vote "FOR" the proposal to approve and adopt the merger
agreement.
9
<PAGE>
OPINION OF LTI'S FINANCIAL ADVISOR (page 30)
In deciding to approve the merger, one of the factors that the LTI board of
directors considered was the opinion of its financial advisor, Marshall &
Stevens Incorporated, that as of the date of the opinion and subject to the
considerations set forth in the opinion, the merger is fair to the stockholders
of LTI from a financial point of view. Marshall & Stevens' opinion was provided
for the information and assistance of the LTI board of directors in connection
with its consideration of the transactions contemplated by the merger agreement
and its opinion does not constitute a recommendation as to how any holder of LTI
common stock should vote with respect to the proposed merger. The full text of
the Marshall & Stevens opinion, which sets forth assumptions made, matters
considered and limitations on the review undertaken by Marshall & Stevens in
connection with its opinion, is attached as Appendix C to this proxy
statement/prospectus. We urge you to read the opinion carefully.
INTERESTS OF CERTAIN PERSONS IN THE MERGER (page 32)
In connection with the completion of the merger, all current LTI officers
and directors are required to resign their positions. Upon such resignation,
Michael Noonan, LTI's current Chairman, President and Chief Executive Officer,
will be entitled to a severance payment of $144,000 (equal to his annual base
salary), payable over twelve months, and subject to a fifty percent offset
during the second six months for salary received from subsequent employment.
THE LTI SPECIAL MEETING (page 24)
The special meeting of the stockholders of LTI will be held on September 26,
2000, at 9:00 a.m., local time, at LTI's offices at 5115 New Peachtree Road,
Suite 200, Atlanta, Georgia 30341. At the special meeting, LTI stockholders will
be asked to consider and approve the merger agreement with Speedcom and certain
additional matters outlined below.
You are entitled to vote at the LTI stockholders meeting if you held shares
of LTI common stock of record at the close of business on August 24, 2000.
Approval and adoption of the merger agreement requires the favorable vote of
the holders of a majority of the issued and outstanding common stock of LTI.
Each share of LTI common stock is entitled to one vote on each matter to be
voted on at the meeting.
OTHER MATTERS TO BE VOTED UPON BY LTI STOCKHOLDERS (pages 47 and 51)
Pursuant to the merger agreement, LTI is obligated to submit certain
merger-related proposals to a vote of LTI stockholders. In addition to the
merger, stockholders will consider and vote upon:
- a 1 for 4.26 reverse split; and
- additional amendments to the current LTI certificate of incorporation.
Approval of the 1 for 4.26 reverse stock split and the additional changes to
the certificate of incorporation require the favorable vote of the holders of a
majority of the issued and outstanding common stock of LTI. Approval of these
proposals is a condition to closing of the merger. If LTI stockholders do not
approve these additional proposals, the merger will not be completed unless
Speedcom waives compliance with this condition to closing.
The LTI board of directors recommends that LTI stockholders vote "FOR" each
of these proposals.
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<PAGE>
CONDITIONS TO THE MERGER (page 44)
LTI and Speedcom are not obligated to complete the merger unless several
conditions are satisfied, including:
- approval of the merger by LTI stockholders;
- LTI meeting certain minimum net worth tests;
- approval of the merger by Speedcom stockholders;
- approval of the 1 for 4.26 reverse split and the other amendments to the
LTI certificate of incorporation;
- the absence of legal restraints that prevent the completion of the merger;
- compliance by each of the parties with all agreements and covenants
included in the merger agreement;
- the receipt of required opinions of counsel;
- the receipt by LTI of a "fairness" opinion from its financial advisor;
- the continuing accuracy of the representations in the merger agreement;
and
- the continuing effectiveness of the registration statement filed with the
SEC.
These, and other conditions, are set forth in the merger agreement. Some of
the conditions to the merger may be waived.
TERMINATION AND AMENDMENT OF THE MERGER AGREEMENT (pages 45 and 46)
LTI and Speedcom may mutually agree at any time to terminate the merger
agreement without completing the merger. Either party may also terminate the
merger agreement if, among other reasons:
- the merger has not been completed by October 15, 2000, if all the
conditions precedent to be performed by the other party have not been
performed by that date;
- the other party has breached or violated a representation, warranty,
covenant or agreement and the breach or violation is not cured or cannot
be cured within a specified time period; or
- the board of directors exercises its rights under the "fiduciary out"
provisions of the merger agreement.
LTI and Speedcom also may amend the merger agreement before the completion
of the merger by mutual written consent.
NO OTHER NEGOTIATIONS (page 43)
The merger agreement provides that neither LTI nor Speedcom will permit any
of its employees, officers, agents or other affiliates to directly or indirectly
solicit or initiate any discussions or negotiations concerning a sale or merger,
unless a written proposal is submitted to LTI or Speedcom by a third party, and
the board of directors of LTI or Speedcom, as the case may be, determines in its
good faith judgment that continued compliance with the non-solicitation
provision set forth in the merger agreement may cause the board of directors to
breach or violate its fiduciary duties under applicable law.
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<PAGE>
APPRAISAL RIGHTS OF LTI STOCKHOLDERS (page 37)
LTI stockholders have the right to object to the merger and be paid cash for
their shares in an amount determined in accordance with the provisions of
Delaware law.
Speedcom stockholders also have the right to object to the merger and be
paid cash for their shares in an amount determined in accordance with the
provisions of Florida law.
RESALES OF LTI COMMON STOCK (page 36)
The shares of LTI common stock issued to Speedcom stockholders pursuant to
the merger will be registered under the Securities Act of 1933, as amended.
These shares will be freely transferable under the Securities Act following
completion of the merger, except for shares issued to any Speedcom stockholder
who may be deemed to be an "affiliate" of Speedcom for purposes of Rule 145
under the Securities Act. Affiliates may not sell their shares of LTI common
stock acquired in the merger except pursuant to (1) an effective registration
statement under the Securities Act covering the resale of those shares, (2) an
exemption under Rule 145 under the Securities Act or (3) any other applicable
exemption under the Securities Act.
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER (page 33)
The merger is intended to qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code. Assuming that the merger qualifies
as a reorganization, holders of Speedcom common stock will generally not
recognize gain or loss for U.S. federal income tax purposes as a result of the
exchange of their shares of Speedcom common stock for shares of LTI common stock
in the merger, except for cash received instead of fractional shares of LTI
common stock.
TAX MATTERS ARE VERY COMPLICATED, AND THE TAX CONSEQUENCES OF THE MERGER TO
YOU WILL DEPEND ON THE FACTS OF YOUR PARTICULAR SITUATION. YOU ARE URGED TO
CONSULT YOUR OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO YOU OF THE
MERGER, INCLUDING THE APPLICABLE FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES.
ANTICIPATED ACCOUNTING TREATMENT (page 33)
We expect to account for the merger as a recapitalization of Speedcom since
LTI has been a non-operating public shell for greater than twelve months and
because Speedcom stockholders will own the majority of the outstanding common
stock following the merger. As a result, Speedcom will record the merger as an
issuance of common stock for the net monetary assets of LTI, accompanied by a
recapitalization of its equity.
MANAGEMENT AND BOARD OF DIRECTORS AFTER THE MERGER (page 75)
At the effective time of the merger, the current management of Speedcom will
serve as the management of the combined company. The Chairman and Chief
Executive Officer will be Michael W. McKinney and the Chief Financial Officer
will be Jay O. Wright. Bruce Sanguinetti will become the President of Speedcom,
effective September 1, 2000.
After the effective time of the merger, the board of directors will consist
initially of five members: Michael W. McKinney, Bruce Sanguinetti, Jay O.
Wright, R. Craig Roos and a director to be appointed by the current LTI board of
directors.
EFFECTS OF THE MERGER ON THE RIGHTS OF SPEEDCOM STOCKHOLDERS (page 57)
The rights of stockholders of Speedcom after the merger will be governed by
Delaware law and LTI's certificate of incorporation and bylaws (as modified by
the other proposals being put to a vote of
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LTI stockholders at its special meeting). Those rights will differ from rights
of current Speedcom stockholders under Florida law and Speedcom's current
articles of incorporation and bylaws.
COMPARATIVE MARKET PRICE INFORMATION (page 16)
Shares of LTI common stock are quoted on the National Association of
Securities Dealer's Over-the-Counter Electronic Bulletin Board (also referred to
as the OTC-Bulletin Board). On June 5, 2000, the last full trading day prior to
the public announcement of the merger, the last reported sale price of LTI
common stock was $1.375 per share. On August 3, 2000, the last full trading day
prior to execution of the definitive merger agreement, the last sale price of
LTI common stock, as reported on the OTC-Bulletin Board was $4.125. On
August 24, 2000, the last reported sale price of LTI common stock was $3.437 per
share. The foregoing market quotations have not been adjusted to give effect to
the proposed 1 for 4.26 reverse stock split. Stock prices can fluctuate
dramatically--we urge you to obtain more recent quotes for LTI's common stock.
Shares of Speedcom common stock are not listed or traded on an exchange or
quotation system. Therefore, no meaningful basis exists to determine the market
price of Speedcom common stock.
REGULATORY APPROVALS (page 33)
Other than with respect to compliance with federal and state securities law
and filings to be made with the Secretary of State of Delaware and the Secretary
of State of Florida, no federal or state regulatory filings or approvals are
necessary to complete the merger.
EXPENSES (page 46)
Each of LTI and Speedcom will bear all expenses it incurs in connection with
the merger, except that LTI and Speedcom will share certain costs of filing with
the SEC the registration statement of which this proxy statement/prospectus is a
part and printing and mailing this proxy statement/ prospectus.
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<PAGE>
SUMMARY FINANCIAL INFORMATION
In the tables below, we are providing you with summary historical and pro
forma financial data of Speedcom to aid you in your analysis of the financial
aspects of the merger. We have prepared this information using the financial
statements of Speedcom for the two years ended December 31, 1999, and the six
months ended June 30, 1999 and 2000. The financial statements for the two fiscal
years ended December 31, 1999 have been audited by Ernst & Young LLP,
independent auditors. The financial statements for the six months ended
June 30, 1999 and 2000 have not been audited. The pro forma information assumes
that the merger, accounted for as a recapitalization, occurred at the beginning
of the respective period in the case of operating information or at June 30,
2000 in the case of balance sheet information. Pro forma net loss per share
equals historical net loss per share because the contemplated exchange ratio is
on a one for one basis.
When you read this summary financial data, it is important that you read
along with it the historical financial statements and related notes, and
"Speedcom Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in this proxy statement/ prospectus.
SUMMARY HISTORICAL AND PRO FORMA OPERATING INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
------------------------ -------------------------
1998 1999 1999 2000
----------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Historical Operating Information:
Revenues..................................... $ 5,171,070 $5,052,043 $2,011,825 $4,000,982
=========== ========== ========== ==========
Net loss..................................... $(1,265,178) $ (790,508) $ (344,644) $ (678,700)
=========== ========== ========== ==========
Net loss per share: basic and diluted........ $ (0.21) $ (0.13) $ (0.06) $ (0.10)
=========== ========== ========== ==========
Pro Forma Information:
Pro forma net per share: basic and diluted $ (0.13) $ (0.10)
========== ==========
</TABLE>
SUMMARY HISTORICAL AND PRO FORMA BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL JUNE 30,
DECEMBER 31, JUNE 30, 2000
1999 2000 PRO FORMA
------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Cash..................................................... $ 108,564 $ 105,026 $1,871,707
========== ========== ==========
Total assets............................................. $1,463,059 $3,015,543 $4,790,454
========== ========== ==========
Total long-term obligations, including current
maturities............................................. $ 427,935 $ 137,913 $ 137,913
========== ========== ==========
Total stockholders' equity (deficit)..................... $ (348,362) $1,230,778 $2,827,661
========== ========== ==========
Cash dividends paid...................................... $ -- $ -- $ --
========== ========== ==========
Book value (deficit) per common share.................... $ (0.05) $ 0.18 $ 0.37
========== ========== ==========
</TABLE>
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<PAGE>
COMPARATIVE PER SHARE DATA
The following table summarizes certain historical per share data of LTI for
its year ended March 31, 2000 and three month period ended June 30, 2000 and
certain historical and equivalent pro forma per share data of Speedcom for its
year ended December 31, 1999 and six month period ended June 30, 2000. The
information presented below should be read in conjunction with the historical
financial statements of LTI and Speedcom, which are included in this proxy
statement/prospectus. You should also read the information in conjunction with
the unaudited pro forma financial information included in this proxy
statement/prospectus. You should not rely on the unaudited pro forma financial
information to indicate the results that would have been achieved had the
companies combined at an earlier date or the future results the combined company
may experience after the merger. Earnings per share data are calculated using
the diluted weighted average shares outstanding during the periods, while book
value per share is calculated using the outstanding shares at period end. The
pro forma information gives effect to the merger accounted for as a
recapitalization (see page 33--"Anticipated Accounting Treatment").
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
MARCH 31, 2000 JUNE 30, 2000
--------------- --------------
<S> <C> <C>
LTI HISTORICAL:
Net loss per common share--basic and diluted................ $(0.37) $ (.03)
Book value (deficit) per common share....................... $ 0.57 $ .55
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1999 JUNE 30, 2000
------------------ --------------
<S> <C> <C>
SPEEDCOM HISTORICAL:
Net loss per common share--basic and diluted................ $(0.13) $(0.10)
Book value (deficit) per common share....................... $(0.05) $ 0.18
EQUIVALENT PRO FORMA COMBINED:
Net loss per common share--basic and diluted (1)............ $(0.13) $(0.10)
Book value (deficit) per common share (1)................... $(0.05) $ 0.18
</TABLE>
------------------------
(1) Equivalent pro forma per share data equals the Speedcom historical per share
data because the contemplated exchange ratio is on a one for one basis.
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<PAGE>
COMPARATIVE MARKET PRICE DATA
LTI's common stock is traded on the OTC-Bulletin Board under the symbol
"LAMT." The common stock was listed on the Nasdaq SmallCap market under the same
symbol from October 9, 1996 to December 17, 1998, at which time it was delisted
for failing to meet certain Nasdaq continued listing requirements. The following
table presents certain historical trading information for the LTI common stock.
These quotations represent prices between dealers and do not include retail
mark-up, mark-down or commission or necessarily represent actual transactions.
The market for the common stock has been thin or illiquid at times, with no or
few trades occurring on a number of days.
<TABLE>
<CAPTION>
HIGH LOW
-------- --------
<S> <C> <C>
QUARTER ENDED
June 30, 1998............................................... 1.0000 0.2500
September 30, 1998.......................................... 0.6870 0.1875
December 31, 1998........................................... 0.3437 0.1875
March 31, 1999.............................................. 0.3125 0.1875
June 30, 1999............................................... 0.5625 0.2400
September 30, 1999.......................................... 0.5938 0.4063
December 31, 1999........................................... 0.5625 0.3800
March 31, 2000.............................................. 0.8438 0.5000
June 30, 2000............................................... 3.1875 0.5938
September 30, 2000 (through August 24, 2000) 5.3750 2.1875
</TABLE>
On June 5, 2000, the last full trading day prior to the public announcement
of the merger, the last sale price of LTI common stock, as reported on the
OTC-Bulletin Board was $1.375. On August 3, 2000, the last full trading day
prior to the execution and public announcement of the definitive merger
agreement, the last sale price of LTI common stock, as reported on the
OTC-Bulletin Board was $4.125. On August 24, 2000, the last full trading date
prior to the printing of this document, the last sale price of LTI common stock,
as reported on the OTC-Bulletin Board was $3.437. The foregoing market
quotations have not been adjusted to give effect to the proposed 1 for 4.26
reverse stock split.
THE MARKET PRICE OF LTI'S COMMON STOCK FLUCTUATES AND YOU ARE ADVISED TO
OBTAIN CURRENT MARKET QUOTATIONS.
The number of shares of LTI common stock issuable to holders of Speedcom
stock in the merger will not be affected by any changes in the market price of
LTI common stock. Therefore, the market value of the shares of LTI common stock
that holders of Speedcom common stock will receive in the merger may increase or
decrease prior to the completion of the merger because the market price of LTI
is subject to fluctuation but the exchange ratio is fixed.
As of August 24, 2000 there were approximately 92 holders of record of the
LTI common stock.
In addition to the common stock, LTI's class A warrants and class B warrants
are traded on the OTC-Bulletin Board under the symbol "LAMTW" and "LAMTZ,"
respectively. These warrants also were listed on the Nasdaq SmallCap market
under the same symbols until they were delisted for failing to meet certain
Nasdaq continued listing requirements.
Because there is no established trading market for shares of any class of
Speedcom stock, information with respect to market prices of Speedcom stock has
been omitted.
Neither LTI nor Speedcom has ever paid any cash dividends with respect to
its shares of common stock and neither anticipates that dividends will be
declared in the foreseeable future. After the merger, the company expects that
all available cash will be utilized to further the growth of its business.
Following the merger, LTI expects that its common stock will continue to be
quoted on the OTC-Bulletin Board. LTI intends to change its trading symbol to
reflect the change in the company's name in connection with the merger. As
discussed elsewhere in this proxy statement/prospectus, following the merger the
company intends to apply for listing of the common stock on the Nasdaq SmallCap
Market. There can be no assurance, however, that the company will meet the
requirements for listing on the Nasdaq SmallCap Market after the merger, or that
it will be able to take the additional steps necessary to meet those
requirements.
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NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus contains or incorporates by reference
statements that constitute "forward-looking statements" within the safe harbor
provisions of the Private Securities Litigation Reform Act. These statements
include statements with respect to LTI's and Speedcom's financial condition,
results of operations and business and on the expected impact of the merger on
the financial performance of the combined companies. Words such as
"anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates"
and similar expressions generally identify forward-looking statements. These
forward-looking statements are not guarantees of future performance and are
subject to certain risks and uncertainties that could cause actual results to
differ materially from the results contemplated by the forward-looking
statements. These risks and uncertainties include, but are not limited to, the
following:
- LTI and Speedcom may not achieve the benefits they expect from the
merger which may have a material adverse effect on the combined
company's business, financial condition and operating results and/or
could result in loss of key personnel;
- The merger could adversely affect combined financial results;
- The market price of LTI common stock may decline as a result of the
merger;
- Certain officers and directors may have conflicts of interest that may
influence them to support or approve the merger;
- Failure to complete the merger could negatively impact LTI's stock
price, future business and operations.
In evaluating the merger, you should carefully consider the discussion of
these and other factors in the section entitled "Risk Factors" on page 18.
Should one or more of these risks or uncertainties affect the business of
LTI or Speedcom or should underlying assumptions prove incorrect, actual
results, performance or achievements in 2000 and beyond could differ materially
from those expressed in, or implied by, such forward-looking statements.
17
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION PROVIDED OR INCORPORATED BY REFERENCE
IN THIS DOCUMENT, YOU SHOULD CONSIDER THE FOLLOWING FACTORS CAREFULLY IN
EVALUATING THE MERGER AND AN INVESTMENT IN THE COMMON STOCK. YOU SHOULD ALSO
REFER TO "NOTE REGARDING FORWARD LOOKING STATEMENTS" ON PAGE 17.
RISKS RELATED TO THE MERGER
SPEEDCOM STOCKHOLDERS WILL RECEIVE A FIXED NUMBER OF SHARES OF LTI COMMON STOCK
DESPITE CHANGES IN THE MARKET VALUE OF LTI COMMON STOCK.
Upon the completion of the merger, each share of Speedcom common stock will
be exchanged for one share of LTI common stock. This exchange ratio assumes that
LTI stockholders approve the proposed 1 for 4.26 reverse stock split. There will
be no adjustment for changes in the market price of LTI common stock. In
addition, neither LTI nor Speedcom may terminate the merger agreement solely
because of changes in the market price of LTI common stock. The specific dollar
value of LTI common stock that Speedcom stockholders will receive upon
completion of the merger will depend on the market value of LTI common stock
when the merger is completed and may decrease or increase after the date of this
proxy statement/prospectus. We urge you to obtain recent market quotations for
LTI common stock. Neither LTI nor Speedcom can predict or give any assurances as
to the market price of LTI common stock at any time before or after the
completion of the merger.
IF LTI COMMON STOCK IS DEEMED TO BE A "PENNY STOCK" FOLLOWING THE MERGER,
RESTRICTIONS ON BROKER-DEALERS' ABILITY TO MAKE MARKETS IN THE COMMON STOCK ARE
LIKELY TO ADVERSELY AFFECT LIQUIDITY.
LTI's common stock may be covered by SEC rules regarding so-called "penny
stocks." These rules impose additional sales practice requirements on
broker-dealers who sell such securities to persons other than established
customers and "accredited investors." For transactions covered by these rules,
the broker-dealer must make a special suitability determination for the
purchaser and receive the purchaser's written agreement to the transaction prior
to the sale. As a result, the rules may affect the ability of broker-dealers to
sell shares of LTI common stock and also may affect the ability of persons
receiving shares of LTI common stock to sell them in the public market. Costs of
transactions in penny stocks may also be higher than the costs of transactions
in other stocks. After completion of the merger, LTI common stock will initially
continue to be quoted on the OTC-Bulletin Board rather than on the Nasdaq or an
exchange, and assuming LTI stockholder approval of the proposed 1 for 4.26
reverse stock split, is expected to command a market price of $5 per share, the
price required for a non-Nasdaq-quoted security to avoid the SEC "penny stock"
trading restrictions. However, there can be no assurance that LTI's stock will
continue to avoid "penny stock" restrictions in the future.
ALTHOUGH IT IS OUR INTENTION TO APPLY FOR LISTING OF THE COMMON STOCK ON THE
NASDAQ SMALLCAP MARKET, WE CANNOT ASSURE YOU THAT WE WILL BE ABLE TO DO SO.
LTI intends to apply for listing of its common stock on the Nasdaq SmallCap
Market after the merger. The requirements for listing on the Nasdaq SmallCap
Market include a number of standards which LTI does not currently meet, and it
is uncertain whether the combined company will meet all of the standards after
the completion of the merger. There can be no assurance that the company will
meet the requirements for listing on the Nasdaq SmallCap Market after the
merger, or that it will be able to take the additional steps necessary to meet
those requirements. Further, we cannot assure you that, even if the company is
able to meet all of the requirements for the initial listing of the common stock
on the Nasdaq SmallCap Market, it will be able to satisfy the continued listing
requirements on an ongoing basis in the future. If LTI fails to satisfy the
initial listing requirements or fails to satisfy the continued listing
requirements in the future, the market price for and liquidity of the common
stock may be adversely affected.
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<PAGE>
THE MARKET PRICE OF THE LTI COMMON STOCK IS LIKELY TO BE VOLATILE.
Although the LTI common stock is currently quoted on the OTC-Bulletin Board,
at times during the recent past there has been only a limited market for those
shares and there is no assurance that an active market for the shares will
develop after the merger or that, if one develops, that it will be maintained.
It is likely that any market that develops will be highly volatile and that the
trading volume may be limited. Further, the market price of the LTI common stock
may fluctuate significantly before and after the completion of the merger due to
a variety of factors, including:
- revenue or income below analysts' expectations;
- quarterly fluctuations in financial results;
- general business conditions in the wireless telecommunications industry;
- changes in prices for products of the company or its competitors;
- changes in revenue growth rates for the company or its competitors;
- the exercise of options and warrants to acquire LTI common stock;
- sales of large blocks of LTI common stock; and
- conditions in the financial markets generally and the markets for smaller
companies in particular, whose stock may experience extreme price and
volume fluctuations without regard to operating performance.
RISKS RELATED TO THE COMBINED COMPANY
THE MARKET FOR WIRELESS NETWORKING IS AT AN EARLY STAGE OF DEVELOPMENT.
The wireless networking market is at an early stage of development and is
rapidly evolving. As is typical for a new and rapidly evolving industry, demand
and market acceptance for recently introduced wireless networking products and
services are subject to a high level of uncertainty. Market acceptance of
particular products cannot be predicted; however, it is likely that new wireless
LAN products will not be generally accepted unless they operate at higher speeds
and are sold at lower prices. While the number of businesses recognizing the
increased value of wireless solutions is increasing, it is not known whether
this market will continue to develop such that sufficient demand for our
products will emerge and become sustainable. Our prospects must be evaluated due
to the risks encountered by a company in the early stages of marketing new
products or services, particularly in light of the uncertainties relating to the
new and evolving markets in which we operate. There can be no assurance that we
will succeed in addressing any or all of these risks, and the failure to do so
would have a material adverse effect on our business, financial condition and
operating results.
THERE IS INTENSE COMPETITION IN THE WIRELESS LAN MARKET.
The market for our products is very competitive, and we expect that
competition will increase in the future, both with respect to our current
products and future products which we may develop. Within the wireless industry,
business is intensely competitive and is characterized by rapid technological
change, frequent introduction of new products and evolving industry standards.
Increased competition could adversely affect our revenues and profitability
through pricing pressure, loss of market share and other factors. We believe
that the principal competitive factors in the wireless LAN market include:
- expertise and familiarity with 2.4 GHz spread spectrum technology,
wireless data communication protocols and LAN technology;
- product performance, features, functionality and reliability;
- price/performance characteristics;
19
<PAGE>
- timeliness of new product introductions;
- adoption of emerging industry standards;
- customer service and support;
- size and scope of distribution network; and
- brand name.
While we believe that we are competitive in these regards, there can be no
assurance that we will be able to successfully compete as to these or other
factors or that competitive pressures we face will not materially and adversely
affect our business and operating results. We also cannot assure you that these
will continue to be competitive factors in the wireless LAN market and, if not,
whether we will be able to successively identify future competitive factors or
be successful competing as to those factors.
Within the wireless LAN industry, our primary competitors are Lucent
Technologies, Aironet (part of Cisco Systems) and BreezeCom. We also experience
competition from a number of smaller companies that provide wireless data
communication products, and we may encounter future competition from other
companies, both that have and have not announced their intentions to offer
competitive products and solutions. In addition, we could encounter future
competition from larger wireless, computer and networking equipment companies.
We also face competition from our OEM customers who have, or could acquire,
their own wireless data communications research and development capabilities.
We could also encounter future competition from companies that offer
products that replace or are alternatives to radio frequency wireless solutions
including, for example, products based on infra-red technology or laser
technology and systems that utilize existing telephone wires or cables within a
building as a wired network backbone or satellite systems outside of buildings.
Many of our current and potential competitors have significantly greater
financial, marketing, technical and other resources than us and, as a result,
may be able to respond more quickly to new or emerging technologies or standards
and to changes in customer requirements, or to devote greater resources to the
development, promotion and sale of products or to deliver competitive products
at a lower end user price. Current and potential competitors have established or
may establish cooperative relationships among themselves or with third parties
to increase the ability of their products to address the needs of our existing
and prospective customers. Accordingly, it is possible that new competitors or
alliances among competitors may emerge and rapidly acquire significant market
share. Increased competition is likely to result in price reductions, reduced
operating margins and loss of market share, any of which could have a material
adverse effect on our business and operating results.
OUR RELIANCE ON LIMITED SOURCES OF WIRELESS AND COMPUTER COMPONENTS COULD
ADVERSELY AFFECT OUR BUSINESS.
Many of the key components necessary for the assembly of our products are
only available from a single supplier or from a limited number of suppliers. We
have experienced delays and shortages in the supply of components in the past
and could experience delays and shortages in the future. We generally do not
maintain a significant inventory of components and do not have long-term supply
contracts with our suppliers. Our reliance on sole or limited source suppliers
involves several risks, including:
- suppliers could increase component prices significantly, without notice
and with immediate effect;
- suppliers could discontinue the manufacture or supply of components or
delay delivery of components used in our products for reasons such as
inventory shortages, new product offerings, increased cost of materials,
destruction of manufacturing facilities, labor disputes and bankruptcy;
and
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- in order to compensate for potential component shortages or
discontinuance, we may in the future hold more inventory than is
immediately required, resulting in increased inventory costs.
If our suppliers are unable to deliver or ration components to us, we could
experience interruptions and delays in manufacturing and sales which could
result in cancellation of orders for our products or the need to modify our
products. This may cause substantial delays in our product shipments, increased
manufacturing costs and increased product prices. Further, we may not be able to
develop alternative sources for these components in a timely way, if at all, and
may not be able to modify our products to accommodate alternative components.
For example, we have a contract with an important software licensor on which
three years remain. If this contract were to be terminated, our ability to
perform our business would be adversely affected.
These factors could damage our relationships with current and prospective
customers lasting longer than any underlying shortage or discontinuance. Any of
these risks, if realized, could materially and adversely affect our business
operating results and financial condition.
EXPANDING OUR DISTRIBUTION CHANNELS MIGHT ADVERSELY AFFECT OUR BUSINESS.
To increase revenues, we believe we must increase the number of our
distribution partners. Our strategy includes an effort to reach a greater number
of end users through indirect channels. We are currently investing, and plan to
continue to invest, significant resources to develop these indirect channels.
This could adversely affect our operating results if these efforts do not
generate the revenues necessary to offset such investments. We will be dependent
upon the acceptance of our products by distributors and their active marketing
and sales efforts relating to our products. The distributors to whom we sell our
products are independent and are not obligated to deal with us exclusively or to
purchase any specified amount of our products. Because we do not generally
fulfill orders by end users of our products sold through distributors, we will
be dependent upon the ability of distributors to accurately forecast demand and
maintain appropriate levels of inventory.
We expect that our distributors will also sell competing products. These
distributors may not continue, or may not give a high priority to, marketing and
supporting our products. This and other channel conflicts could result in
diminished sales through the indirect channels and adversely affect our
operating results. Additionally, because lower prices are typically charged on
sales made through indirect channels, increased indirect sales could adversely
affect our average selling prices and result in lower gross margins.
WE MAY NOT BE ABLE TO MANAGE OUR GROWTH.
We have expanded our operations in recent years, and we anticipate that
further expansion will be required to address potential growth in our customer
base and market opportunities. This expansion has placed, and future expansion
is expected to place, a significant strain on our management, technical,
operational, administrative and financial resources. We have recently hired new
employees, including a number of key managerial and operations personnel, who
have not yet been fully integrated into our operations.
Our current and planned expansion of personnel, systems, procedures and
controls may be inadequate to support our future operations. We may be unable to
attract, retain, motivate and manage required personnel, including finance,
administrative and operations staff, or to successfully identify, manage and
exploit existing and potential market opportunities because of inadequate
staffing. We may also be unable to manage further growth in our multiple
relationships with our OEMs, distributors and other third parties. If we are
unable to manage growth effectively, our business, financial condition and
results of operations could be adversely affected.
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WE MAY FACE RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS AND SALES.
We anticipate that revenues from customers outside North America will
continue to account for a significant portion of our total revenues for the
foreseeable future. Expansion of our international operations has required, and
will continue to require, significant management attention and resources. In
addition, we remain heavily dependent on distributors to market, sell and
support our products internationally. Our international operations are subject
to additional risks, including the following:
- difficulties of staffing and managing foreign operations;
- longer customer payment cycles and greater difficulties in collecting
accounts receivable;
- unexpected changes in regulatory requirements, exchange rates, trading
policies, tariffs and other barriers;
- uncertainties of laws and enforcement relating to the protection of
intellectual property;
- language barriers;
- limits on our ability to sue and enforce a judgment for accounts
receivable;
- potential adverse tax consequences; and
- political and economic instability.
Similarly, we cannot accurately predict the impact that any future
fluctuations in foreign currency exchange rates may have on our operating
results and financial condition.
RAPID TECHNOLOGICAL CHANGE MAY ADVERSELY AFFECT THE MARKET ACCEPTANCE FOR OUR
PRODUCTS.
The markets for our products and the technologies utilized in the industry
in which we operate evolve rapidly and depend on key technologies, including
wireless LAN, wireless packet data, modem and radio technologies. These
technologies may be replaced with alternative technologies or may otherwise not
achieve market acceptance that we are seeking. In particular, there is
substantial risk that the wireless packet data technology underlying the
wireless Internet access and broadband wireless local loop products may not
achieve market acceptance for use in application. Major changes could render our
products and technologies obsolete or subject to intense competition from
alternative products or technologies or by improvements in existing products or
technologies. For example, Internet access and wireless local loop equipment
markets may stop growing, whether as a result of the development of alternative
technologies, such as fiber optic, coaxial cable, satellite systems or
otherwise. Also, new or enhanced products developed by other companies may be
technologically incompatible to our products and render our products obsolete.
WE HAVE A HISTORY OF LOSSES, EXPECT FUTURE LOSSES AND MAY NEVER ACHIEVE OR
SUSTAIN PROFITABILITY.
We have incurred significant losses since our inception, and we expect to
continue to incur net losses for the foreseeable future. We intend to increase
our operating expenses, however our revenues may not grow or even continue at
their current level. If our revenues do not rapidly increase or if our expenses
increase at a greater pace than our revenues, we will never become profitable.
WE ARE DEPENDENT ON KEY PERSONNEL.
There are a limited number of executives, skilled design, process and
testing engineers and marketing professionals involved in the wireless data
communication industry. The competition for these employees is intense. It is
not uncommon for skilled professionals to move among the various competitors in
this industry, and we have taken steps to limit our employees from unfairly
competing with us or using our trade secrets. Our future growth depends in large
part on retaining our current employees and attracting new technical, marketing
and management personnel. The loss of key employees or failure to attract new
key employees could materially affect our business.
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OUR COMMON STOCK PRICE MAY BE VOLATILE.
The stock market has experienced significant price and volume fluctuations,
and the market prices of technology companies have been highly volatile. In the
past, following periods of volatility in the market price of a company's
securities, securities class action litigation has often been instituted against
that company. Such litigation could result in substantial costs and diversion of
management's attention.
WE WILL HAVE LIMITS TO OUR MANUFACTURING CAPACITIES AND ABILITIES.
Speedcom currently has limited manufacturing capability and has no
experience in large scale manufacturing. If, after the completion of the merger,
our customers were to place orders for unexpectedly large quantities of our
products, Speedcom's present manufacturing capacity could be inadequate to meet
such demand. There can be no assurance that we will be able to develop or
contract for additional manufacturing capacity on acceptable terms on a timely
basis.
WE WILL BE SUBJECT TO EXTENSIVE AND UNPREDICTABLE GOVERNMENT REGULATION.
We will be subject to various FCC rules and regulations in the United
States. Current FCC regulations permit license-free operation in certain
FCC-certified bands in the radio spectrum. The combined company's spread
spectrum wireless products are intended for unlicensed operation primarily in
the 2.4-2.4835 GHz frequency bands. Operation in these frequency bands is
governed by rules set forth in Part 15 of the FCC regulations. The Part 15 rules
are designed to minimize the probability of interference to other users of the
spectrum and, thus, accord Part 15 systems secondary status. In the event that
there is interference between a primary user and a Part 15 user, a higher
priority user can require the Part 15 user to curtail transmissions that create
interference. In this regard, if users of the combined company's products
experience excessive interference from primary users, market acceptance of our
products could be adversely affected, thereby materially and adversely affecting
our business and results of operations. The FCC, however, has established
certain standards which create an irrefutable presumption of noninterference for
Part 15 users and we believe that our products will comply with these
requirements.
Our products also will be subject to regulatory requirements in
international markets and, therefore, we will need to monitor the development of
spread spectrum regulations in certain countries that represent potential
markets for our products. We have limited experience in gaining regulatory
approval outside of the United States. There can be no assurance that new
regulations will not be promulgated which could have a material adverse effect
on our business and results of operations, or that existing regulations outside
of the United States would not adversely affect our international marketing of
our products.
Regulatory changes, including changes in the allocation of available
frequency spectrum, could significantly impact our operations by restricting our
development efforts, rendering current products obsolete or increasing the
opportunity for additional competition. In September 1993 and in February 1995,
the FCC allocated additional spectrum for personal communications services. In
January 1997, the FCC authorized 300 MHz of additional unlicensed frequencies in
the 5 GHz frequency range. These changes in the allocation of available
frequency spectrum could create opportunities for other wireless networking
products and services. There can be no assurance that new regulations will not
be promulgated which could have a material adverse effect on our business and
results of operations.
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GENERAL INFORMATION ABOUT THE LTI
SPECIAL MEETING OF STOCKHOLDERS
DATE, TIME AND PLACE OF THE SPECIAL MEETING
The special meeting of the LTI stockholders will be held on September 26,
2000, at 9:00 a.m., local time, at LTI's offices at 5115 New Peachtree Road,
Atlanta, Georgia 30341.
RECORD DATE AND OUTSTANDING SHARES
The LTI board of directors has fixed the close of business on August 24,
2000 as the record date for the determination of the holders of LTI common stock
entitled to receive notice of and to vote at the LTI special meeting. Only
stockholders of record on the record date are entitled to receive notice of and
to vote at the LTI special meeting or any adjournments or postponement of the
special meeting. As of the record date, there were 2,775,100 shares of LTI
common stock issued and outstanding and held by approximately 92 holders of
record. The number of outstanding shares on the record date does not give effect
to the proposed 1 for 4.26 reverse stock split. Each holder of shares of LTI
common stock is entitled to one vote per share held of record on the record date
on all matters being submitted to a vote.
PURPOSE OF THE SPECIAL MEETING
The LTI board of directors is soliciting proxies from its stockholders for
use at the special meeting. The purpose of the special meeting is to consider
and vote upon the proposals to:
1. To approve and adopt a merger agreement dated as of August 4, 2000 by
and between Speedcom and LTI;
2. To approve an amendment to the certificate of incorporation to provide
for a 1 for 4.26 reverse stock split of the outstanding LTI common stock,
to become effective just prior to completion of the merger;
3. To approve an amended and restated certificate of incorporation to make
additional changes to the current certificate of incorporation, to become
effective on the completion of the merger, and to authorize the filing of
an amended and restated certificate of incorporation; and
4. To transact such other business as may properly come before the Special
Meeting and any adjournment or postponement thereof, including potential
adjournments of the purpose of soliciting additional proxies.
Pursuant to the merger agreement, at the effective time of the merger, the
former stockholders of Speedcom will receive shares of LTI common stock in
exchange for their shares of Speedcom common stock.
No fractional shares will be issued to the Speedcom stockholders. Instead of
fractional shares, Speedcom stockholders will be paid in cash the amount equal
to the fractional share multiplied by $4.00.
IN UNANIMOUSLY APPROVING THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED IN CONNECTION WITH THE MERGER, THE MEMBERS OF THE LTI BOARD OF
DIRECTORS HAVE DETERMINED THAT THE MERGER IS ADVISABLE, FAIR TO AND IN THE BEST
INTERESTS OF LTI AND ITS STOCKHOLDERS AND RECOMMEND THAT THE LTI STOCKHOLDERS
VOTE "FOR" THE PROPOSAL TO APPROVE AND ADOPT THE MERGER AGREEMENT. THE BOARD OF
DIRECTORS OF LTI ALSO HAS DETERMINED THAT THE OTHER PROPOSALS ARE ADVISABLE AND
IN THE BEST INTERESTS OF LTI AND ITS STOCKHOLDERS AND RECOMMENDS THAT THE LTI
STOCKHOLDERS VOTE "FOR" EACH OF THE OTHER PROPOSALS.
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VOTE REQUIRED
Approval and adoption of the merger agreement and approval of the 1 for 4.26
reverse stock split and the other proposed changes to our certificate of
incorporation requires the favorable vote of the holders of a majority of the
issued and outstanding common stock of LTI. Only shares affirmatively voted for
a proposal, including properly executed proxies that do not contain voting
instructions, will be counted as favorable votes for that proposal. Abstentions
and broker non-votes are not affirmative votes and, therefore, will have the
same effect as votes against approval of those proposals.
LTI stockholders are entitled to one vote for each share of LTI common stock
on all matters submitted to a vote of LTI stockholders. The presence at the LTI
special meeting, either in person or by proxy, of the holders of a majority of
the votes entitled to vote at the meeting constitutes a quorum for the
transaction of business at the special meeting. In the event that a quorum is
not present at the special meeting, it is expected that the meeting will be
adjourned or postponed to solicit additional proxies. Under Delaware law, an
adjournment proposal requires the affirmative vote of a majority of the votes
cast by LTI stockholders present or represented at the meeting. No proxy voted
against the proposals will be voted in favor of an adjournment or postponement.
If an executed proxy is returned and the stockholder has specifically
abstained from voting on any matter, the shares represented by such proxy will
be considered present at the special meeting for purposes of determining a
quorum.
Brokers who hold shares in street name for customers will not have the
authority to vote on the proposed merger and the other proposals unless they
receive specific instructions from the beneficial owners. If an executed proxy
is returned by a broker holding shares in street name which indicates that the
broker does not have discretionary authority as to certain shares to vote on one
or more matters, such shares will be considered present at the meeting for
purposes of determining a quorum.
LTI stockholders have the right to object to the merger and be paid cash for
their shares in an amount determined in accordance with the provisions of
Delaware law.
VOTING OF PROXIES
If the accompanying proxy card is properly signed and returned to LTI and
not revoked before a vote is taken at the LTI special meeting, it will be voted
in accordance with the instructions indicated on the proxy card. If the proxy
card is signed and returned without indicating any voting directions, the proxy
will be voted "FOR" each of the proposals. Brokers who hold shares in street
name for customers do not have authority to vote on the proposed merger and
other proposals unless they receive specific instructions from the beneficial
owners. If you hold your shares in street name, please see the voting form
provided by your broker for additional information regarding the voting of your
shares.
LTI is not aware of any business to be acted on at the LTI special meeting,
except as described in this document. If any other matters are properly
presented to the LTI special meeting, or any adjournments or postponements of
the meeting, the persons appointed as proxies or their substitutes will have
discretion to vote or act on the matter according to their best judgment and
applicable law unless the proxy indicates otherwise.
REVOCATION OF PROXIES
A stockholder of LTI may revoke a proxy at any time before it is voted by:
- filing written notice of revocation with the Secretary of LTI which is
actually received prior to the vote of stockholders;
- filing a duly executed proxy bearing a later date;
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- attending the LTI meeting and voting in person, although attendance at the
special meeting will not by itself revoke the proxy; or
- following the instructions received from your broker for any shares held
by the broker in street name.
LTI stockholders should send any notice of revocation or later-dated proxy
cards to LTI at 5115 New Peachtree Road, Suite 200, Atlanta, Georgia 30341,
Attention: Secretary.
If you hold your LTI shares in street name, please see the instructions
provided by your broker regarding revocation of your proxy. If you vote your LTI
shares through your broker, you may not change or revoke your vote by contacting
LTI directly. You also will need additional documentation from your broker to
vote your LTI shares in person at the special meeting if they are held in street
name.
SOLICITATION OF PROXIES
LTI will bear the costs of soliciting proxies from LTI stockholders. In
addition to solicitation by mail, our directors, officers and employees may
solicit proxies from our stockholders by telephone or personal communication or
by other means. These persons will not receive additional compensation, but they
may be reimbursed for reasonable out-of-pocket expenses in connection with this
solicitation.
We also will make arrangements with brokerage houses and other custodians,
nominees and fiduciaries to forward solicitation materials to the beneficial
owners of LTI common stock held of record by such persons, and we will reimburse
custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses
in connection with this service.
We may engage one or more proxy solicitation firms to assist in obtaining
proxies from LTI stockholders on a timely basis, and we will pay any fees
related to these services.
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PROPOSAL 1: THE MERGER
GENERAL
In the merger, Speedcom and LTI will merge, with LTI surviving the merger.
If the merger is completed, shares of Speedcom common stock outstanding
immediately prior to the merger will be converted into shares of LTI common
stock. Speedcom stockholders will (i) become stockholders in LTI and (ii) will
no longer hold any interest in Speedcom other than through their interest in
shares of the post-merger combined company. The rights of Speedcom stockholders
will be governed by the LTI certificate of incorporation and bylaws (as amended
or supplemented, including by the other proposals being submitted to a vote of
LTI stockholders at the LTI special meeting). We anticipate that the closing
date will occur as promptly as practicable after the LTI special meeting of
stockholders.
BACKGROUND OF THE MERGER
In connection with the completion of the sale of all of LTI's operating
assets to Packaging Atlanta Corporation last June, LTI's management began
focusing its efforts on identifying suitable candidates for a business
combination. At that time, the board of directors determined not to liquidate
LTI or otherwise distribute any of its remaining assets because the board
believed that a business combination with a suitable operating company had the
potential to create a greater value for LTI stockholders than a liquidation or
similar distribution.
LTI was first introduced to Speedcom in June 1999 by Paul Mannion of J.W.
Genesis Securities, Inc. During June 1999, LTI received and reviewed information
regarding Speedcom, and Michael Noonan, LTI's President and CEO, had a series of
telephone conversations with Michael McKinney, Speedcom's CEO.
On July 22, 1999, Mr. Noonan visited Speedcom's headquarters in Sarasota,
Florida to meet with Mr. McKinney and some of Speedcom's other key personnel,
tour Speedcom's facilities, look at its production operations and perform some
additional preliminary due diligence. Subsequent to that meeting, the parties
began preliminary negotiations of the terms and conditions of a possible
business combination of LTI and Speedcom. While these preliminary negotiations
were ongoing, Mr. Noonan consulted with certain key stockholders of LTI
concerning the possible business combination. As a result of those discussions,
Mr. Noonan decided not to pursue further negotiations with Speedcom at that
time.
After suspending negotiations with Speedcom, LTI continued to explore other
business combination opportunities, exchanging information with a number of
different business combination candidates. During this period, Mr. Noonan also
continued to be in contact with Speedcom representatives.
In early 2000, after reviewing the status of the company's search for a
suitable business combination partner, Mr. Noonan again discussed the
possibility of a transaction with Speedcom with certain key LTI stockholders.
Based upon these discussions and Mr. Noonan's belief that a transaction with
Speedcom remained an attractive opportunity, LTI, through Mr. Mannion,
approached Speedcom to determine if Speedcom was still interested in pursuing a
transaction. Mr. Mannion had discussions with Jay Wright, who had recently
joined Speedcom as its Chief Financial Officer, who communicated Speedcom's
interest in renewing negotiations.
Following Mr. Mannion's contact with Speedcom, representatives of LTI and
Speedcom began negotiating the terms of a merger. The parties exchanged
additional financial and business information and began negotiations and due
diligence during April 2000. These negotiations resulted in a merger proposal
dated May 12, 2000 from Speedcom to LTI.
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The parties continued to negotiate the terms of the merger, and in a letter
to LTI dated May 31, 2000, Speedcom formalized its merger proposal. The parties
and their legal counsel met by telephone to discuss and further negotiate the
terms of the proposal. Speedcom's legal counsel prepared a revised letter of
intent based on those discussions. The terms of the letter of intent provided
for the parties to enter into a definitive merger agreement whereby LTI would
acquire Speedcom in return for shares of LTI's common stock. Upon completion of
the transaction, current LTI's stockholders would own approximately 8% of the
post-merger combined company and current Speedcom stockholders would own
approximately 92% of the post-merger combined company, subject to certain
adjustments based upon the cash position of LTI at the closing of the merger.
The letter of intent also provided that the completion of the merger was subject
to a number of conditions, including completion of due diligence, negotiation of
a definitive merger agreement, stockholder approval and the filing and
effectiveness of a registration statement with the SEC.
The LTI board of directors held a special meeting on June 5, 2000 by
telephone to discuss the terms of the proposed merger. LTI's legal counsel also
attended the meeting. At the meeting, the board discussed the Speedcom proposal
and authorized LTI's management to execute the letter of intent and move forward
with negotiations of a definitive merger agreement. The board also authorized
management to engage Marshall & Stevens Incorporated to render advice to the
board concerning the fairness, from a financial point of view, of the proposed
merger. The parties executed the letter of intent on June 5, 2000 and issued a
joint press release on June 6, 2000 announcing the proposed merger.
During June and July 2000, LTI, Speedcom and their respective advisors
completed their due diligence reviews and negotiated the terms of a definitive
merger agreement.
The LTI board of directors held a special meeting on August 4, 2000 by
telephone to discuss the terms of the draft definitive merger agreement. LTI's
legal counsel and a representative of Marshall & Stevens also attended the
meeting. At that meeting, Marshall & Stevens reviewed the financial terms of the
merger and rendered its oral opinion, subsequently confirmed by delivery of a
written opinion dated as of August 4, 2000, to the effect that as of that date,
based upon and subject to the assumptions, limitations and qualifications set
forth in its written opinion, the merger was fair to LTI's stockholders from a
financial point of view. Following Marshall & Steven's presentation of its
opinion, the board of directors considered the terms and provisions of the draft
definitive merger agreement. After further discussion, and consideration of the
factors described under "--LTI's Reasons for the Merger; Recommendation of the
Board Of Directors" the LTI board of directors concluded that the merger was
advisable, fair to and in the best interests of LTI and its stockholders and
unanimously approved the merger agreement and the transactions contemplated by
the merger agreement. The board authorized Mr. Noonan to complete negotiations
with Speedcom and execute the definitive merger agreement, and that the merger
agreement and the additional proposals relating to the merger be submitted to
LTI stockholders for their approval in accordance with Delaware law and LTI's
charter and bylaws.
On August 4, 2000, after negotiation of the final terms of the merger
agreement and accompanying exhibits and schedules, Messrs. Noonan and McKinney
executed the merger agreement. On August 4, 2000, LTI and Speedcom also issued a
joint press release announcing the execution of the definitive merger agreement.
LTI'S REASONS FOR THE MERGER; RECOMMENDATION OF THE BOARD OF DIRECTORS
The LTI board of directors believes that the merger is advisable, fair to
and in the best interests of LTI and its stockholders and has approved the
merger agreement and the merger. The LTI board of directors believes that the
opportunities created by the merger to increase the value of the LTI common
stock more than offset any risks inherent in the merger. In reaching its
decision to approve
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and recommend the merger agreement and merger, the board evaluated the
information at its disposal, consulted with LTI's management and outside
advisors, and considered certain factors, including the following:
- information regarding the financial condition, results of operations,
business and prospects of LTI and Speedcom;
- the opportunity for current LTI stockholders to share, through their
equity interest in the combined company, in the growth and prospects of
Speedcom;
- the judgment and advice of LTI's senior management, including its
favorable recommendation for the merger;
- the ownership interest in the combined company that would be held by the
current stockholders of LTI;
- the analyses prepared by Marshall & Stevens and presented to the LTI board
of directors on August 4, 2000, and the oral opinion of Marshall & Stevens
presented that date (subsequently confirmed in writing on August 4, 2000)
that, as of the date of the opinion and based upon and subject to certain
considerations set forth in the opinion, the merger was fair to LTI's
stockholders from a financial point of view, as described more fully under
"Opinion of LTI's Financial Advisor;"
- the terms of the merger agreement;
- the possibility of pursuing alternative transactions or liquidating the
company;
- current industry, economic and market conditions;
- the interests of certain persons in the merger as discussed under the
heading "--Interests of Certain Persons in the Merger;"
- the possibility that the merger may not be completed, and the negative
impact the failure to consummate the merger might have on LTI's stock
price; and
- the risks related to the merger. See "Risk Factors."
The terms of the merger were the result of arms-length negotiations between
representatives of LTI and representatives of Speedcom. Based upon its
consideration of the foregoing factors, the LTI board of directors approved the
merger agreement and the transactions contemplated thereby as being advisable,
fair to and in the best interests of LTI and its stockholders.
The foregoing discussion of the information and factors considered by the
board of directors is not intended to be exhaustive, but includes a summary of
all of the material factors that the board took into account in making its
recommendation. The board of directors considered these factors in light of its
knowledge of the business, the industry in general, the information provided by
LTI's management and the opinion of Marshall & Stevens. The board did not
attempt to quantify or assign relative weights to the specific factors, nor did
it determine that any factor or factors was or were of particular importance.
The board viewed its determination as being based on the totality of the
information presented to and considered by the board, and did not believe it to
be practical to assign weights to the various factors.
THE LTI BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF
AND ADOPTION OF THE MERGER AGREEMENT.
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OPINION OF LTI'S FINANCIAL ADVISOR
LTI retained Marshall & Stevens Incorporated to render an opinion to the
board of directors of LTI regarding the fairness, from a financial point of
view, to the stockholders of LTI of the contemplated merger with Speedcom
Wireless International Corporation. On August 4, 2000, Marshall & Stevens
delivered its oral opinion to the LTI board of directors, subsequently confirmed
in writing dated August 4, 2000, that, as of such date and based upon and
subject to the assumptions, limitations and qualifications set forth in the
written opinion, the merger was fair to LTI's stockholders from a financial
point of view.
The full text of the Marshall & Stevens opinion, which sets forth certain
assumptions made, procedures followed, matters considered, limitations on, and
scope of its review in rendering the opinion, is attached to this proxy
statement as Appendix C and is incorporated by reference herein. THE SUMMARY OF
THE MARSHALL & STEVENS OPINION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
FULL TEXT OF THE OPINION ATTACHED TO THIS PROXY STATEMENT/PROSPECTUS. LTI
STOCKHOLDERS ARE URGED TO CAREFULLY READ THE OPINION IN ITS ENTIRETY.
You should note that the Marshall & Stevens opinion is addressed to the LTI
board of directors and addresses the fairness of the merger from a financial
point of view and does not address any other aspect of the proposed merger or
the merger agreement, nor does it constitute a recommendation to any LTI
stockholder as to how to vote at the special meeting. Marshall & Stevens did
not, and was not requested by LTI, to make any recommendations as to the
exchange ratio or to solicit third party indications of interest in acquiring
all or part of LTI.
In arriving at its opinion, Marshall & Stevens reviewed, among other things:
- drafts of the merger agreement;
- Forms 10-KSB for the years ended March 31, 1997, 1998, 1999 and 2000 and
LTI's internal financial statements for June 30, 2000;
- information concerning the efforts to market the company;
- historical trading prices and trading volume of the LTI common stock; and
- certain operating and financial information, including projections,
provided by Speedcom management relating to Speedcom's business plan.
Marshall & Stevens also held discussions with members of the senior
management of Speedcom regarding Speedcom's history, financial performance and
future prospects. In addition, Marshall & Stevens performed valuation tests and
analysis of the proposed combined company and conducted such other studies,
analyses, inquiries and investigations as it deemed appropriate.
In preparing its opinion, Marshall & Stevens relied on the accuracy and
completeness of all information that was publicly available, supplied or
communicated to Marshall & Stevens by or on behalf of LTI or Speedcom and
Marshall & Stevens has not assumed any responsibility to independently verify
that information. Marshall & Stevens also assumed that the financial forecasts
provided to it were reasonably prepared on bases reflecting the best currently
available estimates and good faith judgments of the management of LTI and
Speedcom. The opinion does not address the relative merits of the proposed
merger and any other transactions or strategies which may have been discussed as
alternatives to the proposed merger. LTI did not place any limitations on
Marshall & Stevens with respect to the procedures followed or factors considered
in rendering the opinion. In addition, Marshall & Stevens did not make an
independent evaluation or appraisal of the assets and liabilities of LTI or
Speedcom and was not furnished with any such evaluation or appraisal.
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The following is a summary of the material financial analyses used by
Marshall & Stevens in connection with providing its oral opinion to the LTI
board of directors on August 4, 2000. Marshall & Stevens utilized substantially
the same type of financial analyses in connection with providing the written
opinion attached as Appendix C.
Marshall and Stevens reviewed the historical financial statements of LTI to
ascertain the financial position of the company. The prospects of the company,
which has no operating assets or active business, were evaluated to determine
the long run viability of LTI on a standalone basis.
Marshall & Stevens reviewed the historical financial statements and the
current business plan of Speedcom to ascertain the financial position of
Speedcom and its expected performance in the immediate future, based on their
business plan.
Marshall & Stevens reviewed the economic outlook for the wireless
communication and internet service industries. In addition, companies which
compete in these markets and are publicly traded were analyzed and compared to
the combined LTI-Speedcom entity.
Marshall and Stevens performed a hypothetical valuation of the combined
business operations of LTI and Speedcom, as if the companies had merged. We
utilized both the discounted cash flow approach and the capital market approach
to estimate the potential range of value of the combined entity. This range of
value exceeded the nominal price per share from the merger agreement of $4.00
per share after the reverse split as contemplated in the agreement.
The preparation of a fairness opinion involves various determinations as to
the most appropriate and relevant quantitative methods of financial analysis and
the application of those methods to the particular circumstances and, therefore,
is not readily susceptible to partial analysis or summary description.
Accordingly, Marshall & Stevens believes that its analysis must be considered in
its entirety, and to do otherwise could create a misleading or incomplete view
of the process underlying the opinion. In its analysis, Marshall & Stevens made
numerous assumptions regarding the performance of LTI and Speedcom, the industry
and the economy, many of which are beyond the control of LTI and Speedcom. The
estimates used in the analysis are not necessarily indicative of actual values
or predictive of future values which may vary significantly from those set forth
herein and in the written opinion. In addition, analyses relating to the value
of the businesses do not purport to be appraisals or to reflect the prices at
which businesses may actually be sold. Accordingly, such analyses and estimates
are inherently subject to substantial uncertainty and none of LTI, Speedcom or
Marshall & Stevens assumes responsibility for the accuracy of such analyses and
estimates.
The analyses were prepared solely for purposes of Marshall & Stevens
providing its opinion to the LTI board of directors as to the fairness of the
merger from a financial point of view and do not purport to be appraisals or
necessarily reflect the prices at which businesses or securities actually may be
sold. Analyses based upon forecasts of future results are not necessarily
indicative of actual future results, which may be significantly more or less
favorable than suggested by such analyses. Because such analyses are inherently
subject to uncertainty, being based upon numerous factors or events beyond the
control of the parties or their respective advisors, none of LTI, Speedcom,
Marshall & Stevens or any other person assumes responsibility if future results
are materially different from those forecast. As described above, Marshall &
Stevens' opinion to the LTI board of directors was one of many factors taken
into consideration by the LTI board of directors in making its determination to
approve and adopt the merger agreement. The foregoing summary describes material
financial analyses used by Marshall & Stevens in connection with providing its
opinion to the LTI board of directors, but does not purport to be a complete
description of the analysis performed by Marshall & Stevens in connection with
such opinion and is qualified by reference to the written opinion of Marshall &
Stevens set forth in Appendix C hereto.
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Marshall & Stevens is continually engaged in the valuation of businesses and
their securities. Marshall & Stevens is familiar with LTI, having been engaged
by LTI to provide a fairness opinion in connection with the sale of assets to
Packaging Atlanta Corporation and the proposed transaction (which was not
completed) with Pen Interconnect.
In connection with rendering its opinion, Marshall & Stevens will be paid a
fee of $23,000. LTI has also agreed to reimburse Marshall & Stevens for its
reasonable out-of-pocket expenses. No portion of Marshall & Stevens' fee is
contingent upon the successful completion of the proposed merger. In addition,
LTI has agreed to indemnify Marshall & Stevens and its employees, directors,
officers, control persons, affiliates and agents against certain liabilities
incurred in connection with its services, including liabilities under federal
securities laws
SPEEDCOM'S REASONS FOR THE MERGER
Speedcom has been evaluating methods of obtaining access to significant
amounts of financial capital for some time. Speedcom has determined that
becoming a publicly traded corporation presents significant advantages at this
time relative to other financing alternatives such as venture capital. Speedcom
believes that merging with LTI presents several advantages, including:
- Obtaining approximately $1.5 million in working capital pursuant to the
merger;
- Utilizing its common stock as a currency to acquire one or more companies
which complement its product offerings;
- Raising additional capital at more favorable prices, assuming an increase
in Speedcom's valuation;
- Enhancing its ability to: recruit employees, obtain favorable terms from
suppliers and promote its brand name; and
- Creating liquidity for its common shareholders by providing them with the
option of selling part or all of their holdings.
In sum, Speedcom believes that a merger with LTI presents an excellent
opportunity to enhance shareholder value for Speedcom shareholders.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In connection with the completion of the merger, all current LTI officers
and directors are required to resign their positions. Upon such resignation,
Michael Noonan, LTI's current Chairman, President and Chief Executive Officer,
will be entitled to a severance payment of $144,000 (equal to his annual base
salary), payable over twelve months, and subject to a fifty percent offset
during the second six months for salary received from subsequent employment.
WHAT SPEEDCOM STOCKHOLDERS WILL RECEIVE IN THE MERGER
Common stockholders of Speedcom will receive one share of LTI common stock
for each share of Speedcom common stock that they own. Speedcom stockholders
will not receive any fractional shares of LTI common stock. Instead, they will
receive cash in an amount equal to $4.00 multiplied by the appropriate fraction.
Following completion of the merger, current Speedcom stockholders will own
shares, in the aggregate, representing approximately 92% of the equity ownership
interest in the post-merger company.
If, at the effective time of the merger, LTI has net cash of less than
$1.5 million, the number of shares of LTI common stock to be issued to the
Speedcom stockholders will be increased by an aggregate amount equal to (i) the
difference between $1.5 million and the net cash of LTI at the time
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the merger becomes effective, divided by (ii) 4, multiplied by (iii) 11.5. In
that event, current Speedcom stockholders will own shares, in the aggregate,
representing more than approximately 92% of the equity ownership interest in the
post-merger company.
Speedcom stockholders should not send in their stock certificates now. After
the merger, the exchange agent acting on behalf of LTI will send Speedcom
stockholders written instructions for exchanging their stock certificates.
TREATMENT OF SPEEDCOM OPTIONS AND WARRANTS IN THE MERGER
Each outstanding option and warrant to acquire shares of Speedcom common
stock will be converted into an option or a warrant, as appropriate, to acquire,
on substantially the same terms and conditions currently applicable to the
Speedcom option or warrant, the number of shares of LTI common stock equal to
the number of shares of Speedcom common stock that the holder would have been
entitled to receive in the merger had such holder fully exercised the option or
warrant immediately prior to the effective date of the merger.
EFFECTIVE TIME OF THE MERGER
The effective time of the merger will occur upon the filing of a certificate
of merger with the Secretary of State of Delaware and the Secretary of State of
Florida or at such other time as specified in the certificate of merger. This
filing is expected to be made at the same time as the closing of the merger.
GOVERNMENT AND REGULATORY MATTERS
Neither LTI or Speedcom is aware of any governmental regulatory approvals or
filings that are necessary to complete the merger, other than with respect to
compliance with federal and state securities law and filings to be made with the
Secretary of State of Delaware and the Secretary of State of Florida.
ANTICIPATED ACCOUNTING TREATMENT
We expect to account for the merger as a recapitalization of Speedcom since
LTI has been a non-operating public shell for greater than twelve months and
because Speedcom stockholders will own the majority of the outstanding common
stock following the merger. As a result, Speedcom will record the merger as an
issuance of common stock for the net monetary assets of LTI, accompanied by a
recapitalization of its equity.
CERTAIN MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
CONSEQUENCES TO LTI AND LTI STOCKHOLDERS
The following is a discussion, based on the advice of Piper Marbury
Rudnick & Wolfe LLP, counsel to LTI, of the material United States federal
income tax consequences of the merger to LTI and to stockholders of LTI.
The discussion does not address all aspects of United States federal income
taxation that may be important to you in light of your particular circumstances.
For example, it does not address tax consequences that may apply to you if you
are a taxpayer that is subject to special treatment under the federal income tax
laws, such as a bank, financial institution, broker-dealer, insurance company,
foreign person, or tax-exempt entity, or if you acquired your LTI common stock
by exercising employee stock options or otherwise as compensation or through a
tax-qualified retirement plan. It also does not address any aspect of state,
local or foreign taxation. The discussion assumes that you will hold your
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LTI common stock as a capital asset at all times. This discussion also does not
address any consequences to you if, in addition to holding stock in LTI, you
also own stock in Speedcom.
You are urged to consult with your own tax advisor concerning the tax
consequences of the merger to you.
Neither LTI nor its stockholders will recognize gain or loss as a result of
the merger, except that any stockholders of LTI who exercise their dissenter's
rights and who receive cash upon such exercise will, in general, recognize
capital gain or loss (which will be long-term capital gain or loss if such LTI
shares have been held for more than one year at the time of the merger) equal to
the difference between the amount received and such holders' basis in their
shares. Any stockholders of LTI who intend to exercise dissenters' rights should
consult their own tax advisors as to the possibility of dividend treatment.
Although LTI will not recognize any gain as a result of the merger, as the
surviving corporation it will succeed to all liabilities (including tax
liabilities) of Speedcom. Accordingly, to the extent, if any, that Speedcom
recognizes gain as a result of the merger (see "--Certain Material United States
Federal Income Tax Consequences of the Merger--Consequences to Speedcom and
Speedcom Stockholders) LTI will be responsible for any tax on such gain.
For a summary of certain material Federal income tax consequences of the
proposed reverse split, see "Proposal 2: Reverse Split--Certain Material United
States Federal Income Tax Consequences of the Reverse Split."
This discussion is based on the Internal Revenue Code, Treasury regulations
promulgated thereunder, administrative rulings and practice, and judicial
precedent, all as of the date hereof. All of these authorities are subject to
change, possibly with retroactive effect. Any change in any of these authorities
could alter the tax consequences to LTI and its stockholders discussed herein.
The parties will not request, and the merger is not conditioned upon, a ruling
from the Internal Revenue Service as to any of the United States federal income
tax consequences of the merger. As a result, there can be no assurance that the
Internal Revenue Service will not disagree with or challenge any of the
conclusions concerning the merger set forth in this discussion.
CONSEQUENCES TO SPEEDCOM AND SPEEDCOM STOCKHOLDERS.
The following is a discussion, based on the advice of Foley & Lardner,
counsel to Speedcom, of the material United States federal income tax
consequences of the merger to Speedcom and to stockholders of Speedcom.
The following is a discussion of certain material federal income tax
consequences of the merger to Speedcom and the holders of Speedcom common stock
who are citizens or residents of the United States or who are domestic
corporations. This discussion is for general information only and does not
address all tax consequences of the merger that may be important to you in light
of your particular circumstances. The summary may not apply to Speedcom
stockholders in special situations (such as dealers in securities or currencies,
traders in securities, financial institutions, tax-exempt organizations,
insurance companies, persons holding shares of Speedcom common stock as part of
a hedging, "straddle," conversion or other integrated transaction or through an
individual retirement account or tax-qualified retirement plan, non-United
States persons, persons whose functional currency is not the United States
dollar or persons who acquired their shares of Speedcom common stock pursuant to
the exercise of employee stock options or warrants, or otherwise as compensation
and Speedcom stockholders who also hold stock in LTI). The discussion assumes
that the shares of Speedcom common stock are held as capital assets. In
addition, no information is provided herein with respect to the tax consequences
of the merger under applicable foreign, state or local laws.
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The consummation of the merger is conditioned upon the receipt by Speedcom
of an opinion from Foley & Lardner in form and substance reasonably satisfactory
to Speedcom, on the basis of certain facts, representations and assumptions set
forth therein, that the merger will be treated for federal income tax purposes
as a reorganization within the meaning of Section 368(a) of the Code, and that
LTI and Speedcom will each be a party to that reorganization within the meaning
of section 368(b) of the Code. Foley & Lardner will provide such opinion based
upon certain customary assumptions and representations of fact, including
representations of fact contained in certificates of officers of LTI and
Speedcom, all of which must be true, correct and complete in all material
respects as of the effective time of the merger.
This discussion is based on the Internal Revenue Code, Treasury Regulations
promulgated thereunder, administrative rulings and practice, and judicial
precedent, all as of the date hereof. All of these authorities are subject to
change, possibly with retroactive effect. Any change in any of these authorities
could alter the tax consequences to Speedcom and its stockholders discussed
herein. No ruling has been sought from the Internal Revenue Service as to the
U.S. federal income tax consequences of the merger. The opinion of counsel is
not binding upon the Internal Revenue Service or any court. Accordingly, there
can be no assurances that the Internal Revenue Service will not contest the
conclusions expressed therein or that a court will not sustain such contest.
Assuming the merger will qualify as a reorganization, no gain or loss will
be recognized by Speedcom as a result of the merger except to the extent the sum
of the liabilities assumed by LTI, plus the amount of liabilities (if any) to
which the Speedcom assets transferred to LTI in the merger are subject, exceed
the aggregate adjusted tax basis in the Speedcom assets transferred to LTI in
the merger. Speedcom expects, as of the effective time of the merger, that it
will not have such liabilities in excess of adjusted tax basis.
Assuming that the merger will qualify as a reorganization, the federal
income tax consequences of the merger to a Speedcom stockholder are as follows:
Except as discussed below with respect to cash received in lieu of a
fractional share of LTI common stock, a Speedcom stockholder that receives
shares of LTI common stock in exchange for such holder's shares of Speedcom
common stock will not recognize gain or loss. The tax basis of the shares of LTI
common stock received in the merger will be the same as the tax basis of the
shares of Speedcom common stock exchanged therefor. The holding period of the
shares of LTI common stock received will include the holding period of shares of
Speedcom common stock exchanged therefor.
If a Speedcom stockholder receives cash in lieu of a fractional share of LTI
common stock in the merger, such cash amount will generally be treated as
received in exchange for the fractional share of LTI common stock. Any gain or
loss recognized as a result of that exchange will be equal to the difference
between the cash amount received for the fractional share of LTI common stock
and the proportion of the stockholder's tax basis in shares of Speedcom common
stock exchanged and allocable to the fractional share of LTI common stock. Such
gain or loss will be a long-term or short-term capital loss, depending upon the
holding period of the Speedcom common stock exchanged.
The payment of cash in lieu of a fractional share of LTI common stock to a
Speedcom stockholder, other than exempt persons or entities, may be subject to
"backup withholding" for federal income tax purposes, unless specified
requirements are met. LTI or a third-party paying agent, as the case may be,
must withhold 31% of the cash paid to that stockholder, unless that stockholder:
- is a corporation or comes within other exempt categories and, when
required, demonstrates this fact; or
- provides LTI or the third-party paying agent, as the case may be, with his
or her taxpayer identification number and completes a form in which he or
she certifies that he or she has not
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been notified by the Internal Revenue Service that he or she is subject to
backup withholding as a result of a failure to report interest and
dividends.
The taxpayer identification number of an individual is his or her Social
Security number. Any amount paid as backup withholding will be credited against
the stockholders' federal income tax liability.
THE PRECEDING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF CERTAIN FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER AND DOES NOT PURPORT TO BE A COMPLETE
ANALYSIS OR DISCUSSION OF ALL POTENTIAL TAX EFFECTS RELEVANT THERETO. THUS,
SPEEDCOM STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING TAX RETURN REPORTING
REQUIREMENTS, THE APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL, AND OTHER
APPLICABLE TAX LAWS, AND THE EFFECT OF ANY PROPOSED CHANGES IN THE TAX LAWS.
RESALE OF LTI COMMON STOCK FOLLOWING THE MERGER
The shares of LTI common stock issued to Speedcom stockholders pursuant to
the merger will be registered under the Securities Act of 1933, as amended.
These shares will be freely transferable under the Securities Act following
completion of the merger, except for shares issued to any Speedcom stockholder
who may be deemed to be an "affiliate" of Speedcom for purposes of Rule 145
under the Securities Act.
THIS DOCUMENT DOES NOT COVER RESALES OF SHARES OF LTI COMMON STOCK RECEIVED
BY ANY PERSON WHO MAY BE DEEMED TO BE AN AFFILIATE OF SPEEDCOM.
Persons who may be deemed to be affiliates of Speedcom generally include
individuals or entities that control, are controlled by, or are under common
control with Speedcom, and generally include the executive officers and
directors of Speedcom and entities controlled by executive officers and
directors of Speedcom. Affiliates may not sell their shares of LTI common stock
acquired in connection with the merger, except pursuant to an effective
registration under the Securities Act covering the resale of such shares or in
compliance with Rule 145 under the Securities Act (or Rule 144 under the
Securities Act in the case of persons who become affiliates of LTI subsequent to
the merger) or another applicable exemption from the registration requirements
of the Securities Act.
In general, Rule 145 under the Securities Act provides that, for one year
following the effective time of the merger, an affiliate (together with certain
related persons) would be entitled to sell shares of LTI common stock acquired
in connection with the merger only through unsolicited "broker transactions" or
in transactions directly with a "market maker," as such terms are defined in
Rule 144 under the Securities Act. Additionally, the number of shares to be sold
by an affiliate (together with certain related persons and certain persons
acting in concert) within any three-month period for purposes of Rule 145 under
the Securities Act may not exceed the greater of 1% of the outstanding shares of
LTI common stock or the average weekly trading volume of such shares during the
four calendar weeks preceding such sale. Rule 145 under the Securities Act will
remain available to affiliates if LTI timely files reports under the Securities
Exchange Act of 1934 with the SEC. One year after the effective time of the
merger, an affiliate of Speedcom will be able to sell such shares of LTI common
stock without being subject to such manner of sale or volume limitations,
provided that LTI is current with its Exchange Act informational filings and
such affiliate is not then an affiliate of the post-merger combined company. Two
years after the effective time of the merger, an affiliate will be able to sell
such shares of LTI common stock without any restrictions so long as such
affiliate had not been an affiliate of the post-merger combined company for at
least three months prior to the date of such sale.
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APPRAISAL RIGHTS OF LTI STOCKHOLDERS
If the merger is consummated, a holder of record of LTI stock on the date of
making a demand for appraisal, as described below, will be entitled to have
those shares appraised by the Delaware Court of Chancery pursuant to
Section 262 of the Delaware corporation statute and to receive payment for the
"fair value" of those shares.
LTI stockholders who are entitled to appraisal of the fair value of their
shares are those who (1) hold shares of LTI stock on the date on which they make
a demand for appraisal rights, (2) continuously hold such shares through the
effective date of the merger, (3) strictly comply with the procedures discussed
in Section 262 and (4) have neither voted in favor of the merger nor consented
thereto in writing.
Holders of outstanding LTI options or warrants are not entitled to appraisal
rights in connection with the merger.
This proxy statement/prospectus is being sent to all holders of record of
LTI common stock on the record date for the LTI special meeting and constitutes
notice of the appraisal rights available to those holders under Section 262. THE
STATUTORY RIGHT OF APPRAISAL GRANTED BY SECTION 262 IS COMPLEX AND REQUIRES
STRICT COMPLIANCE WITH THE PROCEDURES IN SECTION 262. FAILURE TO FOLLOW ANY OF
THESE PROCEDURES MAY RESULT IN A TERMINATION OR WAIVER OF DISSENTERS' RIGHTS
UNDER SECTION 262. THE FOLLOWING IS A SUMMARY OF THE PRINCIPAL PROVISIONS OF
SECTION 262.
The following summary is not a complete statement of Section 262 of the
Delaware corporation statute, and is qualified in its entirety by reference to
Section 262 which is incorporated herein by reference, together with any
amendments to the laws that may be adopted after the date of this proxy
statement/prospectus. A copy of Section 262 is attached as Appendix D to this
proxy statement/ prospectus.
Any LTI stockholder entitled to appraisal rights and electing to seek
appraisal of such stockholder's shares must demand in writing from LTI the
appraisal of such holder's shares prior to the taking of the vote on the merger.
Such demand will be sufficient if it reasonably informs LTI of the identity of
the stockholder and that the stockholder intends thereby to demand the appraisal
of such holder's shares. Voting against approval of the merger, abstaining from
voting or failing to vote with respect to approval of the merger will not
constitute a demand for appraisal within the meaning of Section 262. All demands
should be delivered to: President, LTI Holdings, Inc., 5115 New Peachtree Road,
Suite 200, Atlanta, Georgia 30341.
BENEFICIAL OWNERS WHO ARE NOT RECORD OWNERS AND WHO INTEND TO EXERCISE
APPRAISAL RIGHTS SHOULD INSTRUCT THE RECORD OWNER TO COMPLY WITH THE STATUTORY
REQUIREMENTS WITH RESPECT TO THE EXERCISE OF APPRAISAL RIGHTS BEFORE THE DATE OF
THE LTI SPECIAL MEETING.
Within 10 days after the effective date of the merger, LTI, as the surviving
corporation in the merger, must notify each stockholder of LTI who has complied
with the procedures set forth above and has not voted in favor of or consented
to the merger that the merger has become effective.
Within 120 days of the effective date of the merger, LTI, as the surviving
corporation in the merger, or any stockholder who has complied with 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 value of the stock.
Stockholders seeking to exercise appraisal rights should not assume that LTI
will file a petition with respect to the appraisal of the fair value of their
shares or that LTI will initiate any negotiations with respect to the fair value
of those shares. LTI is under no obligation, and has no present intention, to
take any action in this regard. Accordingly, stockholders who wish to seek
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appraisal of their shares should initiate all necessary action with respect to
the perfection of their appraisal rights within the time periods and in the
manner prescribed in Section 262. FAILURE TO FILE THE PETITION ON A TIMELY BASIS
WILL CAUSE THE STOCKHOLDERS' RIGHT TO AN APPRAISAL TO CEASE.
Notwithstanding the foregoing, at any time within 60 days after the
effective date of the merger, any stockholder shall have the right to withdraw
the demand for appraisal and to accept the terms offered in the merger. Within
120 days after the effective date of the merger, any stockholder who has
complied with Section 262, upon written request, shall be entitled to receive
from LTI a statement setting forth the aggregate number of shares not voted in
favor of the merger and with respect to which demands for appraisal have been
received. Such written statement must be mailed to a stockholder making such a
request within 10 days after the written request is received by LTI or within
10 days after the expiration of the period for delivery of demands for appraisal
under subsection (d) of Section 262, whichever is later.
Upon the filing of any such petition by a stockholder in the Court of
Chancery, service of a copy thereof shall be made upon LTI. Within 20 days after
such service, LTI shall 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 such shares have not been reached. If the petition
is filed by LTI, the petition shall be accompanied by such a duly verified list.
At the hearing on such petition, the Court shall determine the stockholders
who have complied with Section 262 and who have become entitled to appraisal
rights. After determining the stockholders entitled to 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, together
with a fair rate of interest, if any, to be paid upon the amount determined to
be the fair value. In determining the fair value, the Court shall take into
account all relevant factors, including the rate of interest which LTI would
have had to pay to borrow money during the pendency of the proceeding.
Stockholders who consider seeking appraisal should consider that the fair
value of their shares under Section 262 could be more than, the same as, or less
than, the value of the consideration provided for in the merger agreement
without the exercise of appraisal rights.
The Court shall direct the payment of the fair value of the shares, together
with interest, if any, by LTI to the stockholders entitled thereto. Interest may
be simple or compound, as the Court may direct.
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,
without limitation, reasonable attorney's fees and the fees and expenses of
experts, to be charged pro rata against the value of all of the shares entitled
to appraisal.
Any stockholder who has demanded appraisal in compliance with Section 262
will not, after the merger, be entitled to vote such stock for any purpose or
receive payment of dividends or other distributions, if any, on the LTI stock,
except for dividends or distributions, if any, payable to stockholders of record
at a date prior to the merger.
IN VIEW OF THE COMPLEXITY OF THESE PROVISIONS OF THE DELAWARE CORPORATION
STATUTE, ANY LTI STOCKHOLDER WHO IS CONSIDERING EXERCISING APPRAISAL RIGHTS
SHOULD CONSULT A LEGAL ADVISOR.
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NASDAQ SMALLCAP MARKET LISTING
LTI intends to apply for listing of the common stock on the Nasdaq SmallCap
Market after the merger. The initial Nasdaq SmallCap Market listing requirements
provide for a number of minimum standards, including:
- minimum net tangible assets of $4 million or minimum market capitalization
of $50 million or minimum net income of $750,000;
- public float of at least 1 million shares;
- public float value of at least $5 million;
- minimum bid price of $4;
- three or more market makers;
- 300 or more "round lot" stockholders;
- minimum operating history of one year or minimum market capitalization of
$50 million; and
- compliance with certain Nasdaq-mandated corporate governance standards.
LTI does not currently meet a number of these standards, and it is uncertain
whether the combined company will meet all of the standards after the completion
of the merger. We cannot assure you that the company will meet the requirements
for listing on the Nasdaq SmallCap Market after the merger, or that it will be
able to take the additional steps necessary to meet those requirements. Further,
the Nasdaq imposes certain continued listing requirements that would apply to
the company on an ongoing basis even after the company met all of the
requirements for the initial listing of the common stock on the Nasdaq SmallCap
Market. We cannot assure you that the company will be able to satisfy the
continued listing requirements on an ongoing basis in the future. If LTI fails
to satisfy the initial listing requirements or fails to satisfy the continued
listing requirements in the future, the market price for and liquidity of the
common stock may be adversely affected.
PROCEDURES FOR EXCHANGE OF SPEEDCOM COMMON STOCK CERTIFICATES
LTI intends to authorize American Stock Transfer and Trust Company to act as
exchange agent to assist in the exchange of Speedcom stock certificates for
certificates of LTI. As soon as practicable after the effective time of the
merger, LTI will deliver to the exchange agent, for the benefit of holders of
issued and outstanding shares of Speedcom common stock, certificates
representing the shares of LTI common stock issuable as a result of the merger
and cash required to make payments in lieu of fractional shares.
As soon as reasonably practicable after the effective time of the merger,
the exchange agent will mail a letter of transmittal, together with exchange
instructions, to the holders of record of Speedcom common stock. After receiving
the letter of transmittal, the Speedcom stockholders will be able to surrender
their certificates to the exchange agent, and will receive in exchange a
certificate representing the number of whole shares of LTI common stock (and
cash in lieu of any fractional shares) to which they are entitled. The letter of
transmittal will be accompanied by instructions specifying other details of the
exchange.
SPEEDCOM STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY
RECEIVE A LETTER OF TRANSMITTAL.
After the effective time of the merger and until surrendered, each
certificate representing shares of Speedcom common stock will represent only the
right to receive upon surrender a certificate representing shares of LTI common
stock and cash in lieu of fractional shares. No dividends or other
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distributions declared or made on LTI common stock with a record date after the
effective time of the merger and no payment in lieu of fractional shares will be
paid to the holder of any unsurrendered Speedcom stock certificate until the
holder of record surrenders his, her or its Speedcom stock certificate. Subject
to the effect of applicable laws, after a Speedcom stockholder surrenders his,
her or its Speedcom stock certificate, he, she or it will be paid, without
interest, (i) at the time of surrender, the amount of any cash payable in lieu
of fractional shares of LTI common stock to which he, she or it is entitled and
the amount of dividends or other distributions with a record date after the
effective time of the merger previously paid with respect to whole shares of
his, her or its LTI common stock, and (ii) at the appropriate payment date, the
amount of dividends or other distributions with a record date after the
effective time of the merger but prior to surrender and with a payment date
after surrender payable with respect to whole shares of his, her or its LTI
common stock.
LTI and the exchange agent are entitled to deduct and withhold from the
consideration otherwise payable such amounts as they are required to deduct and
withhold under the Internal Revenue Code of 1986 or any provision of state,
local or foreign tax law. LTI and Speedcom will treat any amounts so withheld as
having been paid to the person in respect of whom such deduction and withholding
was made.
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THE MERGER AGREEMENT
THE FOLLOWING IS A SUMMARY OF CERTAIN PROVISIONS OF THE MERGER AGREEMENT.
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MERGER AGREEMENT,
WHICH IS INCORPORATED BY REFERENCE IN ITS ENTIRETY AND ATTACHED TO THIS DOCUMENT
AS APPENDIX A. YOU ARE URGED TO READ THE MERGER AGREEMENT IN ITS ENTIRETY FOR A
MORE COMPLETE DESCRIPTION OF THE MERGER.
GENERAL
Pursuant to the merger agreement, Speedcom will merge with and into LTI,
with LTI surviving the merger. The stockholders of Speedcom will receive the
consideration described below. The effective date of the merger will occur
following the satisfaction or waiver, where permissible, of all conditions to
completion of the merger specified in the merger agreement. Speedcom and LTI may
also mutually agree on a different date. We expect that the effective date of
the merger will occur shortly after the LTI stockholder meeting.
Speedcom or LTI may terminate the merger agreement if, among other reasons,
the merger does not occur on or before October 15, 2000.
CONVERSION RATIO; FRACTIONAL SHARES
At the effective time of the merger, each issued and outstanding share of
Speedcom common stock will be canceled and cease to be outstanding and will be
converted into the right to receive one share of LTI common stock. The exchange
ratio assumes that LTI stockholders approve the proposed 1 for 4.26 reverse
stock split. If, however, at the effective time of the merger, LTI has net cash
of less than $1.5 million, the number of shares of LTI common stock to be issued
to the Speedcom stockholders will be increased by an aggregate amount equal to
(i) the difference between $1.5 million and the net cash of LTI at the time the
merger becomes effective, divided by (ii) 4, multiplied by (iii) 11.5, and each
Speedcom stockholder will receive a pro rata portion of such increase.
No fractional shares of LTI common stock will be issued to Speedcom
stockholders. Instead, Speedcom stockholders who would otherwise be entitled to
a fractional share of LTI common stock will be paid in cash an amount equal to
$4.00 multiplied by the appropriate fraction.
SPEEDCOM OPTIONS AND WARRANTS
At the effective time of the merger, each outstanding option to acquire
shares of Speedcom common stock will be converted into an option to acquire, on
substantially the same terms and conditions as were applicable under such
Speedcom option, the number of shares of LTI common stock equal to the number of
shares that the holder would have been entitled to receive in the merger had
such holder exercised such option in full immediately prior to the effective
date of the merger (not taking into account whether or not such option was in
fact exercisable).
Similarly, at the effective time of the merger, each outstanding warrant to
acquire shares of Speedcom common stock will be converted into a warrant to
acquire, on substantially the same terms and conditions as were applicable under
such Speedcom warrant, the number of shares of LTI common stock equal to the
number of shares that the holder would have been entitled to receive in the
merger had such holder exercised such warrant in full immediately prior to the
effective date of the merger (not taking into account whether or not such
warrant was in fact exercisable).
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CERTAIN REPRESENTATIONS AND WARRANTIES
The merger agreement contains various representations and warranties made by
LTI and Speedcom regarding the following matters, among others:
- corporate existence, organization, standing, authority and capitalization;
- that the merger agreement and the related transactions will not result in
a violation of the LTI or Speedcom charter documents or contracts to which
LTI or Speedcom are a party, or any law, rule or regulation;
- obligations with respect to the capital stock issued or issuable by LTI
and Speedcom;
- consistency of financial statements with generally accepted accounting
principles;
- absence of certain material adverse events, changes or effects;
- that neither LTI nor Speedcom is in default with respect to any material
contract or agreement to which it is a party;
- filing of tax returns and payment of taxes;
- accuracy of information supplied in connection with this proxy
statement/prospectus;
- compliance with laws and required licenses and permits;
- absence of pending or threatened suits, actions or other proceedings not
already disclosed in the merger agreement;
- consents and regulatory approvals necessary to complete the merger;
- intellectual property, including ownership, use and the absence of
infringement;
- amount of brokers' fees and commissions in connection with the merger;
- quality of title to properties and assets;
- validity of material contracts and agreements;
- absence of material environmental violations, actions or liabilities;
- labor matters;
- retirement and other employee plans and matters relating to the Employee
Retirement Income Security Act of 1974;
- filings required to be made under the federal and state securities laws;
- vote required to approve merger;
- bank accounts;
- existence and extent of guaranties or advances by or on behalf of
affiliates; and
- maintenance of adequate insurance.
Some of these representations and warranties are qualified as to materiality
and with respect to matters or items which are specifically disclosed to the
other party. The representations and warranties of each party will not be deemed
waived or otherwise affected by any investigation made by the other party and,
except with respect to breaches occurring prior to the effective time of the
merger, do not survive beyond the effective time of the merger.
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CERTAIN COVENANTS AND AGREEMENTS
The merger agreement contains several covenants and agreements of LTI and
Speedcom. The discussion below summarizes certain of the key covenants and
conditions.
CONDUCT OF BUSINESS PENDING MERGER
Pursuant to the merger agreement, LTI and Speedcom have each agreed, except
as permitted by the other party or as otherwise expressly contemplated by the
merger agreement:
- not to take or cause to be taken any action which would cause the
representations and warranties made by it in the merger agreement to
become untrue;
- to deliver to the other party, within 15 days following the end of each
calendar month prior to the merger, certain financial statements
presenting its financial condition, assets, liabilities and stockholder's
equity as of the end of each such month; and
- to furnish such information as to its financial condition, business, net
worth, assets, properties or operations as may be reasonably requested by
the other party prior to the consummation of the merger.
PREPARATION OF PROXY STATEMENT/PROSPECTUS AND REGISTRATION STATEMENT
Pursuant to the merger agreement, LTI has agreed to prepare and file with
the SEC a registration statement relating to the registration of the shares of
LTI common stock that will be delivered to Speedcom stockholders at the
effective time of the merger and that are issuable upon the exercise of Speedcom
options and warrants that will become LTI options and warrants upon completion
of the merger, and a related proxy seeking stockholder approval of the merger,
all in accordance with applicable rules and regulations of the SEC. Speedcom is
obligated to supply LTI with all information necessary for LTI to meet this
obligation.
JOINT OBLIGATIONS OF LTI AND SPEEDCOM
LTI and Speedcom have jointly agreed:
- to submit the merger agreement and other related documents to their
respective stockholders for their consideration;
- to use commercially reasonable best efforts to obtain all required
regulatory approvals and required third party consents necessary to
consummate the transactions contemplated by the merger agreement; and
- to take all actions necessary to complete the transactions contemplated by
the merger agreement.
NO SOLICITATION
The merger agreement provides that neither LTI nor Speedcom will permit any
of its employees, officers, agents or other affiliates to directly or indirectly
solicit or initiate any discussions or negotiations concerning a sale or merger,
unless a written proposal is submitted to LTI or Speedcom by a third party, and
the board of directors of LTI or Speedcom, as the case may be, determines in its
good faith judgment that continued compliance with the non-solicitation
provision set forth in the merger agreement may cause the board of directors to
breach or violate its fiduciary duties under applicable law.
In the event either party exercises its rights pursuant to the merger
agreement to terminate the merger agreement because of the receipt of a
third-party proposal and enters into a letter of intent or
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definitive agreement to merge or otherwise combine with a third party on or
prior to October 30, 2000, the terminating party is obligated to pay to the
other party, immediately upon the execution of such letter of intent or
definitive agreement, a fee of $100,000.
MANAGEMENT OF LTI FOLLOWING THE MERGER
In connection with the merger, LTI has agreed to cause each of its
employees, directors and officers to resign, effective as of the effective date
of the merger. Following the merger, the executive officers and directors of LTI
will be:
- Michael W. McKinney, Chairman, Chief Executive Officer and Director;
- Jay O. Wright, Chief Financial Officer and Director;
- Bruce Sanguinetti, President (effective September 1, 2000) and Director;
- R. Craig Roos, Director; and
- a director to be named by the current LTI Board.
CONDITIONS TO COMPLETION OF THE MERGER
LTI and Speedcom are not obligated to complete the merger unless certain
conditions have been satisfied or waived, if waiver is permitted. The discussion
below summarizes some of the key conditions to completion of the merger.
At any time prior to the effective time of the merger, each of LTI and
Speedcom may waive the compliance with any condition that may legally be waived.
Neither LTI nor Speedcom may, however, waive compliance with conditions that are
required by law to complete the merger, including (i) the requirement for
stockholder approval; (ii) the requirement for regulatory approval; and
(iii) the requirement that the registration statement be effective on the
closing date.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Each of the representations and warranties of the parties contained in the
merger agreement must be true and correct in all material respects, as of the
date of the merger agreement and as of the effective time of this merger, except
for (i) representations and warranties made as of a specific date, which must be
true and correct as of such date and (ii) any inaccuracies which, taken as a
whole, will not have a material adverse effect on such party's financial
condition, business, net worth, assets, properties, liabilities, or results of
operations.
Each party must perform in all material respects all of the agreements and
covenants required by the merger agreement to be performed prior to the closing
date of the merger.
MATERIAL ADVERSE CHANGE
No material adverse change in the financial condition, business, net worth,
assets, properties, or operations of either party shall have occurred since the
date of the merger agreement. No circumstance shall have occurred, which may
reasonably result in any such material adverse change prior or subsequent to the
closing date of the merger.
REGULATORY APPROVALS
Each of the parties must obtain all permits, authorizations, consents and
approvals of governmental authorities and other third parties that are necessary
in connection with the merger as contemplated by the merger agreement.
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STOCKHOLDER APPROVAL
LTI must obtain the approval of the stockholders of LTI of the merger
agreement, 1 for 4.26 reverse stock split and amendments to its certificate of
incorporation on or prior to the closing date of the merger.
EFFECTIVENESS OF REGISTRATION STATEMENT
The registration statement on Form S-4 of which this proxy
statement/prospectus is a part must become effective in accordance with the
provisions of the Securities Act.
DELIVERY OF CORPORATE RECORDS
LTI must deliver or cause to be delivered its minute books, stock record and
stock transfer books to Speedcom on or prior to the closing date of the merger.
RESIGNATIONS
LTI must deliver the resignations of each of its employees, directors and
officers to Speedcom, effective as of the closing date of the merger.
FINANCIAL CONDITION
The net worth and total cash of LTI, determined in accordance with GAAP,
shall not be less than $1 million as of the effective time of the merger.
NO LITIGATION
No final order, decree or ruling, or other action shall have been taken,
which restrains, enjoins or otherwise prohibits the merger or other transactions
contemplated by the merger agreement. No litigation, proceeding or investigation
is pending or threatened, which may materially and adversely affect the merger
or other transactions contemplated by the merger agreement.
OPINION OF FINANCIAL ADVISOR
LTI must have received an opinion of its financial advisor to the effect
that the merger is fair from a financial point of view to LTI's stockholders.
CLOSING CERTIFICATES
Each party is obligated to furnish to the other party an officer's
certificate evidencing its compliance with the conditions described herein upon
request.
TERMINATION
LTI and Speedcom may terminate the merger agreement at any time prior to the
effective time of the merger by mutual written consent.
Either LTI or Speedcom may terminate the merger agreement at any time prior
to the effective time of the merger:
- if the other party has materially breached any of its representations,
warranties or covenants and the breach is not cured within 15 days after
written notice of such breach;
- if the other party has failed to perform all conditions set forth in the
merger agreement prior to October 15, 2000, upon written notice of such
failure given on or after such date; or
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- if the board of directors of either party determines in its good faith
judgment that continued compliance with the non-solicitation provision in
the merger agreement may result in a breach of fiduciary duty under
applicable law, upon written notice of such determination.
AMENDMENT; WAIVER
Subject to applicable legal restrictions, at any time prior to the effective
time of the merger, the parties may:
- amend the merger agreement;
- extend the time for the performance of any of the obligations or other
acts of the other party required in the merger agreement; and
- waive compliance with any of the terms and conditions contained in the
merger agreement.
After the stockholders of LTI and Speedcom have approved the merger
agreement, however, any amendment that by law would require stockholder approval
may be made only with such approval.
EXPENSES
Each of LTI and Speedcom will bear all expenses it incurs in connection with
the merger, except that LTI and Speedcom will share certain costs of filing with
the SEC the registration statement of which this proxy statement/prospectus is a
part and printing and mailing this proxy statement/ prospectus.
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PROPOSAL 2: REVERSE STOCK SPLIT
GENERAL
The LTI board of directors has approved a proposal to amend the LTI
certificate of incorporation to effect a 1 for 4.26 reverse stock split of LTI
common stock. If the merger and the reverse split are both approved by the LTI
stockholders, we intend to file an amendment to LTI's certificate of
incorporation immediately prior to the completion of the merger. The text of the
amendment is substantially as follows:
At the Effective Time (as defined below), each share of common stock,
par value $0.01 per share, issued and outstanding immediately prior to
the Effective Time ("Old Common Stock"), shall automatically be
reclassified and continued (the "Reverse Split"), without any action on
the part of the holder thereof, as Two Hundred Thirty-five One
Thousandths (0.235) of one share of common stock, par value $0.001 per
share (the "Reverse Split Rate") of the Corporation. The Corporation
shall not issue fractional shares on account of this Reverse Split.
Holders of common stock who would otherwise be entitled to a fraction of
a share on account of the Reverse Spit shall receive, upon surrender of
the stock certificates formerly representing shares of the Old Common
Stock in lieu of such fractional share, an amount in cash (the
"Cash-in-Lieu Amount") equal to the product of (i) the fractional share
which a holder would otherwise be entitled to, multiplied by (ii) the
closing price of the Old Common Stock as reported on the Nasdaq Over-
the-Counter Bulletin Board, on the business day prior to the day of the
Effective Time multiplied by the Reverse Split Rate. No interest shall
be payable on the Cash-in-Lieu Amount. "Effective Time" shall mean 4:45
p.m. on the day this Certificate of Amendment is filed in the office of
the Secretary of State of the State of Delaware.
Upon the filing of the amendment to the certificate of incorporation with
the Secretary of State of Delaware, each certificate representing LTI common
shares outstanding immediately prior to the reverse split, will be deemed
automatically, without any action on the part of LTI or its stockholders, to
represent .235 of the number of shares of LTI common stock outstanding
immediately prior to the reverse split. No fractional shares will be issued as a
result of the reverse split. Instead, holders of LTI common stock who would
otherwise be entitled to a fraction of a share on account of the reverse split
shall receive, in lieu of a fractional share, an amount in cash equal to the
closing price of a share of LTI common stock on the date immediately prior to
the effective date of the reverse split multiplied by the appropriate fraction.
After the reverse split becomes effective, stockholders will be asked to
surrender certificates representing their LTI shares in the letter of
transmittal to be sent to stockholders by LTI. After the old certificates are
surrendered, a certificate representing the number of post-reverse split shares
will be issued and sent to stockholders. You should note, however, that each old
LTI common stock certificate will continue to be valid and represent shares
equal to .235 of the number of shares held prior to the reverse split. The
voting and other rights relating to the LTI common stock will not be altered by
the reverse split.
REASONS FOR THE REVERSE SPLIT
The approval of the reverse split is a condition to closing of the merger.
We believe the reverse split is desirable for several reasons. We believe that
the reverse split may serve to enhance the acceptability of the common stock of
the post-merger company by the financial community and investing public. The
reduction in the number of issued and outstanding shares caused by the reverse
split is expected to increase the market price of LTI common stock thereby
reducing the negative attributes traditionally associated with a low per share
market price. In addition, the higher share price expected to result from the
reverse split will assist the post-merger company in its efforts to list the
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shares of common stock for trading on the Nasdaq SmallCap Market, which
requires, among other things, a $4 minimum trading price in order to list the
shares.
We cannot be certain whether any or all of these effects will occur,
including, whether the market price per share after the reverse split will
exceed or remain above the current market price. In addition, we do not know if
the market for the common stock will be improved. You should note that, by
itself, the reverse split will not necessarily improve stockholder value of the
combined company.
EFFECTIVE TIME OF THE REVERSE SPLIT; CERTAIN EFFECTS OF THE REVERSE SPLIT
If the reverse split is approved by the LTI stockholders, and the merger is
approved, we intend to file the amendment to LTI's certificate of incorporation
with the Delaware Secretary of State immediately prior to the effective time of
the merger.
You should note that we may abandon the reverse split at any time before its
effectiveness if for any reason we deem it advisable. We will abandon the
proposed reverse split if the merger is not approved. We will abandon the
proposed reverse split if all of the conditions to closing of the merger have
not been met at the time for filing the amendment to the certificate of
incorporation that would implement the reverse split. We also may consider
abandoning the proposed reverse split if we determine, in our sole discretion,
that the reverse split might adversely affect our ability to raise capital or
the liquidity of our common stock, among other things.
As of June 30, 2000, the number of shares of LTI common stock issued and
outstanding was approximately 2,775,100, and after giving effect to the reverse
stock split and the issuance of shares in connection with the merger with
Speedcom, the number of outstanding shares will be approximately 8,089,468
million.
As of June 30, 2000, LTI had 8,789,900 shares of common stock reserved for
issuance under outstanding options and warrants and Speedcom had 3,114,015
shares of common stock reserved for issuance under options and warrants.
Following completion of the merger and the reverse stock split, the combined
company will have outstanding options and warrants for approximately 5,177,372
shares and 1,055,226 shares available for grant under option plans and
agreements. The plans and agreements pursuant to which such options and warrants
are or will be issued each provide that in the event of a change in the
capitalization, such as the reverse split, the number of shares covered by each
option and warrant will be adjusted so as to maintain the holder's proportionate
interest, and the applicable exercise price will also be appropriately adjusted.
The following table summarizes the effects of the reverse split and the
mergers upon the common stock of LTI that will be (1) issued and outstanding,
(2) reserved for issuance under options, option plans, warrants and other
convertible securities, and (3) available for issuance.
<TABLE>
<CAPTION>
NUMBER OF SHARES
-------------------------------------------
ISSUED AND RESERVED FOR AVAILABLE FOR
TIME/TRANSACTION OUTSTANDING OPTIONS, ETC. ISSUANCE
---------------- ----------- ------------- -------------
<S> <C> <C> <C>
Before Reverse Split and Merger.......................... 2,775,100 8,789,900 8,435,000
After Reverse Split and before Merger.................... 651,432 2,063,357 17,285,211
After Reverse Split and Merger........................... 8,089,468 5,117,372 16,796,410
</TABLE>
The reverse split may result in some stockholders owning "odd-lots" of less
than 100 shares of common stock. Brokerage commissions and other costs of
transactions in odd-lots are generally higher than the costs of transactions in
"round-lots" of even multiples of 100 shares.
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LTI common stock is registered under Section 12(g) of the Securities
Exchange Act of 1934, and is traded on the OTC-Bulletin Board. As a result of
the registration under Section 12(g), LTI is subject to the periodic reporting
and other requirements of the Securities Exchange Act.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE SPLIT
The following is a discussion, based on the advice of Piper Marbury
Rudnick & Wolfe LLP, counsel to LTI, of the material United States federal
income tax consequences of the reverse split to LTI and to LTI stockholders.
This discussion does not address all aspects of U.S. federal income taxation
that may be important to you in light of your particular circumstances. For
example, it does not address tax consequences that may apply to you if you are a
taxpayer that is subject to special treatment under the federal income tax laws,
such as a bank, financial institution, broker-dealer, insurance company, foreign
person, or tax-exempt entity, or if you acquired your LTI common stock by
exercising employee stock options or otherwise as compensation or through a
tax-qualified retirement plan. It also does not address any aspect of state,
local or foreign taxation. The discussion assumes that LTI stockholders hold
their shares of LTI common stock as capital assets at all times. This discussion
also does not address any consequences to you if, in addition to holding stock
in LTI you also own stock in Speedcom.
You are urged to consult with your own tax advisor concerning the tax
consequences of the reverse split to you.
The reverse split will qualify as a recapitalization described in
Section 368(a)(1)(E) of the Code, and no gain or loss will be recognized by LTI
in connection with the reverse split. The receipt by an LTI stockholder of
shares of LTI common stock (the "Post-Split Shares") in the reverse split will
be a nontaxable transaction for federal income tax purposes, except to the
extent that cash is received in lieu of fractional shares. Consequently, except
with respect to cash received in lieu of fractional shares of LTI common stock,
an LTI stockholder will not recognize taxable gain or loss with respect to the
Post-Split Shares received as a result of the reverse split. In addition, the
aggregate tax basis of the stockholder's shares of LTI common stock prior to the
reverse split, excluding the portion of the basis allocable to fractional shares
of LTI common stock, will carry over as the tax basis of the stockholder's
Post-Split Shares. Each LTI stockholder will be required to allocate his or her
basis in the shares of LTI common stock ratably among the total number of
Post-Split Shares. The holding period of the Post-Split Shares received as a
result of the reverse split will include the holding period during which the
stockholder held the LTI common stock, provided that the Post-Split Shares are
held by the stockholder as a capital asset when the reverse split is completed.
The receipt by an LTI stockholder of cash in lieu of a fractional share of
LTI common stock as a result of the reverse split will be a taxable transaction
for federal income tax purposes. The receipt of cash in lieu of a fractional
share of LTI common stock will generally result in taxable gain or loss to the
LTI stockholder measured by the difference between the amount of cash received
and the adjusted basis of the fractional share. However, an LTI stockholder
should consult his or her tax advisor as to the possibility of dividend
treatment upon the receipt of cash in lieu of a fractional share under
Section 302 of the Code. Assuming that the receipt of cash in lieu of a
fractional share is not treated as a dividend and that the LTI common stock was
held by the stockholder as a capital asset when the reverse split is completed,
any gain or loss will be a capital gain or loss, and will be a long-term capital
gain or loss if, when the reverse split is completed, the LTI stockholder has
held the shares of LTI common stock for more than one year.
The payment of cash in lieu of a fractional share of LTI common stock to an
LTI stockholder, other than exempt persons or entities, will be subject to
"backup withholding" for federal income tax
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purposes, unless specified requirements are met. LTI or a third-party paying
agent, as the case may be, must withhold 31% of the cash paid to that
stockholder, unless that stockholder:
- is a corporation or comes within other exempt categories and, when
required, demonstrates this fact; or
- provides LTI or the third-party paying agent, as the case may be, with his
or her taxpayer identification number and completes a form in which he or
she certifies that he or she has not been notified by the Internal Revenue
Service that he or she is subject to backup withholding as a result of a
failure to report interest and dividends.
The taxpayer identification number of an individual is his or her Social
Security number. Any amount paid as backup withholding will be credited against
the stockholder's federal income tax liability.
This discussion is based on the Internal Revenue Code, Treasury regulations
promulgated thereunder, administrative rulings and practice, and judicial
precedent, all as of the date hereof. All of these authorities are subject to
change, possibly with retroactive effect. Any change in any of these authorities
could alter the tax consequences to LTI and its stockholders discussed herein.
The parties will not request, and the reverse split is not conditioned upon, a
ruling from the Internal Revenue Service as to any of the United States federal
income tax consequences of the reverse split. As a result, there can be no
assurance that the Internal Revenue Service will not disagree with or challenge
any of the conclusions concerning the reverse split set forth in this
discussion.
EXCHANGE OF STOCK CERTIFICATES--HOLDERS OF LTI STOCK PRIOR TO MERGER
LTI will send a letter of transmittal to each holder of record of common
stock outstanding on the date the reverse split is effective. The letter of
transmittal will contain instructions for the surrender of certificates to the
transfer agent for the common stock. Upon submission of a properly completed and
executed letter of transmittal to the transfer agent, together with the holder's
stock certificate(s), a stockholder will be entitled to receive a certificate
representing the number of shares resulting from the reverse split.
Stockholders should not submit any certificates until requested to do so. No
new stock certificate will be issued to a stockholder until the surrender of the
stockholder's old certificate(s), together with the properly completed and
executed letter of transmittal to the transfer agent.
Payment in lieu of a fractional new share will be made to any LTI
stockholder entitled thereto promptly after receipt of a properly completed
letter of transmittal and stock certificate(s) for all of his or her shares of
common stock outstanding prior to the reverse split. There will be no service
charge payable by stockholders in connection with the exchange of certificates
or in connection with the payment of cash in lieu of the issuance of a
fractional new share.
RECOMMENDATION OF THE BOARD OF DIRECTORS; VOTE REQUIRED FOR APPROVAL
The LTI board of directors has determined that the reverse stock split is
advisable and recommends that you vote "FOR" of Proposal 2.
The approval of this proposed amendment to the certificate of incorporation
will require the affirmative vote of the holders of a majority of the
outstanding shares of LTI common stock.
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PROPOSAL 3: AMENDMENTS TO THE LTI
CERTIFICATE OF INCORPORATION
GENERAL
The LTI board of directors has approved a proposal to make certain
amendments to the current amended and restated certificate of incorporation of
LTI. If approved, these changes will be effected through the filing of a further
amended and restated certificate of incorporation. The approval of these changes
and the amended and restated certificate of incorporation is a condition to
closing of the merger. We believe the changes are appropriate and desirable in
the context of the completion of the merger. If this proposal is approved by LTI
stockholders, we will file the amended and restated certificate of incorporation
in connection with the completion of the merger. If the merger is not approved
by LTI stockholders or does not close for some other reason, we will not file
the proposed amended and restated certificate of incorporation and the current
LTI certificate of incorporation will continue to be applicable.
SUMMARY OF PROPOSED CHANGES
CHANGE IN CAPITALIZATION
The LTI certificate of incorporation currently authorizes the issuance of a
total of 25,250,000 shares of capital stock, 20,000,000 of which are designated
as common stock and 5,250,000 of which are designated as preferred stock.
250,000 shares of preferred stock were previously designated as Series A
Preferred Stock and such shares have all been retired. Of such authorized shares
of common stock, 2,775,100 shares were outstanding as of June 30, 2000, and a
further 8,789,900 shares are reserved for issuance pursuant to outstanding
options, warrants and other securities convertible into shares of common stock.
These June 30, 2000 figures do not give effect to the proposed 1 for 4.26
reverse stock split. Completion of the merger is expected to require the
issuance of approximately an additional 10,552,051 shares of LTI common stock
including shares issuable upon the exercise of outstanding Speedcom options and
warrants that will be assumed by LTI upon completion of the merger (subject to
certain adjustments based upon the cash position of LTI at the closing of the
merger).
If the merger is approved and the proposed amended and restated certificate
of incorporation is filed, the authorized capital stock of the company will be
increased to 40,000,000 shares of capital stock, 30,000,000 of which will be
designated as common stock and 10,000,000 of which will be designated as
preferred stock. Additional shares of LTI capital stock authorized pursuant to
the amendment to the certificate of incorporation and not issued in the merger
or otherwise reserved could be issued at the discretion of the LTI board of
directors without further action by LTI stockholders, except as required by
applicable law, regulation or rule (including stock exchange rules), in
connection with future acquisitions, stock splits, stock dividends, equity
financings, employee benefit plans and other corporate purposes. The issuance of
shares of LTI capital stock, including the additional shares, may, in certain
situations, dilute the present equity ownership position of current LTI
stockholders. As of the date of this prospectus/proxy statement, LTI has no
plans or commitments that would involve the issuance of the additional shares,
other than pursuant to the merger agreement.
CHANGE OF THE COMPANY'S NAME TO SPEEDCOM WIRELESS CORPORATION
The amendments also provide for the company to change its name to Speedcom
Wireless Corporation. We believe the name change is appropriate and is desirable
in the context of the completion of the merger, as the name of the combined
company will be that of the ongoing operating business of the post-merger
company.
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CREATION OF CLASSIFIED BOARD OF DIRECTORS
The amendments provide for the creation of a classified board of directors
pursuant to which the board of directors will be divided into three classes of
directors with each class containing, as nearly as possible, an equal number of
directors. Directors within each class are elected to serve three-year terms,
and approximately one-third of the directors stand for election at each annual
meeting of the stockholders.
A classified board of directors may have the effect of deterring or delaying
any attempt by any person or group to obtain control of LTI by a proxy contest
since such third party would be required to have its nominees elected at two
separate annual meetings of stockholders in order to elect a majority of the
members of the board of directors.
ABILITY OF BOARD OF DIRECTORS TO MAKE, ALTER, AMEND OR REPEAL BYLAWS
The amendments also grant LTI's board of directors the express authorization
to make, alter, amend or repeal the corporation's bylaws without the assent or
vote of the stockholders. This power will enable the board of directors to
define and alter certain of the rules which govern LTI's corporate mechanics.
Though the current bylaws of LTI provide the board of directors with the ability
to amend the bylaws, Delaware law requires that this power be delegated in the
certificate of incorporation.
RECOMMENDATION OF THE BOARD OF DIRECTORS; VOTE REQUIRED FOR APPROVAL
The LTI board of directors has determined that the proposed changes to the
certificate of incorporation are advisable and recommends that you vote "FOR"
Proposal 3.
The approval of this proposed amendment to the amended and restated
certificate of incorporation will require the affirmative vote of the holders of
a majority of the outstanding shares of LTI common stock.
The text of the proposed amendment is included in the form of proposed
amended and restated certificate of incorporation attached to this document as
Appendix B.
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DESCRIPTION OF LTI CAPITAL STOCK
THE FOLLOWING DESCRIPTION DOES NOT PURPORT TO BE COMPLETE AND IS SUBJECT IN
ALL RESPECTS TO APPLICABLE DELAWARE LAW AND TO THE PROVISIONS OF LTI'S AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION AND BYLAWS, AS AMENDED TO THE DATE OF
THIS PROXY STATEMENT/PROSPECTUS.
AS DISCUSSED ELSEWHERE IN THIS PROXY STATEMENT/PROSPECTUS, IN CONNECTION
WITH THE MERGER, LTI IS PROPOSING CERTAIN CHANGES TO ITS CURRENT CERTIFICATE OF
INCORPORATION. THESE CHANGES ARE SUMMARIZED UNDER THE HEADINGS "PROPOSAL 2:
REVERSE STOCK SPLIT" AND "PROPOSAL 3: AMENDMENTS TO THE LTI CERTIFICATE OF
INCORPORATION." ANY DIFFERENCES BETWEEN THE COMPANY'S CURRENT AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION AND THE PROPOSED AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION THAT ARE INTENDED TO BE IMPLEMENTED IN CONNECTION
WITH THE CLOSING OF THE MERGER AND THAT MAY HAVE A SUBSTANTIVE EFFECT ON THE
COMPANY'S SECURITIES ARE SUMMARIZED BELOW.
YOU ARE URGED TO READ THE CURRENT AND PROPOSED FORMS OF THE CERTIFICATE OF
INCORPORATION AND BYLAWS FOR A MORE COMPLETE DESCRIPTION OF THESE PROVISIONS AND
OTHER INFORMATION THAT MAYBE IMPORTANT TO YOU.
GENERAL
The authorized capital stock of LTI consists of 25,250,000 shares, of which
20,000,000 shares have been designated common stock, par value $.01 per share.
The remaining 5,250,000 shares are designated as preferred stock, par value $.01
per share, of which 250,000 shares were designated as series A convertible
preferred stock, all of which have been retired.
If the proposed amendments to the certificate of incorporation are approved
and the proposed amended and restated certificate of incorporation is filed and
becomes effective, the authorized capital stock of the company will consist of
40,000,000 shares, of which 30,000,000 shares will be designated common stock
$.001 par value per share, and the remaining 10,000,000 will be designated as
preferred stock, par value $.001 per share.
COMMON STOCK
Holders of LTI common stock have the right to cast one vote for each share
held of record on all matters submitted to a vote of holders of common stock,
including the election of directors. There is no right to cumulate votes for the
election of directors. Stockholders holding a majority of the voting power of
the capital stock issued and outstanding and entitled to vote, represented in
person or by proxy, are necessary to constitute a quorum at any meeting of LTI's
stockholders, and, under Delaware law, the vote by the holders of a majority of
such outstanding shares is required to effect certain fundamental corporate
changes such as liquidation, merger or amendment of LTI's certificate of
incorporation. Holders of common stock are entitled to receive dividends pro
rata based on the number of shares held, when, as and if declared by the board
of directors, from funds legally available therefor, subject to the rights of
holders of any outstanding preferred stock. In the event of the liquidation,
dissolution or winding up of the affairs of LTI, all company assets and funds
remaining after the payment of all debts and other liabilities, subject to the
rights of the holders of any outstanding preferred stock, shall be distributed,
pro rata, among the holders of the common stock. Holders of common stock are not
entitled to preemptive or subscription or conversion rights, and there are no
redemption or sinking fund provisions applicable to the common stock.
All of the outstanding shares of common stock are, and the shares of common
stock to be issued in connection with the merger will be, validly issued, fully
paid and nonassessable.
The transfer agent for the common stock is American Stock Transfer & Trust
Company.
If the proposed amendments to the certificate of incorporation are approved
and the amended and restated certificate of incorporation is filed and becomes
effective the basic rights of holders of
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common stock will not differ substantively from the rights of the holders of
common stock under LTI's current certificate of incorporation.
PREFERRED STOCK
At the time of LTI's initial public offering, all outstanding shares of
series A preferred stock were automatically converted into shares of LTI common
stock and were retired. Currently, there are no shares of preferred stock
outstanding.
LTI is now authorized to issue up to 5,000,000 shares of "blank-check"
preferred stock, which amount will be increased to 10,000,000 shares if the
proposed amended and restated certificate of incorporation becomes effective.
The proposed amended and restated certificate of incorporation differs
stylistically from the current certificate of incorporation in that it will no
longer contain a description of the rights and preferences of the retired
series A preferred stock.
Under both the current certificate of incorporation and the proposed amended
and restated certificate of incorporation, the board of directors has the
authority to issue the preferred stock in one or more series and to fix the
number of shares and the relative rights, conversion rights, voting rights and
terms of redemption (including sinking fund provisions) and liquidation
preferences, without further vote or action by the stockholders. If shares of
preferred stock with voting rights are issued, such issuance could affect the
voting rights of the holders of the company's common stock by increasing the
number of outstanding shares having voting rights and/or by the creation of
class or series voting rights. If the board of directors authorizes the issuance
of shares of preferred stock with conversion rights, the number of shares of LTI
common stock outstanding could potentially be increased by up to the authorized
amount. Issuance of preferred stock could, under certain circumstances, have the
effect of delaying or preventing a change in control and may adversely affect
the rights of holders of common stock. Also, preferred stock could have
preferences over the common stock with respect to dividend and liquidation
rights. LTI has no current plans to issue any shares of preferred stock.
WARRANTS
LTI's initial public offering consisted of an offering of equity units
comprised of LTI common stock and warrants to acquire shares of common stock.
The warrants issued in the initial public offering were classified as class A
warrants and class B warrants.
REDEEMABLE WARRANTS CLASS A WARRANTS. Each class A warrant entitles the
registered holder to purchase one share of LTI common stock and one class B
warrant at an exercise price of $6.50 at any time until 5:00 P.M., New York City
time, on October 8, 2001. The class A warrants are redeemable by LTI on
30 days' written notice at a redemption price of $.05 per class A warrant if the
closing price of the common stock for any 30 consecutive trading days, ending
within 15 days of the notice of redemption, averages in excess of $9.10 per
share. In this context, "closing price" means the closing bid price if listed in
the over-the-counter market on Nasdaq or otherwise or the closing sale price if
listed on the Nasdaq National Market or a national securities exchange. All
class A warrants must be redeemed if any are redeemed.
As of June 30, 2000 a total of 2,952,400 class A warrants were outstanding.
REDEEMABLE CLASS B WARRANTS. Each class B warrant entitles the registered
holder to purchase one share of LTI common stock at an exercise price of $8.75
at any time after issuance until 5:00 P.M. New York City Time, on October 8,
2001. The class B warrants are redeemable by LTI on 30 days' written notice at a
redemption price of $.05 per class B warrant, if the closing price of the common
stock for any 30 consecutive trading days ending within 15 days of the notice of
redemption averages in excess of $12.25 per share. All class B warrants must be
redeemed if any are redeemed.
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As of June 30, 2000 a total of 1,955,100 class B warrants were outstanding,
and a total of 2,952,400 class B warrants were issuable upon exercise of
outstanding class A warrants.
WARRANTS GENERALLY. The class A warrants and class B warrants are evidenced
by warrant certificates in registered form. The warrants provide for adjustment
of the exercise price and for a change in the number of shares issuable upon
exercise to protect holders against dilution in the event of a stock dividend,
stock split, combination or reclassification of the common stock or upon
issuance of shares of common stock at prices lower than the market price of the
common stock, with certain exceptions. LTI has reserved from its authorized but
unissued shares a sufficient number of shares of common stock for issuance upon
the exercise of the class A warrants and the class B warrants.
If the proposed amendments to the certificate of incorporation are approved
and the amended and restated certificate of incorporation is filed and becomes
effective there will be no change in the class A warrants and class B warrant.
If, however, the reverse stock split described in Proposal 2 is approved, the
warrants will be appropriately adjusted to provide for a change in the exercise
price and the number of shares into which each warrant may be converted.
UNIT PURCHASE OPTIONS
In connection with LTI's 1996 IPO, LTI granted D.H. Blair Investment Banking
Corp., unit purchase options to purchase up to 170,000 units. The units consist
of one share of LTI common stock, one class A warrant and one class B warrant.
These units were substantially identical to the units sold by LTI in the 1996
IPO, except that the warrants included in the unit purchase options are subject
to redemption by LTI, in accordance with the terms of the related warrant
agreement, at any time after the unit purchase options have been exercised and
the underlying warrants are outstanding. The unit purchase options are
exercisable until October 8, 2001 at an exercise price of $6.00 per unit (which
is equal to 120% of the initial public offering price per unit), subject to
adjustment in certain events to protect against dilution. The holders of the
unit purchase options have certain demand and piggyback registration rights.
REGISTRATION RIGHTS
Holders of the unit purchase options have demand and piggyback registration
rights relating to the options and the underlying securities. Michael Noonan,
LTI's current Chairman, President and Chief Executive Officer also has certain
demand and piggyback registration rights relating to certain shares of common
stock that he beneficially owns.
DELAWARE GENERAL CORPORATION LAW
Section 203 of the Delaware corporation statute provides that, subject to
certain exceptions specified therein, an "interested stockholder" of a Delaware
corporation shall not engage in any business combination, including mergers or
consolidations or acquisitions of additional shares of the corporation, with the
corporation for a three-year period following the date at which the stockholder
becomes an "interested stockholder" unless (i) prior to such date, the board of
directors of the corporation approved either the business combination or the
transaction which resulted in the stockholder becoming an "interested
stockholder," (ii) upon consummation of the transaction which resulted in the
stockholder becoming an "interested stockholder," the interested stockholder
owned at least 85% of the voting stock of the corporation outstanding at the
time that the transaction commenced (excluding certain shares), or (iii) on or
subsequent to such date, the business combination is approved by the board of
directors of the corporation and authorized at an annual or special meeting of
stockholders by the affirmative vote of at least 66 2/3% of the outstanding
voting stock which is not owned by the "interested stockholder." Except as
otherwise specified in Section 203, an "interested stockholder" is defined to
include (x) any person which is the owner of 15% or more of the
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outstanding voting stock of the corporation, or is an affiliate or associate of
the corporation and was the owner of 15% or more of the outstanding voting stock
of the corporation at any time within three years immediately prior to the
relevant date and (y) the affiliates and associates of any such person. A
corporation's stockholders, by adopting an amendment to its certificate of
incorporation or bylaws, may elect not to be governed by Section 203, effective
twelve months after adoption. Neither the certificate of incorporation nor the
bylaws presently exclude LTI from the restrictions imposed by Section 203.
Further, neither the proposed amended and restated certificate of incorporation
nor the proposed amended and restated bylaws exclude LTI from the Section 203
restrictions.
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COMPARISON OF THE RIGHTS OF LTI STOCKHOLDERS
AND SPEEDCOM STOCKHOLDERS
ON THE EFFECTIVE DATE OF THE MERGER, THE HOLDERS OF SPEEDCOM COMMON STOCK
WILL RECEIVE LTI COMMON STOCK UNDER THE TERMS OF THE MERGER AGREEMENT AND WILL
BECOME STOCKHOLDERS OF LTI. BECAUSE LTI IS A DELAWARE CORPORATION, THE
STOCKHOLDERS OF SPEEDCOM WILL BECOME STOCKHOLDERS OF A CORPORATION GOVERNED BY
THE GENERAL CORPORATION LAW OF DELAWARE AND BY NEW CHARTER DOCUMENTS, AS OPPOSED
TO THE GENERAL CORPORATION LAW OF FLORIDA AND SPEEDCOM'S CURRENT CHARTER
DOCUMENTS. ALTHOUGH IT IS NOT PRACTICAL TO COMPARE ALL THE DIFFERENCES, CERTAIN
DIFFERENCES BETWEEN THE RIGHTS OF SPEEDCOM STOCKHOLDERS PRIOR TO THE MERGER
VERSUS AFTER THE MERGER ARE SUMMARIZED BELOW.
AS DISCUSSED ELSEWHERE IN THIS PROXY STATEMENT/PROSPECTUS, IN CONNECTION
WITH THE MERGER, LTI IS PROPOSING CERTAIN CHANGES TO ITS CURRENT CERTIFICATE OF
INCORPORATION. THESE CHANGES ARE SUMMARIZED UNDER THE HEADINGS "PROPOSAL 2:
REVERSE STOCK SPLIT" AND "PROPOSAL 3: AMENDMENTS TO THE LTI CERTIFICATE OF
INCORPORATION." WHERE APPROPRIATE, THE FOLLOWING DISCUSSION ADDRESSES
DIFFERENCES BETWEEN THE COMPANY'S CURRENT AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION OR BYLAWS AND THE PROPOSED AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION THAT ARE INTENDED TO BE IMPLEMENTED IN CONNECTION WITH THE CLOSING
OF THE MERGER TO THE EXTENT THAT THE DIFFERENCES IMPACT A DISCUSSION OF THE
RIGHTS OF SPEEDCOM STOCKHOLDERS PRIOR TO THE MERGER VERSUS AFTER THE MERGER.
THIS FOLLOWING SUMMARY DOES NOT PURPORT TO BE COMPLETE, AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO LTI'S CURRENT CERTIFICATE OF INCORPORATION AND
BYLAWS, THE PROPOSED AMENDED AND RESTATED CERTIFICATE OF INCORPORATION,
SPEEDCOM'S CURRENT AMENDED AND RESTATED ARTICLES OF INCORPORATION AND BYLAWS, AS
WELL AS DELAWARE AND FLORIDA LAW. THE PROPOSED FORM OF THE AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION IS ATTACHED AS APPENDIX B TO THIS PROXY
STATEMENT/PROSPECTUS.
ACTION BY WRITTEN CONSENT
FLORIDA. Under Florida law, unless otherwise provided in a corporation's
articles of incorporation, any action that may be taken at any annual or special
meeting of stockholders may be taken without a meeting and without prior notice,
if a consent in writing, setting forth the action so taken, is signed by the
holders of outstanding shares having not less than the minimum number of votes
that would be necessary to authorize such action at a meeting at which all
shares entitled to vote thereon were present and voted. Florida law requires
that notice of the action be sent to stockholders who do not consent in writing
within 10 days of the date authorization is granted. Speedcom's amended and
restated articles of incorporation do not contain a provision that prohibits
stockholders from taking action by written consent.
DELAWARE. Under Delaware law, unless otherwise provided in a corporation's
certificate of incorporation, the stockholders may take action without a meeting
if a consent in writing to such action is signed by the stockholders having a
minimum number of votes that would be necessary to take such action at the
meeting. Delaware law requires that prompt notice of the action be sent to
stockholders who do not consent in writing. While LTI's current certificate of
incorporation does not contain a provision that prohibits stockholders from
taking action by written consent, the proposed amended and restated certificate
of incorporation does contain such a provision.
SPECIAL MEETINGS
FLORIDA. Under Florida law, special meetings of the stockholders may be
called by the board of directors or by such persons as may be authorized by the
articles of incorporation or the bylaws. In addition, Florida law permits the
holders of not less than 10% of all votes entitled to be cast on any issue to be
considered at the special meeting (unless a greater percentage, not to exceed
50%, is specified in the articles of incorporation) to call a special meeting.
Speedcom's amended and restated
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bylaws permit the corporation's president, board of directors and holders of not
less than 10% of all votes to be cast on any issue to be considered at the
special meeting to call a special meeting.
DELAWARE. Under Delaware law, special meetings of the stockholders may be
called by the board or by such persons as may be authorized by the certificate
of incorporation or the bylaws. LTI's bylaws provide that special meetings of
stockholders may be called by the board of directors, the chairman of the board,
the president or by the board of directors when requested in writing by
stockholders holding not less than 20% of the corporation's outstanding stock.
In contrast, LTI' amended and restated bylaws limit the power to call a special
meeting of stockholders to the board of directors, the chairman of the board or
the chief executive officer.
QUORUM FOR STOCKHOLDER MEETINGS
FLORIDA. Florida law provides that unless otherwise provided in a
corporation's articles of incorporation (but not its bylaws), a majority of
shares entitled to vote on a matter constitutes a quorum at a meeting of
stockholders, but in no event may a quorum consist of less than one-third of the
shares entitled to vote on such matter. Speedcom's amended and restated articles
of incorporation do not alter the Florida default rule.
DELAWARE. Delaware law is similar to Florida law in this respect, except
that under the Delaware code a corporation's certificate of incorporation or
bylaws may specify the percentage of votes which constitutes a quorum at a
meeting of stockholders, but in no event may a quorum consist of less than
one-third of the shares entitled to vote. LTI's current bylaws provide that a
quorum exists if a majority of the voting power of the common stock entitled to
vote is present in person or by proxy at a meeting.
STOCKHOLDER VOTING REQUIREMENTS
Under both Florida and Delaware law, directors are generally elected by a
plurality of the votes cast by the stockholders entitled to vote at a
stockholders' meeting at which a quorum is present.
FLORIDA. Generally, with respect to matters other than the election of
directors, unless a greater number of affirmative votes is required by Florida
law or a corporation's articles of incorporation (but not its bylaws), if a
quorum exists, action on any matter is generally approved by the stockholders if
the votes cast by the holders of the shares represented at the meeting and
entitled to vote on the matter favoring the action exceed the votes cast
opposing the action. In the case of a merger, consolidation, or a sale, lease or
exchange of all or substantially all of the assets of a Florida corporation,
except in limited circumstances in which no stockholder vote is required, the
affirmative vote of the holders of a majority of the issued and outstanding
shares entitled to vote is required under Florida law. Speedcom's amended and
restated articles of incorporation provide that stockholder voting of all shares
shall be on a plurality basis.
DELAWARE. Under Delaware law generally, and unless otherwise provided by
specific provisions of the Delaware law or a Delaware corporation's certificate
of incorporation or bylaws, if a quorum exists, action on a matter is approved
by the affirmative vote of a majority of the shares represented at a meeting and
entitled to vote on the matter. In the case of a merger, the affirmative vote of
the holders of a majority of the issued and outstanding shares entitled to vote
is required by Delaware law. Neither the current nor proposed charter documents
of LTI vary the Delaware default rule.
MERGER, CONSOLIDATION AND ASSET SALES
Both Florida and Delaware law each provide that a merger, consolidation or
sale of all or substantially all of the assets of a corporation requires
(a) approval by the board and (b) the affirmative vote of a majority of the
outstanding stock of the corporation entitled to vote thereon. Florida law
allows the board of directors or the articles of incorporation, and Delaware law
permits the
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certificate of incorporation or bylaws, to establish a higher vote requirement.
Neither Speedcom's articles, nor the current charter nor the proposed charter
document of LTI vary the default rule.
AFFILIATED TRANSACTIONS
FLORIDA. Florida law provides that an "affiliated transaction" (as defined
in the Florida law) with an "interested stockholder" or any affiliate or
associate of the interested stockholders must generally be approved by the
affirmative vote of the holders of two-thirds of the voting shares, other than
the shares owned by the interested stockholder. The transactions covered by the
statute include, with certain exceptions:
- mergers and consolidations to which the corporation and the interested
stockholder are parties;
- sales or other dispositions of substantial amounts of the corporation's
assets to the interested stockholder;
- issuances by the corporation of substantial amounts of its securities to
the interested stockholder;
- the adoption of any plan for the liquidation or dissolution of the
corporation proposed by or pursuant to an arrangement with the interested
stockholder;
- any reclassification of the corporation's securities which has the effect
of substantially increasing the percentage of the outstanding voting
shares of the corporation beneficially owned by the interested
stockholder; and
- the receipt by the interested stockholder of certain loans or other
financial assistance from the corporation.
An interested stockholder is any person who is the beneficial owner of 10%
or more of the outstanding voting stock of the corporation. The two-thirds
approval requirement does not apply if, among other things:
- the transaction has been approved by a majority of the corporation's
disinterested directors (as defined in the statute);
- the interested stockholder has been the beneficial owner of at least 80%
of the corporation's outstanding voting shares for at least five years
preceding the transaction;
- the interested stockholder is the beneficial owner of at least 90% of the
outstanding voting shares;
- the corporation has not had more than 300 stockholders of record at any
time during the preceding three years; or
- certain fair price and procedural requirements are satisfied.
These restrictions do not apply if a corporation's articles of incorporation
or an amendment to its articles of incorporation or bylaws approved by the
affirmative vote of the holders of a majority of the outstanding voting shares
of the corporation (other than those held by the interested stockholder) contain
a provision expressly electing not to be governed by these rules. Speedcom's
amended and restated articles of incorporation do not contain a provision
electing to be exempt from this affiliated transaction provision.
DELAWARE. Under Delaware law, a corporation may not engage in any "business
combination" (as defined in the Delaware code) with an "interested stockholder"
for three years after such stockholder becomes an interested stockholder. An
interested stockholder is any person who is the beneficial owner of 15% or more
of the outstanding voting stock of the corporation. These business combinations
are
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substantially the same as the "affiliated transactions" described above with
respect to Florida law. A corporation may enter into a business combination with
an interested stockholder if:
- the board of directors approves either the business combination or the
transaction which resulted in the stockholder becoming an interested
stockholder before the date on which the stockholder becomes an interested
stockholder;
- upon consummation of the transaction resulting in the stockholder reaching
the 15% threshold, the stockholder owned 85% of the outstanding voting
shares at the time the transaction commenced, excluding those shares held
by directors who are also officers or by employee stock plans in which the
participants do not have the right to determine confidentially whether
shares subject to the plan will be tendered in a tender or exchange offer;
or
- on or subsequent to becoming an interested stockholder, the business
combination is approved by the board of directors and is authorized at a
meeting by the affirmative vote of at least two-thirds of the outstanding
voting stock not owned by the interested stockholder.
These restrictions do not apply if the corporation's original certificate of
incorporation or an amendment to its certificate of incorporation or bylaws
approved by a majority of the shares entitled to vote thereon contains a
provision expressly electing not to be governed by these rules, or if the
corporation does not have a class of stock listed on a national securities
exchange authorized for quotation on the Nasdaq Stock Market or held of record
by more than 2,000 stockholders, unless any of the foregoing results from the
actions of the interested stockholder. Neither the current nor proposed charter
documents of LTI contain provisions electing to be exempt from these provisions
of Delaware law.
CONTROL SHARE ACQUISITIONS
FLORIDA. Florida law contains a control share acquisition statute which
provides that a person who acquires shares in an issuing public corporation (as
defined in the statute) in excess of certain specified thresholds will generally
not have any voting rights with respect to such shares unless such voting rights
are approved by a majority of the shares entitled to vote, excluding interested
shares. The three thresholds specified in the Florida law are the acquisition of
a number of shares representing: 20% or more, but less than 33% of all voting
power of the corporation; 33% or more but less than a majority of all voting
power of the corporation; or a majority or more of all voting power of the
corporation. The statute does not apply if, among other things, the acquisition:
- is approved in advance by the corporation's board of directors;
- is pursuant to a pledge or other security interest created in good faith
and not for the purpose of circumventing the statute;
- is pursuant to the laws of intestate succession or pursuant to gift or
testamentary transfer; or
- is pursuant to a statutory merger or share exchange to which the
corporation is a party.
This statute also does not apply to acquisitions of shares of a corporation
if, prior to the pertinent acquisition of shares, the corporation's articles of
incorporation or bylaws provide that the corporation shall not be governed by
the statute. This statute also permits a corporation to adopt a provision in its
articles of incorporation or bylaws providing for the redemption by the
corporation of such acquired shares in certain circumstances. Unless otherwise
provided in the corporation's articles of incorporation or bylaws prior to the
pertinent acquisition of shares, in the event that such shares are accorded full
voting rights by the stockholders of the corporation and the acquiring
stockholder has acquired a majority of the voting power of the corporation, all
stockholders who did not vote in favor of according voting rights to such
acquired shares are entitled to dissenters' rights. Speedcom's amended and
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restated articles of incorporation do not contain a provision electing to be
exempt from Florida's control share acquisition statute.
DELAWARE. Delaware does not have any comparable statutory provision to the
Florida control share acquisition statute.
OTHER CONSTITUENCIES
FLORIDA. Florida law provides that directors of a Florida corporation, in
discharging their fiduciary duties to the corporation, may consider the social,
economic, legal or other effects of corporate action on the employees, suppliers
and customers of the corporation or its subsidiaries and the communities in
which the corporation and its subsidiaries operate, and the economy of Florida
and the nation, in addition to the effect on stockholders.
DELAWARE. Delaware does not have a comparable statutory provision regarding
other constituencies.
REMOVAL OF DIRECTORS
FLORIDA. Florida law provides that the stockholders may remove one or more
directors, with or without cause, unless the articles of incorporation provide
that directors may be removed only for cause. Such removal may be effected at a
meeting of stockholders if the number of votes cast to remove the director
exceeds the number of votes cast not to remove the director. Speedcom's amended
and restated articles of incorporation do not contain a provision altering the
statutory rule.
DELAWARE. Delaware law provides that unless the corporation's certificate
of incorporation otherwise provides, stockholders may remove any director or the
entire board of directors, with or without cause. Such a removal may only be
effected by a majority vote of the shares entitled to vote for the election of
directors. If the board of directors is divided into classes, however, Delaware
law provides that unless the corporation's certificate of incorporation
otherwise provides, directors may be removed by stockholders only for cause. The
current charter documents of LTI do not vary the Delaware default rule. The
proposed charter documents, however, provide that so long as the board of
directors is divided into classes, a director may be removed only for cause.
DISSENTERS' RIGHTS
FLORIDA. Under Florida law, dissenting stockholders who follow prescribed
statutory procedures are, in certain circumstances, entitled to appraisal rights
in the case of:
- a merger;
- a sale or exchange of all or substantially all the assets of a corporation
other than in the regular course of business;
- amendments to the articles of incorporation that adversely affect the
rights or preferences of stockholders;
- consummation of a plan of share exchange if the stockholder is entitled to
vote on the plan; and
- the approval of a control share acquisition pursuant to Florida law.
Unless a corporation's articles of incorporation provide otherwise, such
rights are not provided in a merger, share exchange or sale or exchange of
property when:
- shares of the corporation are listed on a national securities exchange,
designated as a national market security by the National Association of
Securities Dealers, Inc. or
- held of record by 2,000 or more stockholders.
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DELAWARE. Under Delaware law, dissenters' rights are afforded to
stockholders who follow prescribed statutory procedures in connection with a
merger or consolidation (subject to restrictions similar to those provided by
Florida law). Under Delaware law, there are no appraisal rights in connection
with sales of all or substantially all of the assets of a corporation,
reclassifications of stock or other amendments to the certificate of
incorporation which adversely affect a class of stock, unless specifically
provided in the certificate of incorporation. Neither the current nor proposed
certificate of incorporation of LTI provide for dissenters' rights in these
circumstances. Similar to Florida law, dissenters' rights do not apply to a
stockholder of a Delaware corporation if the stockholder's shares were:
- listed on a national securities exchange or designated as a national
market system security on an interdealer quotation system by the National
Association of Security Dealers, Inc.; or
- held of record by more than 2,000 stockholders.
Notwithstanding the foregoing, however, under Delaware law, a stockholder
does have dissenters' rights with respect to such shares if the stockholder is
required by the terms of the agreement of merger or consolidation to accept
anything for his shares other than:
- shares of stock of the corporation surviving or resulting from the merger
or consolidation;
- shares of stock of any other corporation which is so listed or designated
or held of record by more than 2,000 stockholders;
- cash in lieu of fractional shares; or
- any combination of the foregoing.
AMENDMENTS TO CHARTER
Florida and Delaware law provide, generally, that an amendment to the
articles of incorporation or certificate of incorporation, as the case may be,
must be approved by the board of directors and by a corporation's stockholders.
FLORIDA. Under Florida law, unless a corporation's articles of
incorporation or the board of directors requires a greater vote, an amendment to
a Florida corporation's articles of incorporation generally requires that the
votes cast in favor of the amendment exceed the votes cast against the
amendment. Again, Speedcom's amended and restated articles of incorporation
provide for plurality voting.
DELAWARE. Unless the corporation's certificate of incorporation requires a
greater vote, Delaware law provides that a vote to amend the corporation's
certificate of incorporation requires the approval of a majority of the
outstanding stock entitled to vote.
AMENDMENTS TO BYLAWS
FLORIDA. Florida law provides that the stockholders, as well as a
corporation's directors, may amend the bylaws, unless such power is reserved to
the stockholders by the articles of incorporation or by specific action of the
stockholders. Speedcom's amended and restated articles of incorporation do not
prohibit the board of directors from amending the bylaws.
DELAWARE. Delaware law provides that the stockholders or, if provided in
the certificate of incorporation, the board of directors, are entitled to amend
the bylaws. While LTI's current certificate of incorporation does not empower
the board of directors to amend the bylaws, the proposed amended and restated
certificate of incorporation does permit the board to do so.
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LIABILITY OF DIRECTORS
FLORIDA. Under Florida law a director is not personally liable for monetary
damages to the corporation or any other person for any statement, vote, decision
or failure to act, regarding corporate management or policy, by a director
unless the director breached or failed to perform his duties as a director and
such breach or failure constitutes:
- a violation of criminal law unless the director had reasonable cause to
believe his conduct was lawful or had no reasonable cause to believe his
conduct was unlawful;
- a transaction from which the director derived an improper personal
benefit;
- a circumstance resulting in an unlawful distribution;
- conscious disregard for the best interests of the corporation or willful
misconduct in a proceeding by or in the right of the corporation to
procure a judgment in its favor or by or in the right of a stockholder; or
- recklessness or an act or omission which was committed in bad faith or
with malicious purpose or in a manner exhibiting wanton and willful
disregard of human rights, safety, or property in a proceeding by or in
the right of one other than the corporation or a stockholder.
DELAWARE. Delaware law permits a Delaware corporation to include in its
certificate of incorporation a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breaches of fiduciary duty, including conduct which could be
characterized as negligence or gross negligence. The Delaware code expressly
provides, however, that the liability for the following actions cannot be
eliminated or limited in this manner:
- breaches of the director's duty of loyalty;
- acts or omissions not in good faith or involving intentional misconduct or
knowing violation of the law,
- an unlawful distribution; or
- the receipt of improper personal benefits.
Delaware law further provides that no such provision will eliminate or limit
the liability of a director for any act or omission occurring prior to the date
when such provision becomes effective. Both the current and proposed certificate
of incorporation of LTI include a provision eliminating director liability for
monetary damages for breaches to the extent permitted by Delaware law.
INDEMNIFICATION
Under both Florida and Delaware law, a corporation may generally indemnify
its officers, directors, employees and agents against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement of any
proceedings (other than derivative actions), if they acted in good faith and in
a manner they reasonably believed to be in or not opposed to the best interests
of the corporation and, with respect to any criminal action or proceeding, had
no reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in derivative actions, except that indemnification may be made only
for expenses (including attorneys' fees) and certain amounts paid in settlement
and in the event the person seeking indemnification has been adjudicated liable,
amounts deemed proper, fair and reasonable by the appropriate court upon
application thereto. Florida and Delaware law each provide that to the extent
that such persons have been successful in defense of any proceeding, they must
be indemnified by the corporation against expenses actually and reasonably
incurred in connection therewith. Florida law also provides that, unless a
corporation's articles of incorporation provide otherwise, if a corporation does
not so indemnify such persons, they may seek,
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and a court may order, indemnification under certain circumstances even if the
board of directors or stockholders of the corporation have determined that the
persons are not entitled to indemnification.
LTI's current certificate of incorporation and the proposed amended and
restated certificate of incorporation provide that the corporation shall
indemnify current and former directors and officers to the fullest extent
permitted by the Delaware code.
DISTRIBUTIONS, REDEMPTIONS, LIQUIDATIONS AND DISSOLUTION
FLORIDA. A Florida corporation may make distributions to stockholders as
long as, after giving effect to such distribution, (1) the corporation would be
able to pay its debts as they become due in the usual course of business, and
(2) the corporation's total assets would not be less than the sum of its total
liabilities plus (unless the articles of incorporation permit otherwise, which
Speedcom's amended and restated articles of incorporation do not) the amount
that would be needed if the corporation were to be dissolved at the time of the
distribution to satisfy the preferential rights upon dissolution of stockholders
whose preferential rights are superior to those receiving the distribution.
DELAWARE. A Delaware corporation may pay dividends out of surplus or, if
there is no surplus, out of its net profits for the fiscal year in which the
dividend is declared and/or the preceding fiscal year. A Delaware corporation is
generally prohibited from redeeming any of its capital stock if the redemption
would result in an impairment of the corporation's capital.
STOCKHOLDER INSPECTION OF BOOKS AND RECORDS
FLORIDA. Under Florida law a stockholder is entitled to inspect and copy
the articles of incorporation, bylaws, board resolutions creating classes of
stock, minutes of all stockholder meetings and actions taken by the stockholders
in the last three years, certain written communications to stockholders, a list
of the names and business addresses of the corporation's directors and officers,
and the corporation's most recent annual report during regular business hours if
the stockholder gives at least five business days' prior written notice to the
corporation. In addition, a stockholder of a Florida corporation is entitled to
inspect and copy other books and records of the corporation during regular
business hours if the stockholder gives at least five business days' prior
written notice to the corporation and:
- the stockholder's demand is made in good faith and for a proper purpose;
- the demand describes with particularity its purpose and the records to be
inspected or copied; and
- the requested records are directly connected with such purpose.
Florida law also provides that a corporation may deny any demand for
inspection if the demand was made for an improper purpose or if the demanding
stockholder has, within two years preceding such demand, sold or offered for
sale any list of stockholders of the corporation or any other corporation, has
aided or abetted any person in procuring a list of stockholders for such purpose
or has improperly used any information secured through any prior examination of
the records of the corporation or any other corporation.
DELAWARE. The provisions of the Delaware code governing the inspection and
copying of a corporation's books and records are generally less restrictive than
those of the Florida code. Specifically, Delaware law permits any stockholder
the right, during usual business hours, to inspect and copy the corporation's
stock ledger, stockholders list and other books and records for any proper
purpose upon written demand under oath stating the purpose thereof.
TREASURY STOCK
FLORIDA. A Florida corporation may reacquire its own issued and outstanding
capital stock. Under Florida law, unless otherwise provided in the corporation's
articles of incorporation, all capital stock reacquired by a Florida corporation
is automatically returned to the status of authorized but not issued or
outstanding, and is not deemed treasury stock.
DELAWARE. A Delaware corporation may also reacquire its own issued and
outstanding capital stock, and such capital stock is deemed treasury stock which
is issued but not outstanding.
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BUSINESS OF LTI
GENERAL
LTI sold all of its operating assets to Packaging Atlanta Corporation in a
transaction which was completed June 30, 1999. At the present time, LTI has no
operating business and the company's management and board of directors have been
focusing on exploring opportunities to enter into a business combination with an
operating company. The description of LTI's business set forth below provides a
discussion of our past business and is not meant to describe present operations
or planned future operations.
On June 6, 2000, we announced that we had executed a letter of intent to
merge with Speedcom.
OVERVIEW
Laminating Technologies, Inc. was incorporated in Georgia, in March 1993, as
New Cooler Corp., and subsequently changed its name to Laminating
Technologies, Inc. In April 1996, the Company was merged into Laminating Merger
Corporation, a Delaware corporation, which changed its name to Laminating
Technologies, Inc. In connection with the asset sale described above, we changed
our name to LTI Holdings, Inc.
Prior to the asset sale, LTI operated as a development stage company
organized to research, develop, design and market value-added packaging and
specialty display products manufactured using a proprietary processing method
known as "LTI Processed-Registered Trademark-".
The LTI Processed-Registered Trademark- process can be utilized to produce a
wide variety of packaging products and specialty displays. Prior to the asset
sale, we produced a number of commercial products, including bakery dessert
discs, pads and trays, catering HOT 'N COOLER-Registered Trademark- containers,
frozen food shippers, point of purchase displays, pizza delivery boxes and
medical shippers.
PRODUCTS
On April 17, 1997, we announced "BAKE 'N SHIP-TM-", a new product line,
which was available for sale to the baking industry. BAKE 'N SHIP-TM- utilized
the our patented and proprietary process, resulting in a new material which was
ovenable and freezable with the strength and structure of corrugated material.
This was our first commercial product.
In February 1998, we introduced a new "HOT 'N COOLER-Registered Trademark-"
line of watertight containers that keep food and beverages hot or cold,
depending upon the application. Research conducted by an independent laboratory
showed that HOT 'N COOLER-Registered Trademark- cooled down faster (cans and
ice) than the traditional hard plastic, soft bag or styrofoam coolers.
Additionally, during testing, HOT 'N COOLER-Registered Trademark- was proven to
hold heat longer for food caterers of beans, ribs, chicken, etc.
STRATEGY
Prior to the asset sale, LTI's strategy focused on: (i) designing,
developing and marketing value-added, niche LTI Processed-Registered Trademark-
products both directly and indirectly to focused market segments,
(ii) leveraging these developed markets to and through vertically integrated
forest product companies creating strategic alliances, and (iii) obtaining
license agreements and/or royalty arrangements favorable to LTI expanding both
the uses and volume for LTI Processed-Registered Trademark- products.
EMPLOYEES
We currently have two full-time employees and one part-time employee. None
of our employees is represented by a labor union and we believe that our
relations with employees is satisfactory. On April 1, 1997, we placed our
employees with Paradyme, a Professional Employer Organization. Under
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terms of the arrangement with Paradyme, our employees became employees of
Paradyme, entitling the employees to obtain superior benefits that we previously
could not offer to employees. While LTI must pay for the payroll cost of the
employees, and a fee for this service, using this service allowed us to avoid
the overhead and additional administrative costs typically associated with these
benefits.
PROPERTIES
LTI currently leases approximately 1,000 square feet of office space in
Atlanta, Georgia for its executive offices pursuant to a month-to-month
agreement for a monthly rent of $500.
LEGAL PROCEEDINGS
We are not involved in any material legal proceedings.
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LTI MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
LTI was a development stage company organized to develop, design and market
value-added packaging and specialty display products. Since its inception, LTI's
efforts were principally devoted to research, development and design of
products, marketing activities and raising capital. Due to an inability to find
a sufficient market for its products, LTI sold its operating assets as of
June 30, 1999 and currently does not have any operating business. Therefore,
readers should note that the following discussion of results of operations is
being provided for historical comparison purposes only and is not meant to
describe LTI's present business or planned future operations.
The following discussion should be read in conjunction with the LTI
financial statements and notes thereto included elsewhere in this proxy
statement/prospectus.
The per share data set forth in this section does not give effect to the
proposed 1 for 4.26 reverse stock split.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1999 AND 2000.
Net sales decreased from approximately $553,000 in the three months ended
June 30, 1999 (1999 three months) to $0 in the three months ended June 30, 2000
(2000 three months). This decrease is due to LTI selling its operating assets as
of June 30, 1999.
Gross profit decreased from approximately $154,000 in the 1999 three months,
to $0 in the 2000 three months. The gross profit margin decrease is due to LTI
selling its operating assets as of June 30, 1999.
Selling, general and administrative expenses decreased 78% from the 1999
three months of approximately $471,000 to approximately $103,000 in the 2000
three months. This decrease is primarily due to the reduction in personnel due
to LTI selling its operating assets as of June 30, 1999.
Research and development expense decreased from approximately $46,000 in the
1999 three months to $0 in the 2000 three months. This decrease is due to LTI
selling its operating assets as of June 30, 1999.
Interest expense decreased approximately $1,000 from the 1999 three months
of approximately $1,000 to $0 in the 2000 three months. This decrease is due to
the payoff of an outstanding note. Interest income increased from approximately
$20,000 in the 1999 three months to approximately $26,000 in the 2000 three
months. This increase is primarily due to the amount of cash available for
investing, due to the sale of the assets, being greater in the 2000 three months
than in the 1999 three months.
Loss on sale of assets was approximately $335,000 for the 1999 three months.
This loss was recognized as a result of LTI selling substantially all of its
assets. There was no such activity in the 2000 three months.
Net loss decreased from approximately $680,000 or ($.24) per share in 1999
three months to approximately $76,000, or ($.03) per share, in 2000 three months
as a result of the foregoing factors.
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FISCAL YEARS ENDED MARCH 31, 1999 AND 2000.
Net sales decreased from approximately $1,878,000 in the twelve months ended
March 31, 1999 (fiscal 1999) to $553,000 in the twelve months ended March 31,
2000 (fiscal 2000). This decrease is due to LTI selling its operating assets as
of June 30, 1999.
Selling, general and administrative expenses decreased by 32% from
approximately $1,335,000 in fiscal 1999 to approximately $905,000 in fiscal
2000. This decrease is primarily due to the reduction in personnel due to LTI
selling its operating assets as of June 30, 1999.
Research and development expense decreased by 90% from approximately
$463,000 in fiscal 1999 to approximately $46,000 in fiscal 2000. This decrease
is due LTI selling its operating assets as of June 30, 1999.
Interest expense decreased by $4,000 from approximately $5,000 for fiscal
1999 to approximately $1,000 for fiscal 1999. The decrease is due to the
reduction in the outstanding balance of a note payable.
Investment income decreased from approximately $124,000 in fiscal 1999 to
approximately $94,000 in fiscal 2000. This decrease is primarily due to the
amount of cash available for investing being greater in fiscal 1999 than in
fiscal 2000.
Net loss increased 8% from approximately $967,000, or $.35 per share, in
fiscal 1999 to approximately $1,040,000, or $.37 per share, in fiscal 2000, as a
result of the foregoing factors.
LIQUIDITY AND CAPITAL RESOURCES
LTI received approximately $400,000 from the sale of its assets on June 30,
1999 and this cash was added to the existing cash balance. Since this time LTI's
cash has primarily been used to pay recurring general and administrative
expenses which run approximately $25,000 per month, excluding any fees for
legal, financial or other advisory services. LTI currently has cash and short
term investments of approximately $1.7 million.
At the time of LTI's initial public offering, certain common stockholders
had agreed to place 410,000 shares of LTI common stock into escrow. These escrow
shares would have been released from escrow only if certain financial conditions
or market prices for the common stock had been met or achieved. These financial
conditions or market prices were not achieved within the specified time and the
escrow shares have been canceled.
At June 30, 2000, LTI had net operating loss carry-forwards for Federal
income tax purposes of approximately $9,321,000. The net operating loss and
credit carry-forwards expire from March, 2009 through March, 2020. Additionally,
LTI's ability to utilize its net operating loss carry-forwards may be subject to
annual limitations pursuant to Section 382 of the Internal Revenue Code.
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PRINCIPAL STOCKHOLDERS OF LTI
The table below sets forth, as of August 15, 2000, according to information
available to the company, the stock ownership of the directors, executive
officers and principal stockholders of LTI (including all holders of greater
than 5% of LTI common stock). The table also shows the ownership of such persons
after giving effect to the proposed 1 for 4.26 reverse stock split completion of
the merger with Speedcom and the issuance of the shares of LTI common stock to
Speedcom stockholders in connection with the merger. The share ownership and
percentages listed in the table include any shares of LTI common stock held by
the listed stockholders that are subject to options currently exercisable or
exercisable within sixty days from the date of these tables. The persons and
entities listed have, to LTI's knowledge, sale, voting and investment power with
respect to all shares of LTI stock shown as being beneficially owned by them,
except as may otherwise be described in the footnotes to the tables. Beneficial
ownership is determined in accordance with the rules and regulation of the SEC.
Unless otherwise indicated, the address of each affiliate named in the table
is c/o of LTI Holdings, Inc., 5115 New Peachtree Road, Suite 200, Atlanta, GA
30341.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF BENEFICIAL OWNERSHIP OF
LTI SHARES LTI SHARES
PRIOR TO THE MERGER(1) FOLLOWING THE MERGER(2)
--------------------------------------- -------------------------
NUMBER OF NUMBER OF PERCENT OF NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES (3) SHARES (4) CLASS SHARES CLASS
---------------- ---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Michael E. Noonan...................... 116,271 27,293 4.2% 27,293 *
Ronald L. Christensen.................. 10,750(5) 2,523 * 2,523 *
William J. Warren...................... 10,750(5) 2,523 * 2,523 *
Donald B. Sallee....................... 368,885(6) 86,592 13.3 86,592 *
Steven N. Bronson...................... 680,297(7) 159,694 24.5 159,694 1.9%
J. Morton Davis........................ 319,465(8) 74,991 11.1 74,991 *
Kinder Investments, L. P............... 308,300(9) 72,370 11.1 72,370 *
Steve Gorlin........................... 143,343(10) 33,649 5.2 33,649 *
Ruki Renov............................. 277,440(11) 64,126 9.1 64,126 *
Esther Stahler......................... 277,440(12) 65,126 9.1 65,126 *
All executive officers and directors as
a group
(3 persons).......................... 137,771(13) 32,339 4.6 32,339 *
</TABLE>
------------------------
* Less than 1%.
(1) Except as otherwise indicated, each of the parties listed above has sole
voting and investment power over the shares owned.
(2) Assumes implementation of 1 for 4.26 reverse stock split and issuance of
7,438,036 shares in the merger.
(3) Reflects share ownership prior to reverse split and issuance of shares in
the merger.
(4) Reflects share ownership following reverse split, but prior to issuance of
shares in the merger.
(5) As to each director, includes 10,750 immediately exercisable options to
purchase common stock. Does not include 250 shares (per director) issuable
upon exercise of options that that are not exercisable within sixty days.
(6) The address of Mr. Sallee is 980 South Powers Court, N. W., Atlanta, Georgia
30327.
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(7) The address of Mr. Bronson is 16 East 52nd Street, Suite 501, New York, New
York 10022.
(8) Represents 52,360 shares underlying a unit purchase option ("UPO") to
purchase 13,090 units owned by Mr. Davis, 52,360 shares underlying a UPO to
purchase 13,090 units owned by D. H. Blair Investment Banking Corp. and
214,745 shared owned by D. H. Blair Capital Corp. Mr. Davis is the chairman
of the board and sole stockholder of D. H. Blair Capital Corp. and D. H.
Blair Investment Banking Corporation. Mr. Davis has sole power to vote or
direct the vote, to dispose of or to direct the disposition of the shares
owned by D. H. Blair Capital Corp. and D. H. Blair Investment Banking Corp.
The address of Mr. Davis is 44 Wall Street, New York, New York 10005.
(9) Kinder Investments, L.P.; Peyser Associates, LLC, the general partner of
Kinder Investments; and Brian A. Wasserman, the managing member of Peyser,
share voting power over the shares. The address of these parties is 1500
Hempstead Turnpike, East Meadow, New York 11554.
(10) The address of Mr. Gorlin is 150 Gulf Shore Drive, Unit 601, Destin,
Florida 32541. Mr. Gorlin may be deemed a "founder" of the Company, as such
term is defined in the Securities Act of 1933.
(11) Includes 209,440 shares underlying a UPO to purchase 52,360 units owned
directly by Mrs. Renov and 68,000 shares underlying a UPO to purchase 17,000
units owned by D. H. Blair & Co., Inc. Each unit consists of one share of
LTI common stock, one class A common warrant and one class B warrant.
Mrs. Renov has sole voting power of and dispositive control over shares
owned by her and shared voting power of and dispositive control over shares
owned by D. H. Blair & Co. Mr. and Mrs. Renov, collectively, are principal
shareholders of D. H. Blair & Co. The address of Mrs. Renov is 172 Broadway,
Lawrence, New York 11559.
(12) Includes 209,440 shares underlying a UPO to purchase 52,360 units owned
directly by Mrs. Stahler and 68,000 shares underlying a UPO to purchase
17,000 units owned by D. H. Blair & Co. Mrs. Stahler has sole voting power
of and dispositive control over shares owned by her and has voting power of
and dispositive control over shares owned by D. H. Blair & Co. Mr. and
Mrs. Stahler, collectively, are principal shareholders of D. H. Blair & Co.
The address of Mrs. Stahler is 10 Lakeside Drive, Lawrence, New York 11559.
(13) Does not include 500 shares issuable upon exercise of options that are not
exercisable within sixty days.
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BUSINESS OF SPEEDCOM
COMPANY OVERVIEW
Speedcom was incorporated in Florida in 1994 as M-Com Networking Systems
Corporation. The company initially served as a reseller of computer equipment
and wireless communications equipment. In 1997, Speedcom changed its name to
Speedcom Wireless International Corporation and started selling its own branded
products. Speedcom does business under the tradenames Wave Wireless Networking
and Installguys.com.
Speedcom creates high speed wireless local area networking solutions.
Speedcom's products utilize advanced radio frequency and data communication
technologies to connect users to computer networks ranging in size and
complexity from enterprise-wide local areas networks, LANs, to home networks.
Speedcom also develops and markets point-to point and point-to-multipoint bridge
products for fixed wireless networking between buildings in Metropolitan Area
Networks (MANs). Transmitting data at rates up to 100 megabytes per second, or
Mbps, over line-of-site distances measured in miles, Speedcom's wireless bridge
products provide users with a cost effective alternative to leased wirelines for
high speed network and internet access.
Speedcom sells its wireless bridge products in domestic and international
markets through both an indirect channel of distributors, resellers and
OEMs and a direct sales force.
INDUSTRY OVERVIEW
In recent years, organizations have shifted from centralized computing
environments to distributed client/server networks that frequently include
multiple interconnected LANs. Local area networks offer increased productivity
and reduced systems costs by enabling users to share information, applications
and resources such as printers, file servers and communication devices. Today,
businesses and organizations are increasingly reliant upon LANs as the primary
infrastructure for connecting PC users to the enterprise network. Modern
enterprises are providing Internet access through enterprise networks to LAN
users for applications such as e-mail, e-commerce and information browsing.
These LANs have been accessed from computers situated in fixed locations.
Networks located in multiple locations have traditionally been connected by
fiber-optic cables. Installing a new line connection to add access points to a
network is a costly and time consuming operation. In addition, the growing use
of portable computing devices has generated the need for semi-fixed access
networks. In response, organizations have begun to utilize wireless technologies
to open their wired computer infrastructure to semi-fixed users and to provide
an alternative to wired building-to-building or in-building connectivity.
Widespread acceptance of wireless networks beyond existing vertical markets
has been limited to date. However, recent developments collectively resulted in
the emergence and growth of wireless LAN solutions in broader networking
markets. Today, the desire for pervasive network and Internet connectivity, the
preference for mobile computing and the need to deploy and reconfigure networks
rapidly and cost-effectively are all factors contributing to the increase in
market demand for wireless LAN solutions. The rise of wireless internet service
providers (ISPs) has also created significant demand for fixed wireless
equipment. Many wireless ISPs are building out national wireless networks to
circumvent the incumbent telephone companies and gain market share.
Global regulatory changes are increasing the number of competitors providing
data and voice access to the global telecommunications network. The increased
competition is driving access service providers to upgrade their products and
increase their service offerings. Recent deregulation in the United States has
facilitated competition for local and long distance telephone services, data
transmission services and Internet services. Competitors include local exchange
carriers, internet service providers, cable operators and utilities. Access to
public telecommunications services has historically been provided via copper
wire. In the past several years, new technologies have emerged to provide
greater communications capacity to subscribers via existing copper wire and
other wire alternatives.
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These digital systems, such as ISDN and DSL, offer a higher capacity for data
communications over copper wires. Market interest in these systems has been
fueled by the increasing demand for high-speed Internet access. The public
telecommunications infrastructure does not currently meet all the public access
demand. Wireless local loop systems have emerged as an alternative to wired
infrastructure for telephones and access to the Internet.
Instead of traditional wireline technologies, such as copper wire and fiber
optic cable, wireless local loop uses radio frequency communications to provide
alternative network access for both data and voice applications. Wireless local
loop technology is a promising and attractive solution for network access needs.
This is due to a variety of factors, including quick deployment, lower
infrastructure construction costs and lower operating costs than traditional
wireline access alternatives.
THE SPEEDCOM SOLUTION
Speedcom's wireless point-to-point and point-to-multipoint bridge products
provide fixed wireless networking, primarily outdoors between buildings.
Speedcom's products can reduce the overall cost of network connectivity through
reduced installation and infrastructure costs. Speedcom's products also
facilitate rapid deployment, temporary networks and semi-fixed connectivity to
the indoor and outdoor environments. Speedcom distinguishes itself from its
competitors by bundling a variety of components into a comprehensive package and
offering its customers not only the package, but full service as well.
BUSINESS STRATEGY
Speedcom's strategy is to continue providing a complete line of wireless
broadband products and services to sell to internet service providers and
private data network users. Speedcom intends to accomplish this primarily
through its existing product line and the internal development of new products
and services. Speedcom also intends to promote the wider use of its products by
establishing strategic relationships with partners who can reach additional
segments of the market. Speedcom may seek to acquire one or more companies which
complement Speedcom's product offerings in order to facilitate the company's
growth.
PRODUCTS/SERVICES
Speedcom offers a complete line of wireless broadband equipment. Speedcom's
high performance wireless bridge /router systems connect existing enterprise
LANs for point-to-point and point-to-multi-point, campus area, or metropolitan
area networks. Speedcom is developing additional products with smaller size,
greater functionality and greater ease of use for new markets. Speedcom expects
to have these products available for sale by the first quarter of 2001.
Speedcom's products can be reviewed at Speedcom's website, WWW.SPEEDLAN.COM.
Speedcom also offers complete wireless equipment installation and support
services.
CUSTOMERS
No single customer accounts for 10% or more of Speedcom's revenues for the
years ended December 31, 1998 and 1999 or the six month periods ended June 30,
1999 and 2000.
EMPLOYEES
Speedcom currently has approximately 80 full time employees, 32 of whom are
sales personnel and 7 of whom are engineers. None of Speedcom's employees is
represented by a labor union and Speedcom believes that its relations with its
employees is good.
PROPERTIES
Speedcom currently leases approximately 18,000 square feet of office and
light industrial space in Sarasota, Florida and has small offices in Miami,
Florida; Dallas, Texas; San Diego, California; Mexico City, Mexico; Calgary and
Alberta Canada; and Singapore. Speedcom has an option on approximately 3.22
acres at the Lakewood Ranch development in Sarasota, Florida where it intends to
have built and then lease back a 34,000 square foot building constructed to
facilitate the company's growth.
LEGAL PROCEEDINGS
Speedcom is not involved in any material legal proceedings.
72
<PAGE>
SPEEDCOM MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Prior to June 30, 1997, Speedcom was an "S" corporation for federal income
tax purposes. Since that time, Speedcom has operated as a "C" corporation.
The following discussion should be read in conjunction with the financial
statements and notes thereto included elsewhere in this proxy
statement/prospectus.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999 AND JUNE 30, 2000.
Net revenues increased 98.9% from approximately $2,012,000 in the six months
ended June 30, 1999 to approximately $4,001,000 in the six months ended
June 30, 2000. This increase was due to Speedcom executing its business plan in
a growing market for broadband wireless in 2000 coupled with Speedcom's poor
performance in the first half of 1999 due to its operating in a capital
constrained position.
Cost of installation revenues increased 86.2% from approximately $1,144,000
in the six months ended June 30, 1999 to approximately $2,130,000 in the six
months ended June 30, 2000, due primarily to increased sales of Speedcom's
equipment and services and a slight improvement in its gross margin.
Salaries and related, general and administrative and selling expenses
increased by 116.8% from approximately $1,154,000 in the first six months of
1999 to approximately $2,501,000 in the six months ended June 30, 2000. This
increase was primarily due to an increase in employee headcount and increased
spending on marketing and promotion, such as attendance at industry trade shows
coupled with an unusually low expense level in the first half of 1999 due to the
company operating in a capital constrained position. Additionally, Speedcom
incurred the cost of two years of financial audits in the first half of 2000 but
did not incur any expense for an audit in the first half of 1999.
Interest expense decreased by approximately $34,000, or 80.2%, from
approximately $42,000 for the six months ended June 30, 1999 to approximately
$8,000 for the six months ended June 30, 2000. This decrease was due to the
decrease in borrowings under Speedcom's factoring line as the result of an
infusion of equity in the first half of 2000 and continued amortization of
Speedcom's inventory based loan facility.
Net loss increased 96.9% from approximately $345,000, or $.06 per share, in
the first half of 1999 to approximately $679,000, or $.10 per share, in the
first six months of 2000, as a result of the foregoing factors.
FISCAL YEARS ENDED DECEMBER 31, 1998 AND 1999.
Net revenues decreased from approximately $5,171,000 in 1998 to
approximately $5,052,000 in 1999. This decrease was due to the company operating
in a capital constrained environment during the first half of 1999, offset by
growth in the market for wireless broadband equipment.
Cost of installation revenues increased from approximately $2,841,000 in
1998 to approximately $3,094,000 in 1999, an increase of 8.9% due primarily to
increased manufacturing and procurement costs and purchasing inefficiencies due
to financial capital constraints in the first half of 1999.
Salaries and related, general and administrative and selling expenses
decreased by 25.5% from approximately $3,316,000 in 1998 to approximately
$2,469,000 in 1999. This decrease was primarily due to the reduction in
discretionary spending on such items as marketing and promotion as well as
slight reductions in personnel in early 1999 due to lower sales.
73
<PAGE>
Interest expense increased by approximately $44,000 from approximately
$64,000 for 1998 to approximately $108,000 for 1999. The increase was due to the
increase in borrowings from shareholder, the execution of a note payable to a
supplier and increased use of factoring due to constrained cash flow.
Net loss decreased 37.5% from approximately $1,265,000, or $.21 per share,
in 1998 to approximately $791,000, or $.13 per share, in 1999, as a result of
the foregoing factors.
At December 31, 1999, Speedcom had net operating loss carry-forwards for
Federal income tax purposes of approximately $2,000,000. The net operating loss
and credit carry-forwards expire through the year 2019.
LIQUIDITY AND CAPITAL RESOURCES
Speedcom received approximately $990,000 from the sale of its common stock
during 1999 and this cash was added to the company's working capital. Speedcom's
working capital was reduced by approximately $118,400 due to operating losses.
As of December 31, 1999, Speedcom had cash and short term investments of
approximately $144,000.
Between January 1, 2000 and June 30, 2000, Speedcom raised approximately
$2,476,000 through the issuance of common stock and warrants. Subsequent to
June 30, 2000, Speedcom raised approximately $591,000 in additional funds
through the sale of common stock. Management of Speedcom believes that it has
sufficient working capital for Speedcom's business for the rest of 2000.
However, due to the growth of Speedcom, management believes that it will need to
raise additional capital in 2001. This additional capital could come from the
sale of common or preferred stock, the exercise of outstanding warrants, or from
borrowings. Speedcom has a $400,000 factoring facility in place with a financial
institution but has not utilized it since early in the first quarter of 2000.
Speedcom is currently in discussions with a number of financial institutions
regarding debt financing secured by receivables and inventory.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
During November 1999, with the approval of the board of directors, Ernst &
Young LLP replaced Arthur Andersen LLP as the independent auditors of Speedcom.
Arthur Andersen LLP's report on the financial statements of Speedcom for the
years ended December 31, 1997 and 1996 was unqualified. With respect to the
periods audited by Arthur Andersen LLP, there were no disagreements on any
matter of accounting principles or practices, financial statement disclosures,
or auditing scope or procedure, pertaining to the financial statements covered
by their report, which, if not resolved to the satisfaction of Arthur Andersen
LLP, would have caused them to make reference to the subject matter of the
disagreement in connection with their report, nor were there any such matters
identified subsequent to the issuance of their report through the date of
change.
74
<PAGE>
MANAGEMENT FOLLOWING THE MERGER
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth the names, ages and positions of the persons
who will serve as executive officers and directors of the post-merger combined
company.
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
---- -------- --------------------------------------------------------
<S> <C> <C>
Michael W. McKinney......... 43 Chairman and Chief Executive Officer, Director
Bruce Sanguinetti........... 47 President and Director
Jay O. Wright............... 30 Chief Financial Officer and Director
R. Craig Roos............... 53 Vice Chairman and Director
</TABLE>
MICHAEL W. MCKINNEY, CHAIRMAN AND CHIEF EXECUTIVE OFFICER,
DIRECTOR: Mr. McKinney founded Speedcom in 1994 and has served as its Chairman
and Chief Executive Officer for the past six years. Prior to forming Speedcom,
Mr. McKinney worked as an executive of AT&T and NCR Corporation for fourteen
years. Mr. McKinney holds a B.S. in Economics and Finance from Miami University,
Oxford, OH.
BRUCE SANGUINETTI, PRESIDENT AND DIRECTOR: Mr. Sanguinetti served as
President of BreezeCom, Incorporated from June 1995 to September 1999. In
October 1999, Mr. Sanguinetti left BreezeCom to become an the President and CEO
of Evietek Ventures. Prior to his involvement with BreezeCom, Mr. Sanguinetti
had served as executive vice president of sales and marketing with Solectek
Corporation from July 1994 to May 1995. He joined Speedcom's board of directors
in October 1999 and becomes Speedcom's President effective September 1, 2000.
Mr. Sanguinetti received his Bachelor's degree in Business Administration from
California State University.
JAY O. WRIGHT, CHIEF FINANCIAL OFFICER AND DIRECTOR: Mr. Wright joined
Speedcom in December 1999. Previously, he was a principal of FinanceMatrix.com,
a development stage business-to-business financial portal from January 1999
until December 1999. Mr. Wright was an investment banker with Merrill Lynch &
Co. in New York from May 1997 until January 1999. From September 1996 through
May 1997, he was a mergers & acquisitions attorney for Skadden, Arps, Slate,
Meagher & Flom LLP in New York. From June 1994 through September 1996, he was a
corporate attorney at Foley & Lardner, Chicago, Illinois. Mr. Wright received
his JURIS DOCTOR from The University of Chicago Law School in 1994 and his
Bachelor's degree in Business Administration, SUMMA CUM LAUDE, in 1991 from
Georgetown University.
R. CRAIG ROOS, VICE CHAIRMAN AND DIRECTOR: Mr. Roos joined Speedcom's board
of directors as vice chairman in February 2000. Mr. Roos is founder and sole
owner of Roos Capital Planners, Inc. which he formed in 1979. Mr. Roos serves on
the boards of several companies in the wireless and telecommunications industry.
He has previously served as Chairman of MobileMedia Corporation from 1993 until
1995. Mr. Roos also was a co-founder of Locate, a digital local access carrier
specializing in high speed T-1 level radio carrier technologies. Mr. Roos has
testified before the United States Congress on telecommunications issues and is
a former chairman of the Alternative Local Telecommunications trade association.
Mr. Roos has a B.A. in Economics from Davis & Elkins College and an MBA from
Fairleigh Dickinson University.
The following table summarizes the compensation we paid or accrued during
1999 for services of Michael W. McKinney, Speedcom's Chief Executive Officer.
There were no executive officers who received more than $100,000 in salary and
bonus in 1999.
75
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------------ -----------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND COMPENSATION AWARD(S) OPTIONS/ COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) $ $ SARS (#) ($)
------------------ -------- ---------- --------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael W. McKinney... 1999 $55,500 0 0 0 2,000 700(1)
Chairman and Chief
Executive Officer
</TABLE>
------------------------
(1) Represents Speedcom's matching contribution to its 401(k) plan.
The following table sets forth information with respect to option grants to
the executive officers named in the summary compensation table above during
1999.
OPTION GRANTS DURING FISCAL 1999
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL EXERCISE PRICE EXPIRATION
EXECUTIVE OFFICER OPTIONS GRANTED(1) OPTIONS GRANTED ($/SHARE) DATE
----------------- ---------------------- --------------- -------------- ----------
<S> <C> <C> <C> <C>
Michael W. McKinney............ 2,000 * $3.00 12/31/04
</TABLE>
------------------------
(1) The options, which were fully vested on the date of grant, were granted in
lieu of directors' fees.
(2) Less than 1% of the amount granted.
The following table sets forth information with respect options held as of
December 31, 1999 by the executive officers named on the summary compensation
table.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE AT FISCAL YEAR END (#) AT FISCAL YEAR END ($)
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
---- ----------- ----------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Michael W. McKinney........ 0 0 11,500/0 $11,500/$0
</TABLE>
------------------------
(1) Based on the sale prices of common stock sold by Speedcom in 1999, in the
opinion of Speedcom's Board of Directors, the fair market value of
Speedcom's common stock was approximately $4.00 at December 31, 1999.
EMPLOYMENT AGREEMENTS
Speedcom's Chief Executive Officer, President and Chief Financial Officer
have entered into employment contracts with Speedcom. Messrs. Wright and
Sanguenetti have employment contracts, each with a term of three years and
Mr. McKinney's contract is for a term of five years. Each contract provides for
automatic one year renewals thereafter unless either party receives a 60 day
notice of termination. Mr. McKinney, Chief Executive Officer entered into an
employment agreement with Speedcom in January, 2000. Mr. McKinney's base salary
is $120,000 per year and he received a grant of 500,000 options to acquire
shares of Speedcom's common stock in accordance to the terms of his agreement.
Mr. Sanguinetti entered into an employment agreement with Speedcom in July of
2000 and will serve as President, effective September 1, 2000.
Mr. Sanguinetti's current base salary is $180,000 per year and he received a
grant of options to purchase 210,000 shares of Speedcom common stock in
accordance with the terms of his agreement. Mr. Wright, Speedcom's Chief
Financial Officer entered
76
<PAGE>
into an employment agreement with Speedcom in December of 1999. Mr. Wright's
current base salary is $120,000 per year and he received a grant of options to
purchase 300,000 shares of Speedcom common stock in accordance with the terms of
his agreement. Each employment agreement also provides for bonus compensation
for each fiscal year during the term as determined by the Board in its
discretion and specifies that if Speedcom terminates employment for other than
"cause," Speedcom is obligated to pay the employee a severance benefit of 12
months base salary plus any previously earned but unpaid salary and/or bonus
amounts. Mr. McKinney, Mr. Sanguinetti and Mr. Wright are each also entitled to
participate in Speedcom's employee benefit plans.
DIRECTOR COMPENSATION
All directors, including directors who are Speedcom employees, receive 2,000
options annually in lieu of director's fees. The options have a term of 6 years
and vest immediately. All options have exercise prices equal to or greater than
the fair market value of the underlying common stock on the date of grant.
During 1999, 2,000 options were awarded to each of Messrs. McKinney and Wright
with an exercise price of $3.00.
CERTAIN TRANSACTIONS
Michael W. McKinney, Speedcom's Chairman and Chief Executive Officer, made a
series of working capital loans to Speedcom in 1998 and 1999 totaling
approximately $45,600. The loans bore interest at 19%. Speedcom paid interest on
these loans of approximately $8,700 and $11,000 during the 1998 and 1999.
Speedcom paid the loans in full in 2000.
During 1999, Jay O. Wright served as a consultant to Speedcom and received
approximately 9,000 options for certain services rendered in addition to 2,000
options for his service as a director.
In May 2000, Speedcom loaned $95,000 to R. Craig Roos, Vice Chairman and a
director, in connection with his purchase of 25,000 shares of common stock from
Speedcom at a price of $4.00 per share. The loan bears interest at 6% per year
and is payable in full on August 22, 2000.
77
<PAGE>
PRINCIPAL STOCKHOLDERS OF SPEEDCOM
The table below sets forth, as of June 30, 2000, according to information
available to the company, the stock ownership of the directors, executive
officers and principal stockholders of Speedcom (including all holders of
greater than 5% of Speedcom common stock). The table also shows the ownership of
LTI of such persons after giving effect to the completion of the merger and the
issuance of the shares of LTI common stock in connection with the merger. The
share ownership and percentages listed in the table include any shares of
Speedcom or LTI common stock held by the listed stockholders that are subject to
options currently exercisable or exercisable within sixty days from the date of
these tables. The persons and entities listed have, to Speedcom's knowledge,
sale, voting and investment power with respect to all shares of Speedcom and/or
LTI stock shown as being beneficially owned by them, except as may otherwise be
described in the footnotes to the tables. Beneficial ownership is determined in
accordance with the rules and regulation of the SEC.
Unless otherwise indicated, the address of each affiliate named in the table
is c/o Speedcom Wireless International Corporation, 1748 Independence Blvd.,
C-5, Sarasota, FL 34234.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF BENEFICIAL OWNERSHIP OF
SPEEDCOM SHARES LTI SHARES TO BE
PRIOR TO THE MERGER RECEIVED IN THE MERGER
---------------------------- ----------------------------
NUMBER OF PERCENT OF NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES CLASS SHARES CLASS
---------------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C>
MWM Family Ltd. (1)................ 4,900,000 69.4% 4,900,000 60.6
Michael McKinney................... 79,167 1.1 79,167 *
Jay O. Wright...................... 78,117 1.1 78,117 *
Bruce Sanguinetti.................. 27,500 * 27,500 *
Craig R. Roos(2)................... 10,500 * 10,500 *
All executive officers and
directors as a group
(4 persons)...................... 5,084,784(3) 68.4 5,084,784(3) 62.9
</TABLE>
------------------------
* Less than 1%.
(1) Michael McKinney is a general partner of this partnership, along with his
wife Barbara, and may be deemed to beneficially own the 4,900,000 shares of
Speedcom held by the partnership. Mr. McKinney beneficially owns
approximately 40% of the partnership.
(2) Mr. Roos may vest up to 100,000 warrants at a $4.40 strike price based on
various performance targets.
(3) Includes 4,900,000 shares owned by MWM Family Ltd. which Mr. McKinney may be
deemed to beneficially own by virtue of his status as a general partner of
the partnership.
78
<PAGE>
OTHER MATTERS
The LTI board of directors does not know of any other business to be
presented for consideration at the special meeting. If other matters properly
come before the special meeting, the persons named in the accompanying form of
proxy intend to vote on such matters based on their best judgment.
LTI will furnish, without charge, to each person whose proxy is being
solicited, upon request, a copy of its Annual Report on Form 10-KSB for the
fiscal year ended March 31, 2000, as filed with the SEC, including the financial
statements, notes to the financial statements and the financial schedules
contained in the report. LTI will also furnish copies of any exhibits to the
report but may charge a reasonable copying charge. LTI stockholders should
address requests for copies of any of these materials to Secretary, LTI
Holdings, Inc., 5115 New Peachtree Road, Suite 200 Atlanta, Georgia 30341.
A list of stockholders entitled to vote at the special meeting will be
available for inspection by any stockholder for any purpose germane to the
special meeting during ordinary business hours for a period of 10 days prior to
the special meeting at LTI's principal executive offices.
LEGAL MATTERS
Piper Marbury Rudnick & Wolfe LLP, Washington, D.C., counsel to LTI, has
issued a legal opinion concerning the legality of the common stock of LTI to be
issued to Speedcom stockholders in connection with the merger. Certain federal
income tax matters related to the merger will be passed upon for LTI by Piper
Marbury Rudnick & Wolfe LLP, Washington, D.C., and for Speedcom by Foley &
Lardner, Chicago, Illinois.
EXPERTS
The consolidated financial statements of LTI as of March 31, 2000 and for
each of the two years in the period ended March 31, 2000, appearing in this
proxy statement/prospectus and registration statement have been audited by Grant
Thornton LLP, independent certified public accountants, as stated in their
reports appearing elsewhere herein and have been so included in reliance upon
the reports of such firm given upon their authority as experts in accounting and
auditing.
Ernst & Young LLP, independent auditors, have audited our financial
statements at December 31, 1999, and for each of the two years in the period
ended December 31, 1999, as set forth in their report. We've included our
financial statements in the prospectus and elsewhere in the registration
statement in reliance on Ernst & Young LLP's report, given on their authority as
experts in accounting and auditing.
79
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
LTI has filed a registration statement with the SEC under the Securities Act
that registers the shares of LTI common stock to be issued to Speedcom
stockholders in connection with the merger. The registration statement,
including the attached exhibits and schedules, contains additional relevant
information about LTI and its common stock. The rules and regulations of the SEC
allow us to omit certain information included in the registration statement from
this proxy statement/prospectus.
In addition, LTI files annual, quarterly and other reports, proxy statements
and other information with the SEC under the Securities Exchange Act. Speedcom
does not file annual, quarterly, or other reports with the SEC. You may read and
copy any reports, statements or other information at the SEC's Public Reference
Room, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. You may also
obtain copies of this information by mail from the Public Reference Section of
the SEC, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at
prescribed rates. You may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an
Internet world wide web site that contains reports, proxy statements and other
information about issuers, like LTI, who file electronically with the SEC. The
address of the site is http://www.sec.gov.
LTI has supplied all information contained or incorporated by reference in
this document relating to LTI and Speedcom has supplied all information relating
to Speedcom.
Neither LTI nor Speedcom has authorized anyone to give any information or
make any representation about the merger or the companies that is different
from, or in addition to, that contained in this document or in any of the
materials that have been incorporated into this document. Therefore, if anyone
does give you information of this sort, you should not rely on it. If you are in
a jurisdiction where offers to exchange or sell, or solicitations of offers to
exchange or purchase, the securities offered by this document or the
solicitation of proxies are unlawful, or if you are a person to whom it is
unlawful to direct these types of activities, then the offer presented in this
document does not extend to you. The information contained in this document
speaks only as of the date of this document unless the information specifically
indicates that another date applies.
80
<PAGE>
INDEX TO FINANCIAL STATEMENTS
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
<TABLE>
<S> <C>
Report of Independent Auditors--Ernst & Young LLP........... F-2
Balance Sheets as of December 31, 1999 and June 30, 2000
(unaudited)............................................... F-3
Statements of Operations for the years ended December 31,
1998 and
1999 and six months ended June 30, 1999 and 2000
(unaudited)............................................... F-4
Statements of Changes in Stockholders' Equity (Deficit) for
the years ended
December 31, 1998 and 1999 and six months ended June 30,
2000 (unaudited).......................................... F-5
Statements of Cash Flows for years ended December 31, 1998
and
1999 and six months ended June 30, 1999 and 2000
(unaudited)............................................... F-6
Notes to Financial Statements............................... F-8
</TABLE>
LTI HOLDINGS, INC. AND SUBSIDIARY
<TABLE>
<S> <C>
Report of Independent Auditors--Grant Thornton LLP.......... F-18
Consolidated Balance Sheets as of March 31, 2000 and 1999... F-19
Consolidated Statements of Operations for the years ended
March 31, 2000
and 1999.................................................. F-20
Consolidated Statements of Changes in Stockholders' Equity
for the years ended
March 31, 2000 and 1999................................... F-21
Consolidated Statements of Cash Flows for the years ended
March 31, 2000 and 1999................................... F-22
Notes to Consolidated Financial Statements.................. F-23
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
SPEEDCOM Wireless International Corporation
We have audited the accompanying balance sheet of SPEEDCOM Wireless
International Corporation as of December 31, 1999, and the related statements of
operations, changes in stockholders' equity (deficit) and cash flows for the
years ended December 31, 1998 and 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of SPEEDCOM Wireless
International Corporation as of December 31, 1999, and the results of its
operations and its cash flows for the years ended December 31, 1998 and 1999 in
conformity with accounting principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
Tampa, Florida
March 27, 2000
F-2
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, 2000
DECEMBER 31, JUNE 30, PRO FORMA
1999 2000 (NOTE 11)
------------ ----------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash................................................. $ 108,564 $ 105,026 $ 1,871,707
Restricted cash...................................... 35,671 -- --
Accounts receivable, net of allowances of $143,371
and $27,722 in 1999 and 2000, respectively......... 515,155 977,825 977,825
Inventories, net..................................... 553,004 1,076,188 1,076,188
Prepaid expenses and other current assets............ 7,182 161,322 169,552
----------- ----------- -----------
Total current assets................................... 1,219,576 2,320,361 4,095,272
Property and equipment, net............................ 199,199 647,669 647,669
Other assets, net...................................... 44,284 47,513 47,513
----------- ----------- -----------
Total assets........................................... $ 1,463,059 $ 3,015,543 $ 4,790,454
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable..................................... $ 817,092 $ 1,236,928 $ 1,237,256
Accrued expenses..................................... 362,134 286,168 463,868
Loans from stockholder............................... 45,639 -- --
Current portion of deferred revenue.................. 83,005 85,347 85,347
Current notes and capital leases payable............. 328,781 19,229 19,229
----------- ----------- -----------
Total current liabilities.............................. 1,636,651 1,627,672 1,805,700
Accrued expenses, net of current portion............... 12,000 -- --
Deferred revenue, net of current portion............... 63,616 38,409 38,409
Notes and capital leases payable....................... 99,154 78,684 78,684
Convertible subordinated debt.......................... -- 40,000 40,000
Stockholders' equity (deficit):
Preferred stock, $.001 par value, 10,000,000
undesignated shares authorized..................... -- -- --
Common stock, $.001 par value, 20,000,000 shares
authorized, 6,414,767, 6,931,999 and 7,583,431
shares issued and outstanding...................... 6,415 6,932 7,583
Additional paid-in capital........................... 2,062,879 4,415,202 6,011,434
Accumulated deficit.................................. (2,417,656) (3,096,356) (3,096,356)
Notes receivable..................................... -- (95,000) (95,000)
----------- ----------- -----------
Total stockholders' equity (deficit)................... (348,362) 1,230,778 2,827,661
----------- ----------- -----------
Total liabilities and stockholders' equity (deficit)... $ 1,463,059 $ 3,015,543 $ 4,790,454
=========== =========== ===========
</TABLE>
See accompanying notes.
F-3
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
------------------------ -------------------------
1998 1999 1999 2000
----------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues:
Installation revenues...................... $ 5,147,233 $4,990,191 $1,985,579 $3,918,262
Extended services contract revenue......... 23,837 61,852 26,246 82,720
----------- ---------- ---------- ----------
5,171,070 5,052,043 2,011,825 4,000,982
Operating costs and expenses:
Cost of installation revenues, excluding
items stated separately below............ 2,840,619 3,094,205 1,143,672 2,129,727
Salaries and related....................... 1,871,287 1,822,054 829,428 1,714,608
General and administrative................. 1,018,281 391,803 284,341 550,403
Selling expenses........................... 426,685 255,094 39,760 235,736
Bad debts expense.......................... 129,216 78,827 -- 24,478
Depreciation and amortization.............. 31,697 44,366 17,700 30,000
Other...................................... 59,225 63,645 -- --
----------- ---------- ---------- ----------
6,377,010 5,749,994 2,314,901 4,684,952
----------- ---------- ---------- ----------
Loss from operations......................... (1,205,940) (697,951) (303,076) (683,970)
Other income (expense):
Interest expense, net...................... (63,927) (107,763) (41,568) (8,218)
Other income, net.......................... 4,689 15,206 -- 13,488
----------- ---------- ---------- ----------
(59,238) (92,557) (41,568) 5,270
----------- ---------- ---------- ----------
Net loss..................................... $(1,265,178) $ (790,508) $ (344,644) $ (678,700)
=========== ========== ========== ==========
Net loss per share:
Basic and diluted.......................... $ (0.21) $ (0.13) $ (0.06) $ (0.10)
=========== ========== ========== ==========
Shares used in computing basic and diluted
net loss per share......................... 6,007,450 6,158,001 6,092,586 6,899,138
=========== ========== ========== ==========
Unaudited pro forma basic and diluted net
loss per share (Note 11)................... $ (0.13) $ (0.10)
========== ==========
Shares used in computing unaudited pro forma
basic and diluted net loss per share....... 6,158,001 6,899,138
========== ==========
</TABLE>
See accompanying notes.
F-4
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 1998 AND 1999
AND
SIX MONTHS END JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
-------------------- PAID-IN ACCUMULATED NOTE
SHARES AMOUNT CAPITAL DEFICIT RECEIVABLE TOTAL
--------- -------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1998...... 5,858,548 $5,859 $ 634,247 $ (361,970) $ -- $ 278,136
Sale of common stock.......... 90,693 90 132,841 -- -- 132,931
Issuance of common stock to
employees................... 143,015 143 359,421 -- -- 359,564
Net loss...................... -- -- -- (1,265,178) -- (1,265,178)
--------- ------ ---------- ----------- --------- -----------
Balance at December 31, 1998.... 6,092,256 6,092 1,126,509 (1,627,148) -- (494,547)
Sale of common stock for cash
(96,000 shares to be
issued)..................... 364,621 365 966,438 -- -- 966,803
Issuance of common stock for
services.................... 7,890 8 19,882 -- -- 19,890
Treasury shares purchased..... (50,000) (50) (49,950) -- -- (50,000)
Net loss...................... -- -- -- (790,508) -- (790,508)
--------- ------ ---------- ----------- --------- -----------
Balance at December 31, 1999.... 6,414,767 6,415 2,062,879 (2,417,656) -- (348,362)
Sale of common stock and
warrants for cash........... 641,239 641 2,475,709 -- -- 2,476,350
Issuance of stock for note and
consulting services......... 25,000 25 99,975 -- (95,000) 5,000
Treasury shares purchased..... (149,007) (149) (223,361) -- -- (223,510)
Net loss...................... -- -- -- (678,700) -- (678,700)
--------- ------ ---------- ----------- --------- -----------
Balance at June 30, 2000
(unaudited)................... 6,931,999 $6,932 $4,415,202 $(3,096,356) $ (95,000) $ 1,230,778
========= ====== ========== =========== ========= ===========
</TABLE>
See accompanying notes.
F-5
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
----------------------- --------------------------
1998 1999 1999 2000
----------- --------- ----------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss...................................... $(1,265,178) $(790,508) $(344,644) $ (678,700)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization............. 39,622 55,457 17,700 30,000
Bad debts................................. 129,216 78,827 -- 24,478
Provision for inventory obsolescence...... 11,000 44,576 -- 11,000
Gain on sale of assets.................... -- (3,350) (2,900) --
Stock-based compensation.................. 359,564 -- -- --
Common stock issued for services.......... -- 19,890 -- 5,000
Changes in operating assets and
liabilities:
Restricted cash......................... (12,869) 37,198 72,869 35,671
Accounts receivable..................... (100,187) 196,966 228,293 (487,148)
Inventories............................. (357,820) 237,992 300,440 (534,184)
Prepaid expenses and other assets....... 56,897 1,828 3,847 (154,140)
Other assets............................ (23,626) (12,082) (4,149) (3,229)
Accounts payable and accrued expenses... 1,021,057 (708,224) (465,136) 331,870
Deferred revenue........................ 90,371 56,250 45,872 (22,865)
----------- --------- --------- -----------
Net cash used in operating activities......... (51,953) (785,180) (147,808) (1,442,247)
INVESTING ACTIVITIES
Proceeds from sale of equipment............... -- 3,350 2,900 --
Purchases of equipment........................ (94,704) (74,547) (63,622) (478,470)
----------- --------- --------- -----------
Net cash used in investing activities......... (94,704) (71,197) (60,722) (478,470)
FINANCING ACTIVITIES
Net proceeds (payments) from factor........... (13,185) (115,584) 223,948 (111,731)
Proceeds from sale of common stock............ 132,931 966,803 -- 2,476,350
Proceeds (payments) from loans from
stockholder................................. 24,110 -- -- (45,639)
Borrowings of long-term debt.................. 16,087 223,300 223,300 40,000
Payments of long-term debt and capital
leases...................................... (15,998) (59,578) (11,421) (218,291)
Purchase of treasury stock.................... -- (50,000) -- (223,510)
----------- --------- --------- -----------
Net cash provided by financing activities..... 143,945 964,941 435,827 1,917,179
----------- --------- --------- -----------
Net increase (decrease) in cash............... (2,712) 108,564 227,297 (3,538)
Cash at beginning of year..................... 2,712 -- -- 108,564
----------- --------- --------- -----------
Cash at end of year........................... $ -- $ 108,564 $ 227,297 $ 105,026
=========== ========= ========= ===========
</TABLE>
See accompanying notes.
F-6
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
STATEMENTS OF CASH FLOWS (CONTINUED)
SUPPLEMENTAL CASH FLOWS DISCLOSURES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
----------------------- -------------------------
1998 1999 1999 2000
---------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid for interest......................... $ 18,294 $28,667 $41,568 $ 8,218
SUPPLEMENTAL DISCLOSURES OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Increase in capital lease obligations.......... 59,296 8,501 -- --
Issuance of common stock to employees.......... 359,564 -- -- --
Common stock issued for services............... -- 19,890 -- 5,000
Common stock issued for note................... -- -- -- 95,000
</TABLE>
See accompanying notes.
F-7
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. BUSINESS
SPEEDCOM Wireless International Corporation (the Company) was incorporated
in Florida on March 16, 1994. The Company configures, assembles and installs
custom wireless networking equipment for business customers internationally.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INTERIM FINANCIAL DATA
The financial statements as of June 30, 2000 and for the six months ended
June 30, 1999 and 2000 and the related amounts in the notes to financial
statements are unaudited, but in the opinion of management reflect all normal
and recurring adjustments necessary for a fair presentation of the results of
those periods. Operating results for the six months ended June 30, 2000 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2000.
REVENUE RECOGNITION
The Company contracts with customers under short-term (generally two to
three weeks in duration) arrangements to configure, assemble and install
wireless communications products. The Company recognizes revenue on its wireless
communications products upon completion of the installation and customer
acceptance of title to the equipment. The Company also sells extended
maintenance agreements, for periods of one to three years. Revenue on extended
maintenance agreements is deferred and recognized on a straight-line basis over
the term of the agreement.
RISKS AND UNCERTAINTIES
The Company generates a significant amount of its revenues from customers in
foreign geographic areas (See Note 10. Segments and Geographic Information).
Generally, the conduct of business in foreign geographic areas possesses greater
risks than are present with domestic operations. Risks faced by the Company in
conducting business in foreign geographic areas include delays or refusals in
the payment of accounts receivable, refusal to return equipment from unaccepted
installations, and disruptions in installations. Management believes that it is
able to estimate and manage these risks. However, to date, the Company has not
experienced significant losses related to conducting business in foreign
geographic areas.
FACTORED ACCOUNTS RECEIVABLE
The Company accounts for its accounts receivable factoring arrangement as a
secured borrowing pursuant to Statement of Financial Accounting Standards (SFAS)
No. 125, ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND
EXTINGUISHMENT OF LIABILITIES (SFAS 125). As a result, the balances of accounts
receivable sold to the lending institution as of December 31, 1999 are shown as
assets of the Company, and the amounts advanced to the Company are shown as
being payable. The related service charge is reflected in interest expense in
the period that the accounts receivable are transferred. Cash balances retained
by the lending institution are reflected in the accompanying financial
statements as restricted. As of June 30, 2000, there were no borrowings
outstanding under this continuing arrangement.
F-8
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORIES
Inventories consist of telecommunications equipment, related component parts
used in the assembly of wireless network products and finished assemblies ready
for installation. Inventories are recorded at the lower of cost (using the
first-in, first-out method) or net realizable value. Labor and overhead costs
related to assemblies and installations in process are included in finished
assemblies.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation and amortization are
provided using the straight-line method over the estimated useful lives of
depreciable assets ranging from three to five years. Leasehold improvements are
amortized over the shorter of the useful life of the asset or the term of the
related lease agreement.
FINANCIAL INSTRUMENTS
The Company's significant financial instruments included accounts
receivable, accounts payable and notes payable. The Company believes that the
carrying values of financial instruments in the accompanying balance sheet
approximate their respective fair values.
INCOME TAXES
The Company's sole taxing jurisdictions for income tax purposes are within
the United States. Currently, the Company follows the liability method of
accounting for income taxes in accordance with SFAS 109, ACCOUNTING FOR INCOME
TAXES. Under SFAS 109, deferred income taxes are recorded based upon differences
between the financial reporting and tax bases of assets and liabilities, and are
measured using the enacted tax rates and laws that will be in effect when the
differences are expected to affect taxable income.
COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board (FASB) issued
SFAS 130, REPORTING COMPREHENSIVE INCOME. This standard requires that total
comprehensive income (loss) be disclosed with equal prominence as net income.
Comprehensive income is defined as changes in stockholders' equity exclusive of
transactions with owners, such as capital contributions and dividends. The
Company adopted this Standard in 1998 and implemented the standard for all years
presented. The Company's comprehensive losses were equal to net losses for all
periods presented.
STOCK-BASED COMPENSATION
The Company accounts for employee stock-based compensation using the
intrinsic method in accordance with Accounting Principles Board No. 25,
ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, (APB 25) and related Interpretations.
Accordingly, in cases where exercise prices equal or exceed fair market value,
the Company recognized no compensation expense for stock option grants. In cases
where exercise prices are less than fair value, compensation is recognized over
the period of performance or the vesting period. For purposes of stock-based
compensation, the fair value of awards has been determined relative to the sales
prices received in private placements of common stock by the Company. Pro forma
financial information, assuming that the Company had adopted the measurement
F-9
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
standard of SFAS 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, for all
stock-based compensation, is included in Note 7.
ADVERTISING COSTS
The Company's policy is to expense advertising costs as incurred. During the
years ended December 31, 1998 and 1999, the Company expensed $115,684 and
$16,637, respectively, in advertising expenses. Such amounts are included in
selling expenses.
LOSS PER SHARE
The Company has applied the provisions of SFAS 128, EARNINGS PER SHARE,
which establishes standards for computing and presenting earnings per share.
Basic earnings per share is computed by dividing net loss by the weighted
average number of shares outstanding for the period. The calculation of diluted
earnings per share includes the effect of dilutive common stock equivalents. No
dilutive common stock equivalents existed in any year presented.
RECENTLY ISSUED ACCOUNTING STANDARDS
On December 3, 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin (SAB) No. 101, "REVENUE RECOGNITION IN FINANCIAL
STATEMENTS", which provides guidance on the recognition, presentation and
disclosure of revenue in financial statements. The SAB will be effective during
the fourth quarter 2000. The Company has evaluated the impact of this SAB as it
relates to current operations and does not believe that adoption of SAB 101 will
have a material impact on revenues.
In March 2000, the FASB issued FASB Interpretation No. 44 "ACCOUNTING FOR
CERTAIN TRANSACTIONS INVOLVING STOCK COMPENSATION, an Interpretation of APB 25,
which requires variable accounting for certain stock option transactions. This
interpretation is effective July 1, 2000 but certain guidelines cover specific
events that occurred since either December 15, 1998 or January 12, 2000. The
Company has evaluated the impact of this interpretation on its financial
reporting of results of operations and does not believe that adoption of the
interpretation will have a material impact.
In June 2000, the FASB issued SFAS 138, "ACCOUNTING FOR CERTAIN DERIVATIVE
INSTRUMENTS AND CERTAIN HEDGING ACTIVITIES", an amendment of Statement 133,
which is effective for fiscal years beginning after June 15, 2000. The Company
does not anticipate that the adoption of this Statement will have a significant
effect on its results of operations of financial position.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amount reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
F-10
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. INVENTORIES
A summary of inventories at December 31, 1999 and June 30, 2000 is as
follows:
<TABLE>
<CAPTION>
1999 2000
-------- -----------
(UNAUDITED)
<S> <C> <C>
Component parts....................................... $458,385 $ 506,390
Completed assemblies.................................. 94,619 569,798
-------- ----------
$553,004 $1,076,188
======== ==========
</TABLE>
4. PROPERTY AND EQUIPMENT
A summary of property and equipment at December 31, 1999 is as follows:
<TABLE>
<CAPTION>
1999
--------
<S> <C>
Computer and office equipment............................... $215,069
Automobiles................................................. 43,637
Leasehold improvements...................................... 18,706
Furniture and fixtures...................................... 16,775
Construction in progress.................................... 29,526
--------
323,713
Less accumulated depreciation............................... (124,514)
--------
$199,199
========
</TABLE>
Property and equipment included computer and office equipment of $67,797
acquired under capital leases. Amortization and depreciation expense amounted to
$39,622 and $55,457 for the years ended December 31, 1998 and 1999,
respectively.
5. LOANS FROM STOCKHOLDER
A summary of unsecured stockholder loans at December 31, 1999 is as follows:
<TABLE>
<S> <C>
19% note payable originally due February 28, 1998........... $ 5,139
19% note payable originally due December 19, 1998........... 16,000
19% note payable originally due January 21, 1999............ 15,000
19% note payable originally due November 13, 1999........... 7,500
19% note payable originally due November 25, 1999........... 2,000
-------
$45,639
=======
</TABLE>
All notes were paid in 2000. Interest expense amounted to $8,730 and $10,989
for the years ended December 31, 1998 and 1999, respectively.
F-11
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. NOTES AND CAPITAL LEASES PAYABLE
A summary of notes and capital leases payable at December 31, 1999 is as
follows:
<TABLE>
<S> <C>
12% promissory note, originally due September 1999, in
default................................................... $175,000
Advances under accounts receivable factor arrangement....... 111,731
10.5% bank note payable in monthly installments through June
2003; secured by equipment and inventories................ 61,032
Capital lease obligations................................... 51,351
8%-10.6% equipment loans payable in monthly installments
through January 2003; secured by equipment................ 28,821
--------
427,935
Less current portion........................................ (328,781)
--------
$ 99,154
========
</TABLE>
The Company entered into a $200,000 promissory note with a vendor during
1999. Interest was required to be paid monthly and all outstanding principal and
accrued interest was payable in full on September 30, 1999. At December 31,
1999, the principal balance outstanding on the note was $175,000. Although in
default at the date of the financial statements, the note was paid in full
subsequent to year-end.
The Company has an accounts receivable factoring arrangement with a lending
institution that provides for the sale of certain accounts receivable balances
aggregating no more than $400,000. The lending institution charges a discount of
2.5% of the face value of the receivables purchased. The arrangement provides
for full recourse to the lending institution. Advances by the lending
institution amounted to $111,731 as of December 31, 1999. Subsequent to
December 31, 1999, the advances were repaid and no additional advances have been
taken on the continuing arrangement.
Aggregate maturities of notes and capital leases payable as of December 31,
1999 are as follows:
<TABLE>
<CAPTION>
NOTES LEASES
-------- --------
<S> <C> <C>
2000.................................................... $311,533 $ 26,149
2001.................................................... 27,396 24,041
2002.................................................... 25,125 12,455
2003.................................................... 12,530 6,212
2004 and thereafter..................................... -- --
-------- --------
Total maturities and payments........................... $376,584 $ 68,857
========
Less amount representing interest....................... (17,506)
--------
51,351
Less current portion.................................... (17,248)
--------
$ 34,103
========
</TABLE>
During January 2000, the Company issued a convertible subordinated note
payable for $40,000, 10% note due for payment in January 2003. The note is
convertible into 10,000 shares of common stock at any time during its term. The
note is subordinated to all other debt instruments.
F-12
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. INCOME TAXES
The deferred tax consequences of temporary differences in reporting items
for financial statement and income tax purposes are recognized, if appropriate.
Realization of the future tax benefits related to the deferred tax assets is
dependent on many factors, including the Company's ability to generate taxable
income within the net operating loss (NOL) carryforward period. Management has
considered these factors in reaching its conclusion as to the valuation
allowance for financial reporting purposes. Significant components of the
Company's deferred tax assets and liabilities as of December 31 are as follows:
<TABLE>
<CAPTION>
1999
---------
<S> <C>
Deferred income tax assets:
Allowances for doubtful accounts.......................... $ 53,951
Inventory obsolescence reserve............................ 20,913
Vacation and sick pay..................................... 20,865
Deferred revenue.......................................... 55,174
Net loss carryforward..................................... 768,447
---------
919,350
Valuation allowance......................................... (919,350)
---------
Net deferred income tax asset............................... $ --
=========
</TABLE>
The following table reconciles the assumed statutory tax rate with the
effective rate of the Company for the years ended December 31, 1998 and 1999:
<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
Tax benefit at statutory rate.............................. (34.00)% (34.00)%
Reconciling items:
State income taxes....................................... (3.61)% (3.61)%
Non-deductible items..................................... 0.14 % 0.17 %
Change in valuation allowance............................ 37.49 % 37.44 %
------ ------
0.00 % 0.00 %
====== ======
</TABLE>
At December 31, 1999, the Company has NOL carryforwards for both federal and
state income tax purposes of approximately $2,000,000 that expire through the
year 2019.
8. STOCKHOLDERS' EQUITY
SALES AND ISSUANCE OF SECURITIES
During January 1998, the Company sold 60,000 shares of its $.001 par value
common stock for a per share price of $2. During the period from April 1998 to
June 1998, the Company sold 30,693 shares of its $.001 par value common stock
for a per share price of $3.00. The net proceeds on sales of stock during 1998
were $132,931.
During the period from January 1999 to September 1999, the Company sold
208,121 shares of its $.001 par value common stock at a per share price of
$2.25. During the period from October to December 1999, the Company sold 252,500
shares of its $.001 par value common stock at a per share
F-13
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. STOCKHOLDERS' EQUITY (CONTINUED)
price of $2.50. Of the total shares sold, 96,000 shares were unissued at
December 31, 1999. These shares were issued subsequent to December 31, 1999. The
net proceeds on sales of stock during 1999 were $966,803.
In addition to sales of stock for cash, during 1999 the Company issued 330
shares of its common stock to non-employees for services valued at $990 (using a
$3 per share value) and 7,560 shares of its common to non-employees for services
valued at $18,900 (using a $2.50 per share value). The value ascribed to the
common shares corresponds with the price per common share of the aforementioned
sales of common stock.
During January 2000 the Company sold 338,500 shares of common stock for
$4.00 per share. During February 2000, the Company sold 200,000 shares of common
stock for $3.25 per share. During May 2000, the Company sold 572 shares of
common stock for $3.50 per share. During June 2000, the Company sold 60,500
shares of common stock with detachable warrants to purchase up to 125,000 shares
of common stock at exercise prices ranging from $13.00 to $18.00 per share, for
$5.00 per unit. In addition, during June 2000 the Company sold 41,667 shares of
common stock with detachable warrants to purchase up to 100,000 shares of common
stock at $7.50 per share, for $6.00 per unit. Warrants included in the $5.00
unit have a term of two years; warrants included in the $6.00 unit have a term
of 120 days. Net proceeds on the sales of stock and warrants during the first
six months of 2000 amounted to $2,476,350.
In addition to sales of stock and warrants for cash, during May 2000 the
Company issued 25,000 shares of common stock to a board member in exchange for a
$95,000, 6% promissory note, due August 2000 and two months of consulting
services. A value of $100,000 was ascribed to the common stock issued, based
upon the then most recent sale of common stock at a price of $4.00 per share.
The value was allocated to the face value of the note receivable in the amount
of $95,000 (contra-equity) and deferred consulting services (expense) in the
amount of $5,000.
EMPLOYEE STOCK-BASED COMPENSATION
During the year ended December 31, 1998, the Company issued 143,015 shares
of its $.001 par value common stock to certain employees of the Company for
employment services. These shares had no restrictions and vested immediately.
The Company recognized compensation expense of $359,564 for the value of the
shares issued. The value ascribed to the common shares corresponded with the
price per share from sales of common stock closely preceding the issuance.
At December 31, 1999, the Company had 2,000,000 shares of common stock
reserved for issuance under employee incentive stock bonus, purchase or option
plans.
F-14
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. STOCKHOLDERS' EQUITY (CONTINUED)
Employee stock option activity was as follows at December 31:
<TABLE>
<CAPTION>
1999 1998
---------------------------- ---------------------------
WEIGHTED WEIGHTED
AVERAGE EXERCISE AVERAGE EXERCISE
OPTIONS PRICE OPTIONS PRICE
--------- ---------------- -------- ----------------
<S> <C> <C> <C> <C>
Outstanding--
Beginning of year......................... 952,950 $3.00 -- --
Granted at market price................... 575,474 3.00 952,950 $3.00
Expired or canceled....................... 26,550 3.00 -- --
--------- ----- ------- -----
Outstanding--end of year.................... 1,501,874 3.00 952,950 3.00
========= ===== ======= =====
Exercisable as of December 31............... 300,413 $3.00 91,750 $3.00
========= ===== ======= =====
</TABLE>
The weighted average fair value of the options granted during 1998 and 1999
is $.59 and $.21, respectively. The weighted average remaining contractual life
of the options as of December 31, 1998 and 1999 is 3.2 and 2.6 years,
respectively.
Pro forma information regarding the Company's stock option grants is
presented below. The fair market value for these options was estimated at the
date of grant using the "Minimum Value" method. The Minimum Value method
calculates the excess of the fair value of the stock at the date of grant over
the present value of both the exercise price and the expected dividend payments,
each discounted at the risk-free rate over the expected exercise life of the
option. In order to calculate the fair value, the following assumptions were
made: the expected dividend payment rate used was zero, the expected option life
used was five years in 1998 and 1999 and the risk free interest rate was assumed
to be 4.56% in 1998 and 5.23% in 1999. Because the options have a four-year
vesting period, the pro forma effect shown below is not reflective of the
reported net earnings or losses in future years.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows at December 31:
<TABLE>
<CAPTION>
1998 1999
----------- ---------
<S> <C> <C>
Reported net loss.................................... $(1,265,178) $(790,508)
Estimated fair value of options...................... (101,727) (138,451)
----------- ---------
Pro forma net loss................................... $(1,366,905) $(928,959)
=========== =========
Reported net loss per share: Basic and Diluted....... $ (.21) $ (.13)
Effect for the fair value of options................. (.02) (.02)
----------- ---------
Pro forma net loss................................... $ (.23) $ (.15)
=========== =========
</TABLE>
During the period from January 1, 2000 to June 30, 2000, the Company issued
options to employees to purchase 18,000 shares of common stock at exercise
prices based upon the selling prices of common stock for cash.
F-15
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. STOCKHOLDERS' EQUITY (CONTINUED)
TREASURY STOCK PURCHASES
During the years ended December 31, 1998 and 1999, the Company repurchased
50,000 and 149,007 shares of its common stock, respectively, for cash. Treasury
stock is recorded at cost as a component of stockholders' deficit.
9. LEASES
The Company leases computer and office equipment under operating leases.
Rent expense under operating leases, amounted to $55,942 and $80,002 for the
years ended December 31, 1998 and 1999, respectively. Future noncancellable
lease payments under operating leases for each year ended December 31 are as
follows: 2000-$112,093; 2001-$3,659; 2002-$3,659; 2003-$3,659; and, 2004-$1,525.
10. SEGMENT AND GEOGRAPHIC INFORMATION
The Company operated during all periods in a single operating segment when
applying the management approach defined in Statements of Financial Accounting
Standards No. 131, DISCLOSURES ABOUT SEGMENTS.
The Company's business and principal operations are domiciled in North
America. The Company generated revenue in the following geographic areas: North
America, Latin America, Asia, Africa, Middle East, Europe and Australia.
Revenues from customers in foreign geographic areas represented 36%, 23%, 23%
and 26% of total revenues for the years ended December 31, 1998 and 1999 and the
six months ended June 30, 1999 and 2000, respectively. During 1998, 26% of the
Company's revenues were derived from customers located in Latin America. No
other foreign geographic area contributed 10% or greater of total revenues for
any period presented. The Company has no significant property in any foreign
geographic area.
11. MERGER (UNAUDITED)
During June 2000, the Company announced its intention to merge with LTI
Holdings, Inc. (LTI), a publicly traded shell company whose operations ceased in
June 1999. Pursuant to the terms of the preliminary merger agreement, LTI will
effect a 1 for 4.26 reverse stock split prior to the merger. The reverse stock
split will reduce the number of its outstanding common shares to approximately
650,000 and its outstanding options and warrants to approximately 2,068,000
(average post reverse split exercise price of $33.00 per share). The merger, as
currently contemplated, will be effected with the issuance by LTI of its common
stock, on a one-for-one basis, for the outstanding common shares of the Company.
If ultimately consummated, the shareholders of the Company will own
approximately 92% of the outstanding common stock of the combined company.
F-16
<PAGE>
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
11. MERGER (UNAUDITED) (CONTINUED)
Since LTI is a non-operating shell company, the merger will be treated as a
recapitalization of the Company for accounting purposes. As a result, the
Company will record the transaction as the issuance of common stock for the net
monetary assets of LTI (principally cash and investments), accompanied by a
recapitalization of equity. The unaudited pro forma balance sheet as of
June 30, 2000 and the unaudited loss per share amounts for the year ended
December 31, 1999 and the six months ended June 30, 2000 reflect the effects of
the recapitalization as if it had occurred on those dates or the beginning of
those periods. For convenience, the pro forma results include the net monetary
assets of LTI as of its most recent fiscal year end, March 31, 2000.
12. SUBSEQUENT EVENT (UNAUDITED)
During July 2000, the Company sold common stock ranging from $5.00 per share
to $8.00 per share. Net proceeds from these sales amounted to approximately
$591,000.
F-17
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
LTI Holdings, Inc.
Atlanta, Georgia
We did not audit the accompanying financial statements as of June 30, 2000
and for the three month periods ended June 30, 2000 and 1999, and accordingly,
we do not express an opinion on them.
We have audited the accompanying consolidated balance sheets of LTI
Holdings, Inc. and Subsidiary as of March 31, 2000, and the related consolidated
statements of operations, changes in stockholders' equity and cash flows for the
years ended March 31, 2000 and 1999. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of LTI
Holdings, Inc. and Subsidiary as of March 31, 2000, and the consolidated results
of their operations, and their consolidated cash flows for the years ended
March 31, 2000 and 1999, in conformity with generally accepted accounting
principles.
/S/ Grant Thornton, LLP
Atlanta, Georgia
April 15, 2000
F-18
<PAGE>
LTI HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
2000 2000
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS (NOTE B)
CURRENT ASSETS
Cash...................................................... $ 70,903 $ 1,673,335
Investments (Note A-2).................................... 1,695,778 --
Prepaid expenses.......................................... 8,230 --
----------- -----------
Other current assets...................................... -- 10,426
----------- -----------
Total current assets.................................. 1,774,911 1,683,761
----------- -----------
$ 1,774,911 $ 1,683,761
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable--trade................................... $ 328 $ 13,298
Accrued expenses.......................................... 177,700 149,897
----------- -----------
Total current liabilities............................. 178,028 163,195
COMMITMENTS AND OTHER MATTERS (Note G)...................... -- --
STOCKHOLDERS' EQUITY (Note C)
Series A convertible preferred stock, par value $.01,
5,000,000 shares authorized, none issued.................. -- --
Common stock, par value $.01, 20,000,000 shares authorized,
3,185,100 shares issued with 2,775,100 and 3,185,100
shares outstanding for the years ended 1999 and 1998,
respectively.............................................. 27,751 27,751
Additional paid-in capital.................................. 11,713,354 11,713,354
Accumulated deficit......................................... (10,144,222) (10,220,539)
Accumulated other comprehensive earnings (loss) (Note
A-2)...................................................... -- --
----------- -----------
Total stockholders' equity............................ 1,596,883 1,520,566
----------- -----------
$ 1,774,911 $ 1,683,761
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-19
<PAGE>
LTI HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months
Years ended March 31, ended June 30,
------------------------ -------------------------
2000 1999 2000 1999
----------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net sales...................................... $ 553,002 $1,877,703 $ -- $ 553,002
Cost of goods sold............................. 399,341 1,283,642 -- 399,341
----------- ---------- --------- ---------
Gross profit............................... 153,661 594,061 -- 153,661
Selling, general and administrative expenses... 905,290 1,334,862 102,590 471,424
Research and development expense............... 46,142 463,182 -- 46,142
----------- ---------- --------- ---------
Operating loss............................. (797,771) (1,203,983) (102,590) (363,905)
Interest expense............................... (1,475) (5,136) -- (719)
Investment income.............................. 94,444 124,421 26,273 20,462
Cancellation of debt........................... -- 117,522 -- --
Loss on the sale of assets..................... (335,489) -- -- (335,489)
----------- ---------- --------- ---------
Net loss................................... $(1,040,291) $ (967,176) $ (76,317) $(679,651)
=========== ========== ========= =========
Net loss per common share
Basic........................................ $ (.37) $ (0.35) $ (0.03) $ (0.24)
=========== ========== ========= =========
Weighted average number of common shares
outstanding.................................. 2,775,100 2,775,100 2,775,100 2,775,110
=========== ========== ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
F-20
<PAGE>
LTI HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED MARCH 31, 2000 AND 1999, AND
THE THREE MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK ACCUMULATED
PAR VALUE $.01 ADDITIONAL OTHER
--------------------- PAID-IN ACCUMULATED COMPREHENSIVE
SHARES AMOUNT CAPITAL DEFICIT EARNINGS (LOSS) TOTAL
---------- -------- ----------- ------------ --------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance, March 31, 1998...... 3,185,100 $31,851 $11,709,254 $ (8,136,755) $ -- $3,604,350
Net loss for the year ended
March 31, 1999............. -- -- -- (967,176) -- (967,176)
Other comprehensive loss
Unrealized net losses on
marketable securities.... -- -- -- -- (25,377) (25,377)
----------
Comprehensive loss........... (992,553)
---------- ------- ----------- ------------ ------- ----------
Balance, March 31, 1999...... 3,185,100 31,851 11,709,254 (9,103,931) (25,377) 2,611,797
Net loss for the year ended
March 31, 2000............. -- -- -- (1,040,291) -- (1,040,291)
Cancellation of forfeitable
shares returned to Treasury
(Note C-3)................. (410,000) (4,100) 4,100 -- -- --
Other comprehensive earnings
Unrealized gain on
marketable securities.... -- -- -- -- 25,377 25,377
----------
Comprehensive loss........... (1,014,914)
---------- ------- ----------- ------------ ------- ----------
Balance, March 31, 2000...... 2,775,100 27,751 11,713,354 (10,144,222) -- 1,596,883
Net loss for the three months
ended June 30, 2000........ -- -- -- (76,317) -- (76,317)
----------
Comprehensive loss........... (76,317)
---------- ------- ----------- ------------ ------- ----------
Balance, June 30, 2000
(unaudited)................ 2,775,100 $27,751 $11,713,354 $(10,220,539) $ -- $1,520,566
========== ======= =========== ============ ======= ==========
</TABLE>
The accompanying notes are an integral part of this statement.
F-21
<PAGE>
LTI HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31, THREE MONTHS ENDED JUNE 30,
------------------------ ---------------------------
2000 1999 2000 1999
----------- ---------- ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss................................. $(1,040,291) $ (967,176) $ (76,317) $ (679,651)
Adjustments to reconcile net loss to net
cash used in operating activities:
Loss on disposal of assets............. 335,489 -- -- 335,489
Provision for doubtful accounts........ -- 8,210 -- --
Depreciation and amortization.......... 18,305 93,006 -- 18,305
Changes in operating assets and
liabilities:
Decrease (increase) in accounts
receivable......................... 68,998 (137,021) -- 68,998
Decrease (increase) in inventories... 38,907 (2,508) -- 38,907
Decrease (increase) in other assets
and prepaid expenses............... 51,741 92,069 (2,195) 11,882
Increase (decrease) in accounts
payable and accrued expenses....... 27,800 (160,531) (14,834) 27,800
----------- ---------- ----------- -----------
Net cash used in operating
activities....................... (499,051) (1,073,951) (93,346) (178,270)
----------- ---------- ----------- -----------
Cash flows from investing activities:
Acquisitions of fixed assets............. -- (173,606) -- --
(Purchase) sale of investments........... (102) 763,336 1,695,778 630,199
Proceeds from the sale of assets......... 399,625 -- -- 399,625
----------- ---------- ----------- -----------
Net cash provided by investing
activities....................... 399,523 589,730 1,695,778 1,029,824
----------- ---------- ----------- -----------
Cash flows from financing activities:
Repayment of notes payable............... (39,840) (44,441) -- (11,675)
----------- ---------- ----------- -----------
Net cash used in financing
activities....................... (39,840) (44,441) -- (11,675)
----------- ---------- ----------- -----------
Net increase (decrease) in cash............ (139,368) (528,662) 1,602,432 839,879
Cash at beginning of period................ 210,271 738,933 70,903 210,271
----------- ---------- ----------- -----------
Cash at end of period...................... $ 70,903 $ 210,271 $ 1,673,335 $ 1,050,150
=========== ========== =========== ===========
Supplemental Disclosures of
Cash Flow Information
Cash paid during the period for
interest............................. $ 1,475 $ 5,136 $ -- $ 1,475
</TABLE>
The accompanying notes are an integral part of these statements.
F-22
<PAGE>
LTI HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
LTI Holdings, Inc. (formerly Laminating Technologies, Inc.) and subsidiary
(the "Company") was a development stage company formed to research, develop,
design and market packaging and specialty display products using the Company's
proprietary processing method. The Company was incorporated on March 29, 1993
and in April 1993 acquired substantially all of the assets and assumed
substantially all of the liabilities of Cool-R Enterprises, Inc. ("Cool-R"),
obtaining the rights to developed technology.
On December 17, 1998 the Company's stock and warrants were delisted. This
event occurred as a result of the Company's inability to maintain a certain bid
price and market capitalization requirements. The Company's stock is currently
traded on the NASD Supplemental Market under the symbol "LAMT".
The Company sold substantially all of its operating assets and changed its
name to LTI Holdings, Inc. as of June 30, 1999. The Company uses its remaining
cash to pay on-going general and administrative expenses and to seek suitable
business combination candidates. (See Note B.)
1. PRINCIPLES OF CONSOLIDATION
The accompanying financial statements have been prepared on a consolidated
basis. They include the accounts of the Company and its wholly owned subsidiary,
Revenue Process Development, Inc. All intercompany transactions and balances
have been eliminated in consolidation.
2. INVESTMENTS
Investments consist primarily of commercial paper. These investments are
accounted for as available for sale securities and are stated at fair value,
which approximates cost. Unrealized gains or losses on these investments are
included in accumulated other comprehensive earnings (loss).
3. INVENTORY
Inventory is recorded at lower of cost or market, using the first-in,
first-out (FIFO) cost flow method.
4. PROPERTY AND EQUIPMENT
Machinery, furniture and equipment, including property under capital lease
arrangements, are carried at cost. Depreciation is provided using the double
declining balance method over the estimated useful lives of the assets as
follows:
<TABLE>
<S> <C>
Machinery and equipment..................................... 3-10 years
Furniture and fixtures...................................... 5 years
</TABLE>
5. ADVERTISING EXPENSE
All advertising costs are expensed in the period incurred. Advertising
expense for the years ended March 31, 2000 and March 31, 1999 was approximately
$13,000 and $136,000, respectively.
F-23
<PAGE>
LTI HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2000
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
6. STOCK BASED COMPENSATION
The Company's stock option plans are accounted for under the intrinsic value
method in which compensation expense is recognized for the amount, if any, that
the fair value of the underlying common stock exceeds the exercise price at the
date of grant.
7. INCOME TAXES
The Company accounts for income taxes using the asset and liability method.
Under this method, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates applied to taxable income. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date. A valuation allowance is provided for deferred
tax assets when it is more likely than not that the asset will not be realized.
8. LOSS PER SHARE
Basic net loss per common share is based upon the weighted average number of
common shares outstanding during the period. Diluted net loss per common share
is based upon the weighted average number of common shares outstanding less
contingently returnable shares plus dilutive potential common shares, including
options and warrants outstanding during the period.
9. USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
10. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments recorded on the balance sheet include
cash, investments, accounts receivable, accounts payable and debt. Because of
their short maturities, the carrying amount of cash, investments, accounts
receivable and accounts payable approximates fair market value. The fair value
of the Company's long-term debt approximates carrying value based on quoted
market prices of similar issues or on the current rates offered to the Company
for debt of similar terms.
NOTE B--SALE OF OPERATING ASSETS AND CURRENT OPERATIONS
Since its inception, the Company has had limited sales and incurred
substantial operating losses from its principal operations. As of June 30, 1999,
the Company sold substantially all of its operating assets and entered into a
covenant not to compete. This covenant states that for a period of five years,
the Company shall refrain from, directly or indirectly, manufacturing, selling
or marketing and
F-24
<PAGE>
LTI HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2000
NOTE B--SALE OF OPERATING ASSETS AND CURRENT OPERATIONS (CONTINUED)
distributing within the United States any products or services competitive with
the purchaser. The sale of the assets is summarized as follows:
<TABLE>
<S> <C>
Net book value of assets sold............................... $ 735,114
Proceeds received........................................... 399,625
---------
Loss from the sale of assets................................ $(335,489)
=========
</TABLE>
The Company is in the process of exploring opportunities to effect an
acquisition of the Company, by merger, exchange or issuance of securities, or
similar business combination.
NOTE C--STOCKHOLDERS' EQUITY
1. COMMON STOCK
Upon incorporation, the Company authorized 10,000,000 shares of its $.01 par
value common stock. The shares of common stock have unlimited voting rights. In
March 1996, the Company increased the number of authorized common shares to
20,000,000.
2. CONVERTIBLE PREFERRED STOCK
In September 1993, the Company authorized and issued 250,000 shares of its
$.01 par value Series A convertible preferred stock (the "Preferred") for
$500,000. In August 1994, the Company increased the number of authorized shares
of Preferred to 2,500,000. In March 1996, the Company increased the number of
authorized shares of the Preferred to 5,000,000.
2. CONVERTIBLE PREFERRED STOCK--CONTINUED
The Preferred has no voting rights. The holders of the Preferred were
entitled to cumulative quarterly dividends of $.05 per share due upon the
redemption of the shares. The liquidation value of each share of Preferred is
equal to $2.00 plus cumulative dividends.
Concurrent with the public offering in October 1996, the entire 250,000
shares of the Preferred then outstanding were converted into 184,486 shares of
common stock.
3. INITIAL PUBLIC OFFERING
In October and November 1996, the Company completed its initial public
offering and issued 1,955,000 units at a price of $5.00 per unit. Each unit
consists of one share of common stock, one Class A warrant and one Class B
warrant. Each Class A warrant entitles the holder to purchase one share of
common stock and one Class B warrant at an exercise price of $6.50. Each
Class B warrant entitles the holder to purchase one share of common stock at an
exercise price of $8.75. The warrants are redeemable by the Company, under
certain conditions, at any time after October 9, 1997. As a result of the
offering, the Company received net proceeds of approximately $7,988,000.
In connection with the offering, the underwriter required, as a condition of
the offering, that an aggregate of 410,000 shares of the Company's common stock
be designated as forfeitable shares ("forfeitable shares") and placed in escrow.
The forfeitable shares are neither assignable nor
F-25
<PAGE>
LTI HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2000
NOTE C--STOCKHOLDERS' EQUITY (CONTINUED)
transferable until certain earnings or market criteria have been met. These
conditions were not met by March 31, 2000 and all shares were returned to the
Company as treasury shares for cancellation thereof as a contribution to
capital.
4. STOCK OPTIONS AND WARRANTS
In connection with the Company's initial public offering, the Company
granted to the underwriter an option to purchase 170,000 units at $6.00 per unit
exercisable for a three-year period commencing October 9, 1998.
The Company has outstanding 2,952,400 Class A warrants and 1,955,100
Class B warrants exercisable for a five year period commencing October 9, 1996.
5. SHARES RESERVED FOR ISSUANCE
The Company has 8,789,900 shares of common stock reserved for issuance as
follows:
<TABLE>
<S> <C>
Class A warrants............................................ 2,952,400
Class B warrants............................................ 4,907,500
Underwriter's Unit Purchase Option.......................... 680,000
1996 Stock Option Plan...................................... 250,000
---------
8,789,900
=========
</TABLE>
NOTE D--COMMITMENTS AND OTHER MATTERS
1. EMPLOYMENT CONTRACT
Effective June 1, 1996, the Company entered into a one-year employment
agreement with the Chairman and Chief Executive Officer of the Company. The
agreement provides for an annual base salary of $144,000 per year and is
automatically renewable for successive one-year terms unless either party gives
six months notice to the other. Upon termination, the Officer is entitled to
receive his base salary for a period of one year (subject to a 50% offset during
the second six months for salary received from subsequent employment).
2. OPERATING LEASE
During the year ended March 31, 1999, the Company terminated operating
leases for its office facility and a warehouse facility and began leasing an
office facility on a month to month basis. Total rental expense under operating
lease arrangements was approximately $35,992 and $123,519 for the years ended
March 31, 2000 and March 31, 1999, respectively.
F-26
<PAGE>
LTI HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2000
NOTE E--NET LOSS PER COMMON SHARE
The following table sets forth the computation of basic and diluted loss per
share.
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
2000 1999
----------- ---------
<S> <C> <C>
Numerator for basic and diluted net loss per common
share--loss attributable to common stockholders.... $(1,040,291) $(967,176)
=========== =========
</TABLE>
The following table sets forth the computation of basic and diluted loss per
share.
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
2000 1999
--------- ---------
<S> <C> <C>
Denominator for basic net loss per common
share--weighted average shares outstanding........... 2,775,100 2,775,100
Effect of dilutive options and warrants................ -- --
--------- ---------
Denominator for diluted net loss per common share--
adjusted weighted average shares outstanding......... 2,775,100 2,775,100
========= =========
Basic net loss per share............................... $ (.37) $ (.35)
========= =========
</TABLE>
Because the common stock equivalents have an antidilutive effect, no diluted
loss per share is presented.
NOTE F--INCOME TAXES
The Company's temporary differences result in a net deferred income tax
asset which is reduced to zero by a related valuation allowance summarized as
follows:
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
2000 1999
---------- ----------
<S> <C> <C>
Deferred income tax assets
Net operating loss carryforward...................... $3,600,000 $3,220,000
Other................................................ 10,000 20,000
---------- ----------
Gross deferred tax assets............................ 3,610,000 3,240,000
Deferred tax asset valuation allowance............... (3,610,000) (3,240,000)
---------- ----------
Net deferred tax asset............................... $ -- $ --
========== ==========
</TABLE>
The net increase of the deferred tax asset valuation allowance for the year
ended March 31, 2000 was $370,000.
F-27
<PAGE>
LTI HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2000
NOTE F--INCOME TAXES (CONTINUED)
At March 31, 2000, the Company had Federal net operating loss carryforwards
of approximately $9,321,000 available to reduce future taxable income which
expire as follows:
<TABLE>
<CAPTION>
NET
FISCAL OPERATING
YEAR LOSS
------ ----------
<S> <C>
2009........................................................ $1,289,000
2010........................................................ 1,439,000
2011........................................................ 1,303,000
2012........................................................ 2,084,000
2013........................................................ 1,281,000
2019........................................................ 921,000
2020........................................................ 1,004,000
----------
$9,321,000
==========
</TABLE>
Under Section 382 of the Internal Revenue Code, the Company is subject to an
annual limitation of approximately $350,000 on utilization of certain of its net
operating loss carryforwards because an ownership change of more than 50% has
occurred.
Reconciliations of statutory Federal tax rates to the effective tax rate for
the years ended March 31, 2000 and March 31, 1999, are as follows:
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
2000 1999
--------- ---------
<S> <C> <C>
Income tax benefit at 34%................................ (34)% (34)%
State taxes, net of Federal income tax effect............ (4) (4)
Tax benefit of losses not recognized..................... 38 38
--- ---
Effective tax rate....................................... --% --%
=== ===
</TABLE>
NOTE G--STOCK OPTION PLAN
In 1996, the Board of Directors adopted and the Company's stockholders
approved the Amended and Restated 1996 Stock Option Plan (the "Plan"). Pursuant
to the Plan, as amended, incentive stock options and nonqualified stock options
may be granted to purchase up to 250,000 shares of the Company's common stock
through March 2006. Incentive stock options are to be granted at a price not
less than the fair market value of the Company's common stock at the date of
grant. If a stockholder owns 10% or more of the Company's outstanding stock, the
exercise price may not be less than 110% of the fair market value of the
Company's common stock at the date of grant and its term must not exceeds five
years. Options may be granted to employees, consultants, and directors of the
Company and must be exercised within a ten-year period after the date granted.
Nonqualified stock options are exercisable at a price to be determined by the
Board of Directors for a period of ten years after the grant date.
Additionally, the provisions of the Plan provide for the automatic grant of
nonqualified stock options to purchase shares of common stock ("Director
Options") to directors of the Company who are
F-28
<PAGE>
LTI HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2000
NOTE G--STOCK OPTION PLAN (CONTINUED)
not employees or principal stockholders of the Company ("Eligible Directors").
Each of the four Eligible Directors of the Company were granted Director Options
to purchase 10,000 share of common stock on July 15, 1996 at $5.00 per share.
Future Eligible Directors are to be granted a Director Option to purchase 10,000
shares of common stock on the date of election or appointment. Further,
commencing on the day immediately following the date of the annual meeting of
stockholders for the Company's fiscal year ending March 31, 1997, each Eligible
Director, other than directors who received an Initial Director Option since the
last annual meeting, are to be granted a Director Option to purchase 1,000
shares of common stock ("Automatic Grant") on the day immediately following the
date of each annual meeting of stockholders, as long as such director is a
member of the Board of Directors. The exercise price for each share subject to a
Director Option shall be equal to the fair market value of the common stock on
the date of grant, except for directors who receive incentive options and who
own more than 10% of the voting power, in which case the exercise price shall be
not less than 110% of the fair market value on the date of grant. Director
Options are exercisable in four equal annual installments, commencing six months
from the date of grant. Director Options expire the earlier of 10 years after
the date of grant or 90 days after the termination of the director's service on
the Board of Directors.
Stock options activity is summarized as follows:
<TABLE>
<CAPTION>
MARCH 31, 2000
-------------------
WEIGHTED
AVERAGE
EXERCISE
SHARES PRICE
-------- --------
<S> <C> <C>
Outstanding, beginning of year............................ 247,000 $3.09
Granted................................................... -- --
Exercised................................................. -- --
Forfeited................................................. 195,000 3.00
------- -----
Outstanding end of year................................... 52,000 3.43
======= =====
</TABLE>
The following table summarizes information about stock options outstanding
at March 31, 2000:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
---------------------------------------- -------------------------
WEIGHTED
NUMBER AVERAGE WEIGHTED NUMBER WEIGHTED
OUTSTANDING AT REMAINING AVERAGE EXERCISABLE AT AVERAGE
EXERCISE MARCH 31, CONTRACTUAL EXERCISE MARCH 31, EXERCISE
PRICE 2000 LIFE (YEARS) PRICE 2000 PRICE
-------- -------------- ------------ -------- -------------- --------
<S> <C> <C> <C> <C> <C>
$ .75 20,000 7.99 $ .75 20,000 $ .75
4.00 -- 1.21 4.00 -- 4.00
5.00 30,000 5.04 5.00 30,000 5.00
6.75 2,000 7.39 6.75 1,542 6.71
------ ---- ----- ------ -----
52,000 3.93 $3.43 51,542 $3.37
====== ==== ===== ====== =====
</TABLE>
F-29
<PAGE>
LTI HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2000
NOTE G--STOCK OPTION PLAN (CONTINUED)
The Company uses the intrinsic value method in accounting for its stock
option plans. In applying this method, no compensation cost has been recognized
in the accompanying financial statements. Had compensation cost for the
Company's stock option plans been determined based on the fair value at the
grant dates for awards under those plans, the Company's net loss and loss per
share would have resulted in the pro forma amounts indicated below:
<TABLE>
<CAPTION>
MARCH 31, 2000 MARCH 31, 1999
-------------- --------------
<S> <C> <C> <C>
Net loss As reported $(1,040,291) $ (967,176)
Pro forma (1,065,621) (1,102,739)
Basic net loss per $ (.37) $ (.35)
common share As reported (.38) (.40)
Pro forma
Diluted net loss per As reported $ (.37) $ (.35)
common share Pro forma (.38) (.40)
</TABLE>
For purposes of the pro forma amounts above, the fair value of each option
grant was estimated on the date of grant using the Black-Scholes options-pricing
model with the following weighted-average assumptions used for grants in the
years ended March 31, 2000 and 1999; expected volatility of 90%, risk-free
interest rates of 6.7%; and expected lives of 4 to 5 years.
NOTE H--SUBSEQUENT EVENT (UNAUDITED)
During June 2000, the Company announced its intention to merge with Speedcom
Wireless International Corporation ("Speedcom"), a privately held company which
manufactures, services and installs wireless broadband equipment for wireless
core systems, also referred to as backbones and secondary, offshoot
applications, also referred to as "last-mile" applications. Pursuant to the
terms of the preliminary merger agreement, the Company will effect a 1 for 4.25
reverse stock split prior to the merger. The reverse stock split will reduce the
number of its outstanding common shares to approximately 650,000 and its
outstanding options and warrants to approximately 2,068,000. The merger, as
currently contemplated, will be effected with the issuance by the Company of
approximately 7,700,000 shares of its common stock, on a one-for one basis, for
the outstanding common shares of Speedcom.
F-30
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
A-1
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
DATED AS OF AUGUST 4, 2000
BY AND BETWEEN
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
("SPEEDCOM")
AND
LTI HOLDINGS, INC.
("LTI")
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
A-2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
ARTICLE I THE MERGER........................................ 1
SECTION 1.1. THE MERGER................................... 1
SECTION 1.2. THE CLOSING; EFFECTIVE TIME.................. 2
SECTION 1.3. FROM AND AFTER THE EFFECTIVE TIME............ 2
ARTICLE II CONVERSION OF SHARES............................. 2
SECTION 2.1. CONVERSION OF SHARES......................... 3
SECTION 2.2. DISSENTING SHARES............................ 4
SECTION 2.3. STOCK TRANSFER............................... 4
SECTION 2.4. EXCHANGE OF CERTIFICATES..................... 4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF LTI........... 7
SECTION 3.1. ORGANIZATION................................. 7
SECTION 3.2. SUBSIDIARIES................................. 7
SECTION 3.3. GOOD STANDING................................ 7
SECTION 3.4. VALIDITY..................................... 7
SECTION 3.5. NO CONFLICT.................................. 7
SECTION 3.6. CAPITALIZATION............................... 8
SECTION 3.7. OBLIGATIONS WITH RESPECT TO CAPITAL STOCK.... 8
SECTION 3.8. FINANCIAL STATEMENTS......................... 8
SECTION 3.9. EVENTS SINCE MARCH 31, 2000.................. 9
SECTION 3.10. CONTRACTS................................... 10
SECTION 3.11. NO DEFAULT.................................. 10
SECTION 3.12. PERSONAL PROPERTY........................... 11
SECTION 3.13. REAL PROPERTY............................... 11
SECTION 3.14. ENVIRONMENTAL............................... 11
SECTION 3.15. BANK ACCOUNTS............................... 12
SECTION 3.16. GUARANTIES.................................. 12
SECTION 3.17. INSURANCE................................... 12
SECTION 3.18. TAX MATTERS................................. 12
SECTION 3.19. EMPLOYEE BENEFITS........................... 12
SECTION 3.20. CERTAIN ADVANCES............................ 14
SECTION 3.21. LICENSES AND PERMITS........................ 14
SECTION 3.22. PROPRIETARY RIGHTS.......................... 14
SECTION 3.23. LABOR....................................... 15
SECTION 3.24. COMPLIANCE WITH LAW......................... 15
SECTION 3.25. LITIGATION.................................. 15
SECTION 3.26. CONSENTS.................................... 15
SECTION 3.27. SEC FILINGS................................. 15
SECTION 3.28. NO UNDISCLOSED LIABILITIES.................. 15
SECTION 3.29. VOTE REQUIRED............................... 15
SECTION 3.30. UNDERLYING DOCUMENTS........................ 16
SECTION 3.31. BROKERS OR FINDERS.......................... 16
SECTION 3.32. DISCLOSURE OF MATERIAL FACTS................ 16
</TABLE>
A-3
<PAGE>
<TABLE>
<S> <C>
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SPEEDCOM....... 16
SECTION 4.1. ORGANIZATION................................. 16
SECTION 4.2. SUBSIDIARIES................................. 16
SECTION 4.3. GOOD STANDING................................ 16
SECTION 4.4. VALIDITY..................................... 16
SECTION 4.5. NO CONFLICT.................................. 17
SECTION 4.6. CAPITALIZATION............................... 17
SECTION 4.7. OBLIGATIONS WITH RESPECT TO CAPITAL STOCK.... 17
SECTION 4.8. FINANCIAL STATEMENTS......................... 18
SECTION 4.9. EVENTS SINCE DECEMBER 31, 1999............... 19
SECTION 4.10. CONTRACTS................................... 20
SECTION 4.11. NO DEFAULT.................................. 20
SECTION 4.12. ENVIRONMENTAL............................... 20
SECTION 4.13. REAL PROPERTY............................... 21
SECTION 4.14. GUARANTIES.................................. 21
SECTION 4.15. INSURANCE................................... 21
SECTION 4.16. TAX MATTERS................................. 21
SECTION 4.17. CERTAIN ADVANCES............................ 21
SECTION 4.18. LICENSES AND PERMITS........................ 22
SECTION 4.19. PROPRIETARY RIGHTS.......................... 22
SECTION 4.20. LABOR....................................... 22
SECTION 4.21. COMPLIANCE WITH LAW......................... 22
SECTION 4.22. LITIGATION.................................. 22
SECTION 4.23. CONSENTS.................................... 22
SECTION 4.24. SEC REPORTS................................. 23
SECTION 4.25. VOTE REQUIRED............................... 23
SECTION 4.26. UNDERLYING DOCUMENTS........................ 23
SECTION 4.27. BROKERS OR FINDERS.......................... 23
SECTION 4.28. EMPLOYEE BENEFITS........................... 23
SECTION 4.29. DISCLOSURE OF MATERIAL FACTS................ 23
ARTICLE V COVENANTS......................................... 24
SECTION 5.1. NEGATIVE COVENANTS........................... 24
SECTION 5.2. PROXY STATEMENT.............................. 24
SECTION 5.3. REGISTRATION OF LTI COMMON STOCK AND SPEEDCOM
OPTIONS AND WARRANTS.................................... 25
SECTION 5.4. STOCKHOLDER APPROVAL......................... 26
SECTION 5.5. UPDATING OF THE DISCLOSURE SCHEDULES......... 26
SECTION 5.6. ACCESS TO INFORMATION........................ 27
SECTION 5.7. FULFILLMENT OF CONDITIONS AND COVENANTS...... 27
SECTION 5.8. PRESS RELEASES............................... 27
SECTION 5.9. CONSENTS..................................... 28
SECTION 5.10. CERTAIN NOTIFICATIONS....................... 28
SECTION 5.11. ANTITRUST MATTERS........................... 28
SECTION 5.12. EXCLUSIVITY................................. 28
SECTION 5.13. INDEMNIFICATION; D&O INSURANCE.............. 29
SECTION 5.14. PRESERVATION OF TAX TREATMENT............... 29
SECTION 5.15. POST-EFFECTIVE AMENDMENT OF REGISTRATION
STATEMENT............................................... 29
SECTION 5.16. MAINTENANCE OF CLASS A AND CLASS B WARRANT
PROCEEDS................................................ 30
ARTICLE VI CONDITIONS TO OBLIGATIONS OF SPEEDCOM............ 31
</TABLE>
A-4
<PAGE>
<TABLE>
<S> <C>
SECTION 6.1. PERFORMANCE.................................. 31
SECTION 6.2. REPRESENTATIONS AND WARRANTIES............... 31
SECTION 6.3. MATERIAL ADVERSE CHANGE...................... 31
SECTION 6.4. LEGAL OPINION................................ 31
SECTION 6.5. CONSENTS..................................... 31
SECTION 6.6. STOCKHOLDERS' APPROVAL....................... 31
SECTION 6.7. DELIVERY OF CORPORATE RECORDS................ 31
SECTION 6.8. RESIGNATIONS................................. 31
SECTION 6.9. EFFECTIVENESS OF S-4 REGISTRATION STATEMENT
AND POST-EFFECTIVE AMENDMENT............................ 32
SECTION 6.10. FINANCIAL CONDITIONS........................ 32
SECTION 6.11. NO LITIGATION............................... 32
SECTION 6.12. CLOSING CERTIFICATES........................ 32
SECTION 6.13. TAX OPINION................................. 32
SECTION 6.14. OPINION OF FINANCIAL ADVISOR................ 32
SECTION 6.15. GENERAL RELEASES............................ 32
ARTICLE VII CONDITIONS TO OBLIGATIONS OF LTI................ 33
SECTION 7.1. PERFORMANCE.................................. 33
SECTION 7.2. REPRESENTATIONS AND WARRANTIES............... 33
SECTION 7.3. LEGAL OPINION................................ 33
SECTION 7.4. CONSENTS..................................... 33
SECTION 7.5. STOCKHOLDERS' APPROVAL....................... 33
SECTION 7.6. NO LITIGATION................................ 33
SECTION 7.7. CLOSING CERTIFICATES......................... 34
SECTION 7.8. MATERIAL ADVERSE CHANGE...................... 34
SECTION 7.9. EFFECTIVENESS OF S-4 REGISTRATION STATEMENT
AND POST-EFFECTIVE AMENDMENT............................ 34
SECTION 7.10. OPINION OF FINANCIAL ADVISOR................ 34
SECTION 7.11. TAX OPINION................................. 34
ARTICLE VIII TERMINATION.................................... 34
SECTION 8.1. TERMINATION.................................. 34
SECTION 8.2. EFFECT OF TERMINATION........................ 35
ARTICLE IX MISCELLANEOUS.................................... 35
SECTION 9.1. NOTICES...................................... 35
SECTION 9.2. ENTIRE AGREEMENT............................. 36
SECTION 9.3. WAIVERS AND AMENDMENTS....................... 36
SECTION 9.4. CONFIDENTIALITY.............................. 36
SECTION 9.5. SURVIVAL..................................... 37
SECTION 9.6. EXPENSES..................................... 37
SECTION 9.7. FURTHER ACTIONS.............................. 37
SECTION 9.8. GOVERNING LAW................................ 37
SECTION 9.9. NO ASSIGNMENT................................ 37
SECTION 9.10. COUNTERPARTS................................ 37
SECTION 9.11. THE DISCLOSURE SCHEDULE AND EXHIBITS........ 37
SECTION 9.12. HEADINGS.................................... 37
SECTION 9.13. KNOWLEDGE................................... 37
</TABLE>
A-5
<PAGE>
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger ("AGREEMENT") is dated as of August 4,
2000 and is by and between Speedcom Wireless International Corporation, a
Florida corporation ("SPEEDCOM"), and LTI Holdings, Inc., a Delaware corporation
("LTI").
RECITALS
A. The respective Boards of Directors of Speedcom and LTI have approved this
Agreement pursuant to which Speedcom will be merged with and into LTI on the
terms and conditions contained herein and in accordance with the terms of the
Delaware General Corporation Law (the "DGCL") and the Florida Business
Corporation Act (the "FBCA").
B. For United States federal income tax purposes, LTI and Speedcom intend
that the Merger (as defined below) qualify as a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"CODE").
C. Speedcom and LTI desire to make certain representations, warranties,
covenants and agreements in connection with the Merger and to prescribe various
conditions to the Merger.
NOW THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties to this Agreement agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined below) and in accordance with
the DGCL and the FBCA, Speedcom will be merged with and into LTI (the "MERGER").
LTI shall be the surviving corporation in the Merger (the "SURVIVING
CORPORATION"). At the Effective Time, the separate existence of Speedcom shall
cease and the other corporate law effects of the Merger shall be as set forth in
the DGCL and the FBCA and as set forth in this Agreement.
Section 1.2. THE CLOSING; EFFECTIVE TIME.
(a) The closing of the transactions contemplated by this Agreement (the
"CLOSING") shall take place at the Washington, D.C. offices of Speedcom's
counsel, Foley & Lardner, on a date to be agreed upon in writing by
Speedcom and LTI, which shall be no later than the fourth business day
after satisfaction or waiver of the conditions set forth in Articles VI
and VII of this Agreement, or on such other date as may be agreed upon in
writing by Speedcom and LTI. The date on which the Closing actually
occurs shall be the "CLOSING DATE."
(b) Immediately prior to the Effective Time, LTI will cause to be effected,
by filing with the Secretary of State of the State of Delaware in
accordance with the DGCL, a reverse stock split of its outstanding shares
of LTI Common Stock (the "LTI COMMON STOCK"), such that every 4.26 shares
of the LTI Common Stock outstanding at the time of such reverse stock
split will be converted into one share of LTI Common Stock.
(c) At the Closing, Speedcom and LTI shall cause articles of merger to be
executed and filed with the Secretary of State of the State of Delaware
and the Secretary of State of the State of Florida in accordance with the
DGCL and the FBCA. The Merger shall become effective as of the date and
time of such filing (the "EFFECTIVE TIME").
A-6
<PAGE>
Section 1.3. FROM AND AFTER THE EFFECTIVE TIME.
(a) A Certificate of Incorporation in the form attached as EXHIBIT 1.3(A)
shall be, from and after the Effective Time, the Certificate of
Incorporation of the Surviving Corporation, until thereafter altered,
amended or repealed as provided therein and in accordance with applicable
law. The name of the Surviving Corporation shall be changed to "Speedcom
Wireless Corporation."
(b) Bylaws in the form attached as EXHIBIT 1.3(B) shall become, from and
after the Effective Time, the Bylaws of the Surviving Corporation, until
thereafter altered, amended or repealed as provided therein and in
accordance with applicable law.
(c) From and after the Effective Time, the directors and officers of the
Surviving Corporation shall be the individuals set forth on
EXHIBIT 1.3(C) until their respective successors are duly elected or
appointed and qualified or their earlier resignation or removal.
ARTICLE II
CONVERSION OF SHARES
Section 2.1. CONVERSION OF SHARES. At the Effective Time, by virtue of the
Merger and without any action on the part of holders thereof:
(a) Each share of common stock of Speedcom issued and outstanding at the
Effective Time shall cease to be outstanding and shall be converted into
one share of common stock of the Surviving Corporation; provided,
however, that if at the Effective Time, LTI has Net Cash less than
$1.5 million, the amount of shares of common stock of the Surviving
Corporation to be issued to Speedcom stockholders will be increased by an
aggregate amount equal to (i) the difference between $1.5 million and the
Net Cash of LTI at the Effective Time divided by (ii) 4, multiplied by
(iii) 11.5, and each Speedcom stockholder will receive a PRO RATA portion
of such increase. "NET CASH" shall mean cash and cash equivalents minus
(i) accrued expenses and other current liabilities (determined in
accordance with generally accepted accounting principles ("GAAP") by
Ernst & Young LLP at the Closing (provided, however, that regardless of
whether required by GAAP, accrued expenses for purposes of such
calculation shall include any severance payments to Michael Noonan),
minus (ii) $92,504 and plus (iii) the amount of cash paid by LTI to LTI
stockholders in lieu of fractional shares that would otherwise have been
received pursuant to the reverse stock split described in
Section 1.2(b).
(b) Each option to acquire common stock of Speedcom outstanding immediately
prior to the Effective Time will be converted into an option (a "SPEEDCOM
OPTION") to acquire, on substantially the same terms and conditions as
were applicable under such stock option prior to the Effective Time, the
number of shares of LTI Common Stock equal to the number of Speedcom
shares the holder of such stock option would have been entitled to
receive pursuant to the Merger had such holder exercised such option in
full immediately prior to the Effective Time (not taking into account
whether or not such option was in fact exercisable).
(c) Each warrant to acquire common stock of Speedcom outstanding immediately
prior to the Effective Time will be converted into an warrant (a
"SPEEDCOM WARRANT") to acquire, on substantially the same terms and
conditions as were applicable under such stock warrant prior to the
Effective Time, the number of shares of LTI Common Stock equal to the
number of Speedcom shares the holder of such stock warrant would have
been entitled to receive pursuant to the Merger had such holder exercised
such warrant in full immediately prior to the Effective Time (not taking
into account whether or not such warrant was in fact exercisable).
A-7
<PAGE>
(d) Each outstanding warrant or option to acquire LTI Common Stock shall
remain unaffected by the Merger, except for adjustments necessary as a
result of the reverse stock split contemplated by Section 1.2(b).
(e) No fraction of a share of LTI Common Stock shall be issued, but in lieu
thereof, each holder of Speedcom Common Stock who would otherwise be
entitled to a fraction of a share of LTI Common Stock (after aggregating
all fractional shares of LTI Common Stock to be received by such holder)
shall receive from LTI an amount of cash (rounded to the nearest cent),
without interest, equal to the product of (i) such fraction, multiplied
by (ii) $4.00.
Section 2.2. DISSENTING SHARES. Notwithstanding any provision of this
Agreement to the contrary, any shares of Speedcom Common Stock held by a holder
who has exercised appraisal rights for such shares in accordance with the
provisions of the FBCA and who, as of the Effective Time, has not effectively
withdrawn or lost such appraisal rights (the "DISSENTING SHARES"), shall not be
converted into LTI Common Stock and such holder shall be entitled only to such
rights as are granted by the FBCA with respect to the Dissenting Shares.
Section 2.3. STOCK TRANSFER. At the Effective Time, the stock transfer
books of Speedcom shall be closed and no transfer of shares of Speedcom shall be
made thereafter.
Section 2.4. EXCHANGE OF CERTIFICATES.
(a) As of the Effective Time, the Surviving Corporation shall enter into an
agreement with a bank or trust company (the "EXCHANGE AGENT") which shall
provide that the Surviving Corporation shall provide LTI Common Stock
(such shares of LTI Common Stock, together with any dividends or
distributions with respect thereto with a record date after the Effective
Time, and any cash payable in lieu of any fractional shares of LTI Common
Stock being hereinafter referred to as the "EXCHANGE FUND") issuable
pursuant to Section 2.1 in exchange for outstanding shares of Speedcom
Common Stock.
(b) As soon as reasonably practicable after the Effective Time, the Exchange
Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding shares of Speedcom Common Stock (the "CERTIFICATES") whose
shares were converted into the right to receive shares of LTI Common
Stock pursuant to Section 2.1, (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to
the Certificates shall pass, only upon delivery of the Certificates to
the Exchange Agent, and shall otherwise be in customary form) and
(ii) instructions for use in surrendering the Certificates in exchange
for the shares of the LTI Common Stock. Upon surrender of a Certificate
for cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor certificates and certain
dividends or other distributions in accordance with Section 2.4(c) and
cash in lieu of any fractional share of LTI Common Stock in accordance
with Section 2.4(e), and the Certificate so surrendered shall forthwith
be canceled. In the event of a surrender of a Certificate representing
shares of Speedcom Common Stock which are not registered in the transfer
records of Speedcom under the name of the person surrendering such
Certificate, a certificate representing the proper number of shares of
LTI Common Stock may be issued to a person other than the person in whose
name the Certificate so surrendered is registered if such Certificate
shall be properly endorsed or otherwise be in proper form for transfer
and the person requesting such issuance shall pay any transfer or other
taxes required by reason of the issuance of shares of LTI Common Stock to
a person other than the registered holder of such Certificate or
establish to the satisfaction of the Surviving Corporation that such tax
has been paid or is not applicable. Until surrendered as contemplated by
this Section 2.4, each Certificate shall be deemed at any time after the
A-8
<PAGE>
Effective Time to represent only the right to receive upon such surrender
the shares of LTI Common Stock which the holder thereof has the right to
receive in respect of such Certificate pursuant to the provisions of this
Article II, certain dividends or other distributions in accordance with
Section 2.4(c) and cash in lieu of any fractional share of LTI Common
Stock in accordance with Section 2.4(e). No interest shall be paid or
will accrue on any cash payable to holders of Certificates pursuant to
the provisions of this Article II.
(c) No dividends or other distributions with respect to LTI Common Stock
with a record date after the Effective Time shall be paid to the holder
of any unsurrendered Certificate with respect to the shares of LTI Common
Stock represented thereby, and, in the case of Certificates representing
Speedcom Common Stock, no cash payment in lieu of fractional shares shall
be paid to any such holder pursuant to Section 2.4(e), and all such
dividends, other distributions and cash in lieu of fractional shares of
LTI Common Stock shall be paid by the Surviving Corporation to the
Exchange Agent and shall be included in the Exchange Fund, in each case
until the surrender of such Certificate in accordance with this
Article II. Subject to the effect of applicable escheat or similar laws,
following surrender of any such Certificate there shall be paid to the
holder of the certificate representing whole shares of LTI Common Stock
issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such whole
shares of LTI Common Stock and, in the case of Certificates representing
Speedcom Common Stock, the amount of any cash payable in lieu of a
fractional share of LTI Common Stock to which such holder is entitled
pursuant to Section 2.4(e) and (ii) at the appropriate payment date, the
amount of dividends or other distributions with a record date after the
Effective Time and with a payment date subsequent to such surrender
payable with respect to such whole shares of LTI Common Stock.
(d) All shares of LTI Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms of this Article II (including
any cash paid pursuant to this Article II) shall be deemed to have been
issued (and paid) in full satisfaction of all rights pertaining to the
shares of Speedcom Common Stock theretofore represented by such
Certificates, subject, however, to the Surviving Corporation's obligation
to pay any dividends or make any other distributions with a record date
prior to the Effective Time which may have been declared or made by
Speedcom on such shares of Speedcom Common Stock which remain unpaid at
the Effective Time, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the
shares of Speedcom Common Stock which were outstanding immediately prior
to the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation or the Exchange Agent for any
reason, they shall be canceled and exchanged as provided in this
Article II, except as otherwise provided by law.
(e) Any portion of the Exchange Fund which remains undistributed to the
holders of the Certificates for six months after the Effective Time shall
be delivered to the Surviving Corporation, upon demand, and any holders
of the Certificates who have not theretofore complied with this
Article II shall thereafter look only to the Surviving Corporation for
payment of their claim for shares of LTI Common Stock, any dividends or
distributions with respect to LTI Common Stock and any cash in lieu of
fractional shares of LIT Common Stock.
(f) Neither the Surviving Corporation nor the Exchange Agent shall be liable
to any person in respect of any shares of LTI Common Stock, any dividends
or distributions with respect thereto, any cash in lieu of fractional
shares of LTI Common Stock or any cash from the Exchange Fund, in each
case delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
A-9
<PAGE>
(g) The Exchange Agent shall invest any cash included in the Exchange Fund,
as directed by the Surviving Corporation, on a daily basis. Any interest
and other income resulting from such investments shall be paid to the
Surviving Corporation.
(h) If any Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such
Certificate, the Exchange Agent shall issue in exchange for such lost,
stolen or destroyed Certificate the shares of LTI Common Stock to be
distributed pursuant to Section 2.1 and, if applicable, any unpaid
dividends and distributions on shares of LTI Common Stock deliverable in
respect thereof and any cash in lieu of fractional shares, in each case
pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LTI
LTI represents and warrants to Speedcom, as of the date hereof and hereafter
through the Effective Time, as follows (subject to the items set forth on the
Schedules hereto (collectively, the "LTI DISCLOSURE SCHEDULE")).
Section 3.1. ORGANIZATION. LTI is a corporation duly organized, validly
existing and in good standing under the laws of Delaware and has all requisite
corporate power and authority to own, lease and operate its properties and
assets in the manner in which such properties and assets are now owned, leased
and operated and to carry on the business in which it is now engaged. Prior to
the date hereof, LTI has delivered to Speedcom true and complete copies of its
Certificate of Incorporation and its bylaws, as currently in effect.
Section 3.2. SUBSIDIARIES. LTI does not, and as of the Effective Time will
not, own any equity interest, directly or indirectly, in any corporation,
partnership, limited liability company, joint venture, firm or other entity.
Section 3.3. GOOD STANDING. LTI is qualified or licensed to transact
business and is in good standing as a foreign corporation in the jurisdictions
set forth on SCHEDULE 3.3. There is no other jurisdiction in which the
ownership, leasing, licensing or use of property or assets by LTI or the conduct
of its businesses makes such qualification or licensing necessary.
Section 3.4. VALIDITY. LTI has full power and authority to execute and
deliver this Agreement and all of the other agreements and documents referred to
herein, executed in connection herewith or contemplated hereby to which LTI is a
party and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement constitutes the valid and
binding obligation of LTI, enforceable in accordance with its terms, subject to
bankruptcy, insolvency or other laws affecting creditors' rights generally. The
execution and delivery of this Agreement by LTI and the consummation of the
transactions contemplated hereby have been duly authorized by the board of
directors of LTI and, other than the approval of this Agreement and the Merger
by the stockholders of LTI in accordance with the DGCL, such execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby do not and will not require the consent, approval or authorization of any
person, public authority, self-regulatory authority or other entity.
Section 3.5. NO CONFLICT. The execution and delivery of this Agreement by
LTI and the performance of its obligations hereunder, (a) are not in violation
or breach of, and will not conflict with or constitute a default under, any of
the terms of the charter documents or bylaws of LTI or any note, debt
instrument, security agreement, lease, deed of trust or mortgage, license,
franchise, permit or any other contract, agreement or commitment binding upon
LTI or any of its assets or properties,
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except for such violations, breaches or defaults the effect of which would not
have a Material Adverse Effect on LTI; (b) will not result in the creation or
imposition of any lien, encumbrance or restriction in favor of any third party
upon any of the LTI Common Stock or any of the assets or properties of LTI; and
(c) will not conflict with or violate any applicable law, rule, regulation,
judgment, order or decree of any government, governmental instrumentality,
self-regulatory authority or court having jurisdiction over LTI, any of the LTI
Common Stock, or any of the assets or properties of LTI, except where such
conflict or violation would not have a Material Adverse Effect on LTI.
Section 3.6. CAPITALIZATION. LTI's authorized capital stock consists of
20,000,000 shares of LTI Common Stock, $.01 par value per share, of which
2,775,100 shares are currently issued and outstanding, and 5,000,000 shares of
LTI Series A Convertible Preferred Stock, $.01 par value per share, of which no
shares are currently issued and outstanding. All of the LTI Common Stock
outstanding as of the date of this Agreement has been, and all LTI Common Stock
outstanding at the Effective Time (after giving effect to the Merger), shall be,
duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights. All outstanding capital stock of LTI and rights to acquire
capital stock of LTI have been issued in accordance with all applicable federal
and state securities laws.
Section 3.7. OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. Other than as set
forth on SCHEDULE 3.7, LTI has no commitment or obligation to issue, deliver or
sell, under any offer, subscription, stock option agreement, stock bonus
agreement, stock purchase plan, incentive compensation plan, warrant, call,
conversion right or otherwise, any shares of its capital stock or other
securities, except as contemplated under this Agreement. All shares of LTI
Common Stock previously placed by LTI stockholders in escrow have been
cancelled. There are no stockholder agreements, voting agreements, voting trusts
or other similar arrangements to which LTI is a party, and LTI has no knowledge
of any other such arrangements to which it is not a party, which may have the
effect of restricting or limiting the transfer, voting or other rights
associated with the capital stock of LTI.
Section 3.8. FINANCIAL STATEMENTS.
(a) There have been delivered to Speedcom true and correct copies of:
(i) LTI's audited balance sheets as of March 31, 1998, 1999 and 2000, and
the related audited statements of earnings, stockholder's equity and cash
flows, including all notes and schedules thereto, for the fiscal years
ended March 31, 1998, 1999 and 2000, together with reports on all such
audited balance sheets and statements by Grant Thornton LLP and (ii) the
unaudited balance sheet of LTI as of June 30, 2000, and the related
statement of income of LTI for the three-month period ended June 30, 2000
(collectively, the "FINANCIAL STATEMENTS").
(b) As soon as practicable, but in any event within 15 days following the
end of each calendar month which is completed prior to the Closing Date,
commencing July 31, 2000, LTI shall cause to be delivered to Speedcom a
month-end report prepared by LTI with respect to such month, which report
shall include a balance sheet of LTI as of the end of such month prepared
in a manner consistent with, and in a format comparable to, the balance
sheet referred to in Section 3.8(a) hereof.
(c) Each of the balance sheets referred to above presents (or will present)
fairly the financial condition, assets, liabilities and stockholders'
equity of LTI as of its date; each such statement of earnings or
stockholders' equity presents fairly the results of operations of LTI for
the periods indicated; and each such statement of cash flows presents
fairly the information purported to be shown therein, except, in each
case, interim unaudited financial statements need not reflect year-end
adjustments. The Financial Statements, including all notes and schedules
thereto, have been (or will be) prepared in accordance with GAAP
consistently applied throughout the periods involved (except, in the case
of unaudited Financial Statements, for the absence of footnotes and
year-end adjustments) and are (or will be), in all
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material respects, in accordance with the books and records of LTI, which
books and records are correct and complete in all material respects.
(d) At the dates of the aforementioned balance sheets, LTI did not have (or
will not have with respect to such balance sheets dated subsequent to the
date hereof) any liabilities or obligations of any nature, whether
accrued, absolute, contingent or otherwise, whether due or to become due,
and whether or not required to be disclosed on a balance sheet prepared
in conformity with GAAP, not fully or properly reflected or reserved
against in such balance sheets, or in any notes thereto, other than
liabilities pursuant to contractual obligations identified in this
Agreement or the LTI Disclosure Schedule, unless not required to be
identified on the LTI Disclosure Schedule or with respect to unaudited
financial statements, liabilities or material obligations which would be
included in the footnotes or in any year-end adjustments applicable
thereto.
Section 3.9. EVENTS SINCE MARCH 31, 2000. Since March 31, 2000, except as
disclosed in SCHEDULE 3.9:
(a) LTI has not sustained any damage, destruction or loss (including,
without limitation, by reason of revocation of license or right to do
business, total or partial termination, suspension, default or
modification of contracts, governmental or self-regulatory restriction,
regulation, investigation or inquiry).
(b) There have been no changes which, individually or in the aggregate, have
had a material adverse effect on the condition (financial or otherwise),
business, net worth, operations, assets, properties, liabilities, or
results of operations (a "MATERIAL ADVERSE EFFECT") of LTI.
(c) Except as provided in this Agreement or as set forth in the notes to
audited Financial Statements LTI has not issued, or authorized for
issuance, any equity security, bond, note or other security of LTI, and
LTI has not granted, or entered into, any commitment or obligation to
issue or sell any such equity security, bond, note or other security of
LTI, whether pursuant to any offer, underwriting agreement, stock option
agreement, stock bonus agreement, stock purchase plan, incentive
compensation plan, warrant, call, conversion right or otherwise.
(d) LTI has not incurred additional debt for borrowed money, or incurred any
other obligation or liability (fixed, contingent or otherwise) except in
the ordinary and usual course of its business and consistent with past
practices.
(e) LTI has not authorized, declared, paid or effected any dividend, payment
or other distribution on or with respect to any share of its capital
stock.
(f) LTI has not purchased, redeemed or otherwise acquired or committed
itself to acquire, directly or indirectly, any share or shares of capital
stock of LTI.
(g) LTI has not mortgaged, pledged or otherwise encumbered or subjected to
lien any of its assets or properties, tangible or intangible, except for
liens for current taxes which are not yet due and payable and other liens
arising out of the ordinary and usual course of business.
(h) LTI has not entered into any material transaction or contract, nor has
LTI waived any right of substantial value or canceled any material debts
or claims or voluntarily suffered any extraordinary losses.
(i) LTI has not effected any amendment or supplement to, or extension of,
any employee profit-sharing, stock option, stock purchase, pension,
bonus, incentive, retirement, medical reimbursement, life insurance,
deferred compensation or any other employee benefit plan or arrangement.
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(j) LTI has not made any change in accounting methods or principles used for
financial reporting purposes, except as required by a change in GAAP and
concurred with by its independent public accountants.
Section 3.10. CONTRACTS. SCHEDULE 3.10 constitutes a full and complete
list of each material contract or agreement to which LTI is a party, or by which
LTI is bound in any respect. All material contracts or agreements to which LTI
is a party or by which LTI is bound (whether or not disclosed on Schedule 3.10)
(the "LTI CONTRACTS") are in full force and effect, and LTI is not in default
thereunder nor has any event occurred which with the passage of time or giving
notice or both would result in LTI being in default under any of the terms
thereof.
Section 3.11. NO DEFAULT. LTI has in all material respects performed, or
is now performing, the obligations of, and is not in default (and would not by
the lapse of time and/or the giving of notice be in default), nor has it
received notice of default or notice of termination in respect of any LTI
Contract. To the knowledge of LTI, no party other than LTI who is a party to or
bound by any of the LTI Contracts is in default thereof, where such default
could have a Material Adverse Effect, individually or in the aggregate. Each of
the LTI Contracts is a legal, binding and enforceable obligation of or against
LTI. To the knowledge of LTI, there are no facts or circumstances which make a
default under, or termination or suspension of, any of the LTI Contracts likely
to occur subsequent to the date hereof nor has any third party raised any claim,
dispute or controversy with respect to such LTI Contracts.
Section 3.12. PERSONAL PROPERTY. SCHEDULE 3.12 contains a list of all of
the personal property held by LTI. LTI owns all properties included in such
Schedule. LTI has good title to all assets and properties included on LTI's
audited balance sheet dated as of March 31, 2000 and thereafter acquired, free
and clear of any pledge, lien, claim, encumbrance, restriction, charge or equity
of any kind or nature, except for the lien of current taxes not yet due and
payable.
Section 3.13. REAL PROPERTY. SCHEDULE 3.13 constitutes a full and complete
list of all real property leased, or under option to be leased, by LTI. LTI does
not own any real property or any option to purchase any real property. All real
property leased by LTI is held under valid and existing leases. LTI does not
lease any real or personal property as lessor. LTI enjoys peaceful and
undisturbed possession of all property described on Schedule 3.13.
Section 3.14. ENVIRONMENTAL. To the knowledge of LTI:
(a) No Hazardous Materials (as defined in paragraph (e) below) have been
used, stored or otherwise handled in any manner by LTI on, under, in,
from or affecting any of the real property leased by LTI (the
"PROPERTY"), other than cleaning solvents and similar materials used by
LTI in DE MINIMIS amounts in the ordinary course of business and in
compliance with Environmental Laws (as defined below). No prior or
current owner or occupant of the Property has used Hazardous Materials
on, under, in, from or affecting the Property.
(b) No Hazardous Materials have at any time been released into, stored or
deposited by LTI within or on the Property, by LTI into any water systems
on or below the surface of the Property, or by LTI directly or indirectly
onto any property or water system adjoining, adjacent to or abutting the
Property, or have been used by LTI in the construction of any
improvements located on or about the Property.
(c) LTI has not received any notice of any violations (nor is it aware of
any existing violations) of any applicable laws governing the use,
storage, treatment, transportation, manufacture, refinement, handling,
production or disposal of Hazardous Materials on, under, in, from or
affecting the Property and there are not any legal actions or proceedings
commenced or threatened by any person with respect to any such
violations.
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(d) The Property is currently being, and has in the past been, operated by
LTI in accordance with, and in compliance with, all applicable
Environmental Laws.
(e) "HAZARDOUS MATERIALS" means any hazardous materials, hazardous wastes,
hazardous constituents, hazardous or toxic substances or petroleum
products (including gasoline, crude oil or any fraction thereof), defined
or regulated as such in or under any Environmental Law, including,
without limitation, asbestos, polychlorinated biphenyls and urea
formaldehyde insulation. "ENVIRONMENTAL LAWS" are any and all federal,
state, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any governmental authority or
other requirements of law (including common law) regulating, relating to
or imposing liability or standards of conduct concerning protection of
human health or the environment.
Section 3.15. BANK ACCOUNTS. SCHEDULE 3.15 constitutes a full and complete
list of all the bank accounts, including escrow accounts, of LTI, together with
the names of persons authorized to draw thereon. Except as set forth in
Schedule 3.15, all cash in such accounts is held in demand deposits and is not
subject to any restriction or limitation as to withdrawal. All of such accounts
are reconciled on a timely basis, are fully funded and are free from material
errors.
Section 3.16. GUARANTIES. None of the obligations or liabilities of LTI is
guaranteed by any person, firm, association or corporation. SCHEDULE 3.16
contains a correct and complete list of all guarantees by, or other contingent
obligations of LTI, showing the parties and amounts involved and the expiration
dates thereof.
Section 3.17. INSURANCE. SCHEDULE 3.17 constitutes a full and complete
list of all policies of insurance to which LTI is a party or is a beneficiary or
named insured. LTI has in full force and effect, with all premiums due thereon
paid, the policies of insurance set forth therein. No notice of cancellation or
termination has been received with respect to any insurance policy described in
this Section. Except as specifically disclosed on Schedule 3.17, no claims have
been asserted by LTI under any of the insurance policies of LTI or relating to
its properties, assets or operations.
Section 3.18. TAX MATTERS. All tax returns required by law to be filed up
to and including the Effective Time, and all taxes required to have been paid by
LTI, the non-filing or non-payment of which could result in a lien or charge on
or encumbrance against any assets of LTI, have been or prior to the Effective
Time will be duly filed or paid other than taxes not yet due and payable. All
tax returns filed by LTI have been true and correct in all material respects.
There are no actions or other proceedings of any kind pending or threatened
against LTI with respect to any tax matters, and no circumstances exist which
may result in the imposition of additional tax liabilities. To LTI's knowledge,
there exists no fact or circumstance which is reasonably likely to cause the
Merger to fail to qualify as a "reorganization" within the meaning of
Section 368(a) of the Code. LTI has not taken or agreed to take any action that
would prevent the Merger from qualifying as a "reorganization" within the
meaning of Section 368(a) of the Code.
Section 3.19. EMPLOYEE BENEFITS.
(a) SCHEDULE 3.19 sets forth (i) each "employee pension benefit plan"
(within the meaning of Section 3(2) of the Employment Retirement Income
Security Act of 1974, as amended ("ERISA")) of which LTI is the plan
sponsor (within the meaning of Section 3(16)(A) of ERISA) and which
provides benefits to employees of LTI, together with the related trust
agreement providing the funding medium for pension benefits thereunder
(the "PENSION PLANS"); (ii) each "employee welfare benefit plan" (within
the meaning of Section 3(1) of ERISA) of which LTI is the plan sponsor
and which provides benefits to employees of LTI, together with the
related trust agreement or insurance contract providing the funding
medium for benefits thereunder and any related contracts thereunder (the
"WELFARE PLANS"); (iii) the
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summary plan description for each Pension Plan and Welfare Plan;
(iv) the most recent financial statement, if any, including audit reports
thereon, Annual Report Form 5500 and actuarial report for each such
Pension Plan and Welfare Plan; (v) any investment management agreement
which delegates authority for investment of the assets of any such
Pension Plan or Welfare Plan; and (vi) the most recent qualification
letter from the IRS for each Pension Plan and for any Welfare Plan funded
through any tax-exempt trust qualified under Section 501 (a) or (c) of
the Code through which any Welfare Plan is funded.
(b) With respect to any Pension Plan or Welfare Plan (the "PLANS"):
(i) the financial statements relating to the Plans furnished to Speedcom
have been prepared in accordance with GAAP consistently applied
throughout the periods involved and are in accordance with the books
and records of such Plans, which books and records are correct and
complete in all respects;
(ii) LTI does not maintain or contribute to any plan other than those
listed on Schedule 3.19;
(iii) all such Plans comply in all respects with the applicable
requirements of ERISA, all such Pension Plans comply with the
qualification requirements under Section 401(a) and the
requirements for tax-exempt status under Section 501 (a) or (c) of
the Code, and each Plan has been operated in accordance with its
terms;
(iv) LTI does not provide or have any obligation to provide (or
contribute toward the cost of) post-retirement welfare benefits
with respect to their current or former employees or the current or
former employees of any other entity, including, but not limited
to, post-retirement medical, dental, life insurance, severance or
any other similar benefit, whether provided on an insured or
self-insured basis;
(v) no material change in the assets or liabilities of any such Plan has
occurred after the date of the financial statement relating thereto
(other than any change resulting from the accrual of benefits,
payment of benefits or receipt of contributions);
(vi) all required contributions to the Plans have been timely made; and
(vii) all reporting and disclosure obligations to any governmental agency
or entity and to any Plan participant or beneficiary have been
satisfied.
(c) LTI is not and has not been a contributing employer to any multiemployer
pension plan (within the meaning of Section 3(37) of ERISA); LTI is not
under any obligation to make contributions to any multiemployer pension
plan; and LTI has no actual or potential liability under Section 4201 of
ERISA for any complete or partial withdrawal from any multiemployer
pension plan relating to employees or officers of LTI.
(d) Except for the Plans or the programs and arrangements, contractual or
otherwise, listed or referred to in this Agreement or the Disclosure
Schedule (i) LTI does not maintain or contribute to any plans, programs
or arrangements providing for (A) payment of deferred compensation or
retirement benefits; (B) the accrual or payment of bonuses or special or
incentive compensation of any kind; (C) any severance or termination
payments; (D) loans, loan guarantees or other extensions of credit to
directors, officers or employees of LTI; (E) life, health, disability or
other welfare benefits; (F) moving or other relocation expense benefits
or reimbursements; (ii) LTI does not maintain any other stock bonus,
stock option, stock purchase or similar plans or practices, whether
formal or informal; and (iii) LTI is not a party to any written or other
legally binding agreement otherwise relating to the employment of any
person.
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Section 3.20. CERTAIN ADVANCES. There are no receivables of LTI owing by
directors, officers, employees, consultants or stockholders of LTI, or owing by
any affiliate of any director or officer of LTI.
Section 3.21. LICENSES AND PERMITS. LTI has obtained, and is in compliance
with, and SCHEDULE 3.21 contains a correct and complete list of, all necessary
licenses, permits, consents, approvals, orders, certificates, authorizations,
declarations and filings required by all federal, state, local and other
governmental, self-regulatory or regulatory bodies and all courts and other
tribunals for the conduct of the business and operations of LTI as now conducted
or as conducted in the past.
Section 3.22. PROPRIETARY RIGHTS. SCHEDULE 3.22 contains a full and
complete list of all material trademarks, trade names, service marks, copyrights
and patents, or applications therefor, or other intellectual property owned or
used by LTI ("LTI PROPRIETARY RIGHTS"). The operations of LTI do not now
conflict with or infringe, and have not in the past conflicted with or
infringed, any LTI Proprietary Rights owned, possessed or used by any third
party. There are no third parties whose operations conflict with or infringe,
nor has anyone asserted that such operations conflict with or infringe, any LTI
Proprietary Rights.
Section 3.23. LABOR. There are no labor controversies pending or
threatened against LTI.
Section 3.24. COMPLIANCE WITH LAW. The business of LTI has been and is
currently being conducted in all material respects in accordance with all
applicable laws, rules, regulations, orders and other requirements of
governmental and self-regulatory authorities, including, without limitation,
ERISA, all Environmental Laws, all laws, regulations and orders relating to
antitrust or trade regulation, employment practices and procedures, the health
and safety of employees and consumer credit, except where the failure to so
operate would not have a Material Adverse Effect on LTI. LTI has not received
any notice of alleged violations of any laws, rules, regulations, orders or
other requirements of governmental or self-regulatory authorities.
Section 3.25. LITIGATION. There is no claim, dispute, action, proceeding,
suit or appeal or investigation or inquiry, at law or in equity, involving LTI
before any court, agency, authority, self-regulatory authority, arbitration
panel or other tribunal and, to the knowledge of LTI, none have been threatened
or are in prospect against LTI. LTI is not subject to any order, writ,
injunction or decree of any court, agency, authority, arbitration panel or other
tribunal.
Section 3.26. CONSENTS. SCHEDULE 3.27 contains a full and complete list of
all necessary permits, authorizations, consents, waivers and approvals of third
parties required to be obtained by LTI in connection with the execution and
delivery of this Agreement by LTI and the performance of its obligations
hereunder.
Section 3.27. SEC FILINGS. LTI has filed all forms, reports and other
documents required to be filed with the United States Securities and Exchange
Commission (the "SEC") and has delivered to LTI true and correct copies of all
such documents (the "SEC REPORTS"). Except as set forth on SCHEDULE 3.27, the
SEC Reports (a) were prepared in accordance with the requirements of the
Securities Act of 1933, as amended (the "SECURITIES ACT") and the Securities
Exchange Act of 1934, as amended (the "SECURITIES EXCHANGE ACT"), as each were
in effect at the time of the filing of such documents, and (b) did not at the
time they were filed contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
Section 3.28. NO UNDISCLOSED LIABILITIES. To the knowledge of LTI, LTI has
no material liabilities (absolute, accrued, contingent or otherwise) other than
(a) liabilities adequately provided for in the Financial Statements and
(b) liabilities incurred in connection with this Agreement.
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Section 3.29. VOTE REQUIRED. The affirmative vote of the holders of a
majority of the outstanding shares of LTI Common Stock is the only vote of the
holders of any class or series of LTI's capital stock necessary to approve the
Merger and the other transactions contemplated hereby.
Section 3.30. UNDERLYING DOCUMENTS. All underlying documents listed or
described in the Disclosure Schedule have been furnished to Speedcom or its
representatives, except as expressly noted in the Disclosure Schedule. All such
documents furnished to Speedcom or its representatives are true and complete
copies, and there are no amendments or modifications to such documents, except
as expressly noted in the Disclosure Schedule. The minute books of LTI contain
full, complete and accurate records of all meetings and other corporate actions
taken by the directors and stockholders of LTI.
Section 3.31. BROKERS OR FINDERS. Except as set forth on SCHEDULE 3.31,
LTI has not and will not incur, directly or indirectly, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement or the transactions contemplated hereby.
Section 3.32. DISCLOSURE OF MATERIAL FACTS. LTI has disclosed to Speedcom
all material facts relating to the condition (financial or otherwise), business,
net worth, assets, properties or operations of LTI. The representations and
warranties contained in this Article III and in the LTI Disclosure Schedule, and
any other documents or information furnished to Speedcom by or on behalf of LTI
do not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements contained herein or therein not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SPEEDCOM
Speedcom represents and warrants to LTI, as of the date hereof and hereafter
through the Effective Time, as follows (subject to the items set forth on the
Schedules hereto (collectively, the "SPEEDCOM DISCLOSURE SCHEDULE")).
Section 4.1. ORGANIZATION. Speedcom is a corporation duly organized,
validly existing and in good standing under the laws of Florida and has all
requisite corporate power and authority to own, lease and operate its properties
and assets in the manner in which such properties and assets are now owned,
leased and operated and to carry on the business in which it is now engaged.
Prior to the date hereof, Speedcom has delivered to LTI true and complete copies
of its Articles of Incorporation and its bylaws, as currently in effect.
Section 4.2. SUBSIDIARIES. Except as set forth on SCHEDULE 4.2, Speedcom
does not, and as of the Closing Date will not, own any equity interest, directly
or indirectly, in any corporation, partnership, limited liability company, joint
venture, firm or other entity.
Section 4.3. GOOD STANDING. Speedcom is qualified or licensed to transact
business and is in good standing as a foreign corporation in the jurisdictions
set forth on SCHEDULE 4.3. There is no other jurisdiction in which the
ownership, leasing, licensing or use of property or assets by Speedcom or the
conduct of its businesses makes such qualification or licensing necessary.
Section 4.4. VALIDITY. Speedcom has full corporate power and authority to
execute and deliver this Agreement. This Agreement constitutes the valid and
binding obligation of Speedcom, enforceable against it in accordance with its
terms, subject to bankruptcy, insolvency and other laws affecting creditors'
rights generally. The execution and delivery of this Agreement by Speedcom and
the consummation of the transactions contemplated hereby have been duly
authorized by the Board of Directors of Speedcom, and other than approval by the
shareholders of Speedcom, such execution and delivery does not require the
consent, approval or authorization of any person, public authority or entity.
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Section 4.5. NO CONFLICT. The execution and delivery of this Agreement by
Speedcom and the performance of its obligations hereunder, (a) are not in
violation or breach of, and will not conflict with or constitute a default
under, any of the terms of the charter documents or bylaws of Speedcom or any
note, debt instrument, security agreement, lease, deed of trust or mortgage,
license, franchise, permit or any other contract, agreement or commitment
binding upon Speedcom or any of its assets or properties; (b) will not result in
the creation or imposition of any lien, encumbrance, equity or restriction in
favor of any third party upon any of the capital stock of Speedcom or any of the
assets or properties of Speedcom; and (c) will not conflict with or violate any
applicable law, rule, regulation, judgment, order or decree of any government,
governmental instrumentality, self-regulatory authority or court having
jurisdiction over Speedcom, any of the capital stock of Speedcom, or any of the
assets or properties of Speedcom.
Section 4.6. CAPITALIZATION. Speedcom's authorized capital stock consists
of 20,000,000 shares of common stock, $.001 par value, and 10,000,000 shares of
blank-check preferred stock. SCHEDULE 4.6 sets forth all of the Speedcom common
stock that is currently issued and outstanding. No shares of Speedcom preferred
stock is currently issued and outstanding. All outstanding capital stock of
Speedcom has been duly authorized, validly issued, fully paid, is nonassessable
and is free of preemptive rights. All outstanding capital stock of Speedcom and
rights to acquire capital stock of Speedcom have been issued in accordance with
all applicable federal and state securities laws.
Section 4.7. OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. Other than as set
forth on SCHEDULE 4.7, Speedcom has no commitment or obligation to issue,
deliver or sell, under any offer, subscription, stock option agreement, stock
bonus agreement, stock purchase plan, incentive compensation plan, warrant,
call, conversion right or otherwise, any shares of its capital stock or other
securities, except as contemplated under this Agreement. There are no
stockholder agreements, voting agreements, voting trusts or other similar
arrangements which may have the effect of restricting or limiting the transfer,
voting or other rights associated with the capital stock of Speedcom.
Section 4.8. FINANCIAL STATEMENTS.
(a) There have been delivered to LTI true and correct copies of:
(i) Speedcom's audited balance sheets as of December 31, 1997, 1998 and
1999, and the related audited statements of earnings, stockholder's
equity and cash flows, including all notes and schedules thereto, for the
fiscal years ended December 31, 1997, 1998 and 1999, together with
unqualified reports on all such audited balance sheets and statements by
Ernst & Young, LLP and for 1997, Arthur Andersen LLP and (ii) the
unaudited balance sheet of Speedcom as of June 30, 2000, and the related
statement of income of Speedcom for the six-month period ended June 30,
2000.
(b) As soon as practicable, but in any event within 15 days following the
end of each calendar month which is completed prior to the Closing Date,
commencing July 31, 2000, Speedcom shall cause to be delivered to LTI the
a month-end report prepared by Speedcom with respect to such month, which
report shall include a balance sheet of Speedcom as of the end of such
month prepared in a manner consistent with, and in a format comparable
to, the balance sheet referred to in Section 4.8(a) hereof.
(c) Each of the balance sheets referred to above presents (or will present)
fairly the financial condition, assets, liabilities and stockholders'
equity of Speedcom as of its date; each such statement of earnings or
stockholders' equity presents fairly the results of operations of
Speedcom for the periods indicated; and each such statement of cash flows
presents fairly the information purported to be shown therein, except, in
each case, interim unaudited financial statements need not reflect
year-end adjustments. The financial statements referred to in this
Section including all notes and schedules thereto, have been (or will be)
prepared in accordance with GAAP consistently applied throughout the
periods involved (except, in the case of unaudited financial statements,
for the absence of footnotes and year-end adjustments)
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and are (or will be), in all material respects, in accordance with the
books and records of Speedcom, which books and records are correct and
complete in all material respects.
(d) At the dates of the aforementioned balance sheets, Speedcom did not have
(or will not have with respect to such balance sheets dated subsequent to
the date hereof) any liabilities or obligations of any nature, whether
accrued, absolute, contingent or otherwise, whether due or to become due,
and whether or not required to be disclosed on a balance sheet prepared
in conformity with GAAP, not fully or properly reflected or reserved
against in such balance sheets, or in any notes thereto, other than
liabilities pursuant to contractual obligations identified in this
Agreement or the Speedcom Disclosure Schedule, unless not required to be
identified on the Speedcom Disclosure Schedule or with respect to
unaudited financial statements, liabilities or material obligations which
would be included in the footnotes or in any year-end adjustments
applicable thereto.
Section 4.9. EVENTS SINCE DECEMBER 31, 1999. Since December 31, 1999,
except as disclosed in SCHEDULE 4.9:
(a) Speedcom has not sustained any damage, destruction or loss (including,
without limitation, by reason of revocation of license or right to do
business, total or partial termination, suspension, default or
modification of contracts, governmental or self-regulatory restriction,
regulation, investigation or inquiry).
(b) There have been no changes which, individually or in the aggregate, have
had a Material Adverse Effect on Speedcom.
(c) Except as provided in this Agreement, or as set forth in the notes to
audited Speedcom financial statements, Speedcom has not issued, or
authorized for issuance, any equity security, bond, note or other
security of Speedcom, and Speedcom has not granted, or entered into, any
commitment or obligation to issue or sell any such equity security, bond,
note or other security of Speedcom, whether pursuant to any offer,
underwriting agreement, stock option agreement, stock bonus agreement,
stock purchase plan, incentive compensation plan, warrant, call,
conversion right or otherwise.
(d) Speedcom has not purchased, redeemed or otherwise acquired or committed
itself to acquire, directly or indirectly, any share or shares of capital
stock of Speedcom.
(e) Speedcom has not incurred additional debt for borrowed money, or
incurred any other obligation or liability (fixed, contingent or
otherwise) except in the ordinary and usual course of its business and
consistent with past practices.
(f) Speedcom has not authorized, declared, paid or effected any dividend,
payment or other distribution on or with respect to any share of its
capital stock.
(g) Speedcom has not mortgaged, pledged or otherwise encumbered or subjected
to lien any of its assets or properties, tangible or intangible, except
for liens for current taxes which are not yet due and payable and other
liens arising out of the ordinary and usual course of business.
(h) Speedcom has not entered into any material transaction or contract other
than in the ordinary course of business, nor has Speedcom waived any
right of substantial value or canceled any material debts or claims or
voluntarily suffered any extraordinary losses.
(i) Speedcom has not effected any amendment or supplement to, or extension
of, any employee profit-sharing, stock option, stock purchase, pension,
bonus, incentive, retirement, medical reimbursement, life insurance,
deferred compensation or any other employee benefit plan or arrangement.
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(j) Speedcom has not made any change in accounting methods or principles
used for financial reporting purposes, except as required by a change in
GAAP and concurred with by its independent public accountants.
Section 4.10. CONTRACTS. SCHEDULE 4.10 constitutes a full and complete
list of each material contract or agreement to which Speedcom is a party, or by
which Speedcom is bound in any respect. All material contracts or agreements to
which Speedcom is a party or by which Speedcom is bound (whether or not
disclosed on Schedule 4.10) (the "SPEEDCOM CONTRACTS") are in full force and
effect, and Speedcom is not in default thereunder nor has any event occurred
which with the passage of time or giving notice or both would result in Speedcom
being in default under any of the terms thereof.
Section 4.11. NO DEFAULT. Speedcom has in all material respects performed,
or is now performing, the obligations of, and is not in default (and would not
by the lapse of time and/or the giving of notice be in default), nor has it
received notice of default or notice of termination in respect of any Speedcom
Contract. To the knowledge of Speedcom, no party other than Speedcom who is a
party to or bound by any of the Speedcom Contracts is in default thereof, where
such default could have a Material Adverse Effect, individually or in the
aggregate. Each of the Speedcom Contracts is a legal, binding and enforceable
obligation of or against Speedcom. To the knowledge of Speedcom, there are no
facts or circumstances which make a default under, or termination or suspension
of, any of the Speedcom Contracts likely to occur subsequent to the date hereof
nor has any third party raised any claim, dispute or controversy with respect to
such Speedcom Contracts.
Section 4.12. ENVIRONMENTAL. To the knowledge of Speedcom:
(a) No Hazardous Materials have been used, stored or otherwise handled in
any manner by Speedcom on, under, in, from or affecting any of the real
property leased by Speedcom (the "SPEEDCOM PROPERTY"), other than
cleaning solvents and similar materials used by Speedcom in DE MINIMIS
amounts in the ordinary course of business and in compliance with
Environmental Laws (as defined below). No prior or current owner or
occupant of the Speedcom Property has used Hazardous Materials on, under,
in, from or affecting the Speedcom Property.
(b) No Hazardous Materials have at any time been released into, stored or
deposited by Speedcom within or on the Speedcom Property, by Speedcom
into any water systems on or below the surface of the Speedcom Property,
or by Speedcom directly or indirectly onto any property or water system
adjoining, adjacent to or abutting the Speedcom Property, or have been
used by Speedcom in the construction of any improvements located on or
about the Speedcom Property.
(c) Speedcom has not received any notice of any violations (nor is it aware
of any existing violations) of any applicable laws governing the use,
storage, treatment, transportation, manufacture, refinement, handling,
production or disposal of Hazardous Materials on, under, in, from or
affecting the Speedcom Property and there are not any legal actions or
proceedings commenced or threatened by any person with respect to any
such violations.
(d) The Speedcom Property is currently being, and has in the past been,
operated by Speedcom in accordance with, and in compliance with, all
applicable Environmental Laws.
Section 4.13. REAL PROPERTY. SCHEDULE 4.13 constitutes a full and complete
list of all real property leased, or under option to be leased, by Speedcom.
Except as set forth on Schedule 4.13, Speedcom does not own any real property or
any option to purchase any real property. All real property leased by Speedcom
is held under valid and existing leases. Speedcom does not lease any real or
personal property as lessor. Speedcom enjoys peaceful and undisturbed possession
of all property described on Schedule 4.13.
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Section 4.14. GUARANTIES. Except as set forth in SCHEDULE 4.14, none of
the obligations or liabilities of Speedcom is guaranteed by any person, firm,
association or corporation. SCHEDULE 4.14 contains a correct and complete list
of all guarantees by, or other contingent obligations of Speedcom, showing the
parties and amounts involved and the expiration dates thereof.
Section 4.15. INSURANCE. Speedcom has in full force and effect, with all
premiums due thereon paid, the policies of insurance set forth therein, all
insurance necessary to operate its business. No notice of cancellation or
termination has been received with respect to any such insurance policy
described in this Section.
Section 4.16. TAX MATTERS. All tax returns required by law to be filed up
to and including the Effective Time, and all taxes required to have been paid by
Speedcom, the non-filing or non-payment of which could result in a lien or
charge on or encumbrance against any assets of Speedcom, have been or prior to
the Effective Time will be duly filed or paid other than taxes not yet due and
payable. All tax returns filed by Speedcom have been true and correct in all
material respects. There are no actions or other proceedings of any kind pending
or threatened against Speedcom with respect to any tax matters, and no
circumstances exist which may result in the imposition of additional tax
liabilities. To Speedcom's knowledge, there exists no fact or circumstance which
is reasonably likely to cause the Merger to fail to qualify as a
"reorganization" within the meaning of Section 368(a) of the Code. Speedcom has
not taken or agreed to take any action that would prevent the Merger from
qualifying as a "reorganization" within the meaning of Section 368(a) of the
Code. The aggregate amount of liabilities of Speedcom (determined under the
principles of Section 357(d) of the Code) does not exceed the aggregate adjusted
tax basis of the assets of Speedcom.
Section 4.17. CERTAIN ADVANCES. Except as set forth on SCHEDULE 4.17,
there are no receivables of Speedcom owing by directors, officers, employees,
consultants or stockholders of Speedcom, or owing by any affiliate of any
director or officer of Speedcom, other than advances in the ordinary and usual
course of business to officers, employees or consultants for reimbursable
business expenses and advances to employees for reimbursable personal expenses
not exceeding $10,000 in the aggregate.
Section 4.18. LICENSES AND PERMITS. Speedcom has obtained, and is in
compliance in all material respects with, and SCHEDULE 4.18 contains a correct
and complete list of, all necessary licenses, permits, consents, approvals,
orders, certificates, authorizations, declarations and filings required by all
federal, state, local and other governmental, self-regulatory or regulatory
bodies and all courts and other tribunals for the conduct of the business and
operations of Speedcom as now conducted, and there are no proceedings pending
or, to the knowledge of Speedcom, threatened which may result in the revocation,
cancellation or suspension, or any adverse modification, of any such licenses,
permits, etc., nor are there any facts which may give rise to such proceedings.
Section 4.19. PROPRIETARY RIGHTS. SCHEDULE 4.19 contains a full and
complete list of all material trademarks, trade names, service marks, copyrights
and patents, or applications therefor, or other intellectual property owned or
used by Speedcom ("SPEEDCOM PROPRIETARY RIGHTS"). The operations of Speedcom do
not now conflict with or infringe, and have not in the past conflicted with or
infringed, any Speedcom Proprietary Rights owned, possessed or used by any third
party. There are no third parties whose operations conflict with or infringe,
nor has anyone asserted that such operations conflict with or infringe, any
Speedcom Proprietary Rights.
Section 4.20. LABOR. There are no labor controversies pending or
threatened against Speedcom.
Section 4.21. COMPLIANCE WITH LAW. The business of Speedcom has been and
is currently being conducted in all material respects in accordance with all
applicable laws, rules, regulations, orders and other requirements of
governmental and self-regulatory authorities, including, without limitation,
ERISA, all Environmental Laws, all laws, regulations and orders relating to
antitrust or trade regulation, employment practices and procedures, the health
and safety of employees and consumer
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credit. Speedcom has not received any notice of alleged violations of any laws,
rules, regulations, orders or other requirements of governmental or
self-regulatory authorities.
Section 4.22. LITIGATION. Except as set forth on SCHEDULE 4.22, there is
no claim, dispute, action, proceeding, suit or appeal or investigation or
inquiry, at law or in equity, involving Speedcom before any court, agency,
authority, self-regulatory authority, arbitration panel or other tribunal and,
to the knowledge of Speedcom, none have been threatened or are in prospect
against Speedcom. Speedcom is not subject to any order, writ, injunction or
decree of any court, agency, authority, arbitration panel or other tribunal.
Section 4.23. CONSENTS. SCHEDULE 4.23 contains a full and complete list of
all necessary permits, authorizations, consents, waivers and approvals of third
parties not set forth on Schedule 4.23 and required to be obtained by Speedcom
in connection with the execution and delivery of this Agreement by Speedcom and
the performance of its obligations hereunder.
Section 4.24. SEC REPORTS. Speedcom is not and has not been required to
file any reports pursuant to the Securities Exchange Act.
Section 4.25. VOTE REQUIRED. The affirmative vote of the holders of a
majority of the outstanding shares of Speedcom common stock is the only vote of
the holders of any class or series of Speedcom's capital stock necessary to
approve the Merger and the other transactions contemplated hereby.
Section 4.26. UNDERLYING DOCUMENTS. All underlying documents listed or
described in the Speedcom Disclosure Schedule have been furnished to LTI or its
representatives, except as expressly noted in the Speedcom Disclosure Schedule.
All such documents furnished to LTI or its representatives are true and complete
copies, and there are no amendments or modifications to such documents, except
as expressly noted in the Speedcom Disclosure Schedule. The minute books of
Speedcom contain full, complete and accurate records of all meetings and other
corporate actions taken by the directors and stockholders of Speedcom.
Section 4.27. BROKERS OR FINDERS. Except as set forth on SCHEDULE 4.27,
Speedcom has not and will not incur, directly or indirectly, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement or the transactions contemplated hereby.
Section 4.28. EMPLOYEE BENEFITS.
(a) Speedcom has operated materially in accordance with its terms and with
applicable law (i) each "employee pension benefit plan" (within the
meaning of Section 3(2) of ERISA of which Speedcom is the plan sponsor
(within the meaning of Section 3(16)(A) of ERISA) and which provides
benefits to employees of Speedcom and (ii) each "employee welfare benefit
plan" (within the meaning of Section 3(1) of ERISA) of which Speedcom is
the plan sponsor and which provides benefits to employees of Speedcom.
(b) Speedcom is not and has not been a contributing employer to any
multiemployer pension plan (within the meaning of Section 3(37) of
ERISA); Speedcom is not under any obligation to make contributions to any
multiemployer pension plan; and Speedcom has no actual or potential
liability under Section 4201 of ERISA for any complete or partial
withdrawal from any multiemployer pension plan relating to employees or
officers of LTI.
Section 4.29. DISCLOSURE OF MATERIAL FACTS. Speedcom has disclosed to LTI
all material facts relating to the condition (financial or otherwise), business,
net worth, assets, properties or operations of Speedcom. The representations and
warranties contained in this Article IV and in the Speedcom Disclosure Schedule,
and any other documents or information furnished to LTI by or on behalf of
Speedcom do not contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements contained herein or therein
not misleading.
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ARTICLE V
COVENANTS
Section 5.1. NEGATIVE COVENANTS. Except as contemplated by this Agreement,
from the date of this Agreement through the Closing Date, (a) LTI shall not,
without the prior written consent of Speedcom, take or cause to be taken any
action which would cause the representations and warranties set forth in
Article III, as updated from time to time pursuant to Section 5.5, to become
untrue, and (b) Speedcom shall not, without the prior written consent of LTI,
take or cause to be taken any action which would cause the representations and
warranties set forth in Article IV, as updated from time to time pursuant to
Section 5.5, to become untrue. In addition, the Surviving Corporation shall not,
for a period of one year after the Effective Time, without the approval of the
director appointed by LTI, issue any options or other rights to acquire any of
its capital stock for an exercise price less than the fair market value of such
capital stock.
Section 5.2. PROXY STATEMENT.
(a) As promptly as practicable after the execution of this Agreement, LTI
shall prepare and file with the SEC a proxy statement, which shall be in
form and substance reasonably satisfactory to Speedcom (the "PROXY
STATEMENT"). LTI shall cause the Proxy Statement to comply in all
material respects with the Securities Act, the Exchange Act and the
regulations thereunder. LTI shall use its commercially reasonable best
efforts to have the Proxy Statement receive prompt clearance from the SEC
and shall take all actions required under any applicable federal or state
securities laws or rules of self-regulatory organization in connection
with the Merger.
(b) As promptly as practicable after the Proxy Statement has been cleared by
the SEC, LTI shall cause the Proxy Statement to be mailed to its
stockholders, together with a proxy card in form and substance
satisfactory to Speedcom (including the recommendation of LTI, through
its Board of Directors, that its stockholders vote in favor of the
adoption of this Agreement and the transactions contemplated hereby
(subject to Section 5.12)). LTI shall notify Speedcom immediately upon
becoming aware of any event or circumstance that should be described in
an amendment to the Proxy Statement. LTI shall notify Speedcom
immediately after the receipt by LTI of any written or oral comments by
the SEC on, or of any written or oral request by the SEC for amendments
to, the Proxy Statement, and LTI shall promptly supply Speedcom with
copies of all correspondence between it or any of its representatives and
the SEC with respect to any of the foregoing.
(c) Speedcom shall supply LTI with all information in its possession
reasonably necessary for LTI to meet its obligations under this
Section 5.2, and shall otherwise reasonably cooperate with the actions
contemplated hereby. If at any time prior to the Effective Time any
information relating to LTI or Speedcom, or any of their respective
affiliates, officers or directors, should be discovered by LTI or
Speedcom which should be set forth in an amendment or supplement to the
Proxy Statement so that it would not include any misstatement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, the party which discovers such information shall
promptly notify the other party hereto and an appropriate amendment or
supplement describing such information shall be promptly filed by LTI
with the SEC and, to the extent required by law, disseminated to the
stockholders of LTI.
Section 5.3. REGISTRATION OF LTI COMMON STOCK AND SPEEDCOM OPTIONS AND
WARRANTS.
(a) As promptly as practicable after the execution of this Agreement, LTI
shall prepare and file with the SEC a Form S-4 Registration Statement,
which shall be in form and substance reasonably satisfactory to Speedcom
(the "S-4 REGISTRATION STATEMENT"). The S-4 Registration
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Statement shall register for resale, without restriction (other than
pursuant to Rule 145 promulgated under the Securities Act), all shares of
LTI Common Stock issued to former stockholders of Speedcom at the Merger
and all shares of LTI Common Stock issuable to former optionholders of
Speedcom Options upon exercise of the Speedcom Options and former
warrantholders of Speedcom Warrants upon exercise of the Speedcom
Warrants.
(b) LTI shall cause the S-4 Registration Statement to comply in all material
respects with the Securities Act, the Exchange Act and the regulations
thereunder. LTI shall use its commercially reasonable best efforts to
have the S-4 Registration Statement declared effective by the SEC and
shall take all actions required under any applicable federal or state
securities laws or rules of self-regulatory organizations in connection
with the registering of shares of LTI Common Stock under the S-4
Registration Statement.
(c) LTI and Speedcom each shall use all reasonable best efforts to cause to
be delivered to the other party and such other party's directors a letter
of its independent auditors, dated the date on which the S-4 Registration
Statement shall become effective, and addressed to the other party and
such other party's directors, in form and substance customary for
"comfort" letters delivered by independent public accountants in
connection with registration statements similar to the S-4 Registration
Statement.
(d) Speedcom shall supply LTI with all information in its possession
reasonably necessary for LTI to meet its obligations under this
Section 5.3, and shall otherwise reasonably cooperate with the actions
contemplated hereby. If at any time prior to the Effective Time any
information relating to LTI or Speedcom, or any of their respective
affiliates, officers or directors, should be discovered by LTI or
Speedcom which should be set forth in an amendment or supplement to the
S-4 Registration Statement so that it would not include any misstatement
of a material fact or omit to state any material fact necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading, the party which discovers such information
shall promptly notify the other party hereto and an appropriate amendment
or supplement describing such information shall be promptly filed by LTI
with the SEC and, to the extent required by law, disseminated to the
stockholders of LTI and Speedcom.
Section 5.4. STOCKHOLDER APPROVAL.
(a) LTI shall take all action necessary in connection with applicable law to
convene a meeting of the stockholders of LTI as promptly as practicable
after the date hereof and to consider and vote upon this Agreement and
the transactions contemplated hereby. LTI shall, through its Board of
Directors, recommend that its stockholders vote in favor of the adoption
of this Agreement and the transactions contemplated hereby, subject to
the provisions of Section 5.12.
(b) Speedcom shall take all action necessary in connection with applicable
law to convene a meeting of the stockholders of Speedcom as promptly as
practicable after the date hereof and to consider and vote upon this
Agreement and the transactions contemplated hereby. Speedcom shall,
through its Board of Directors, recommend that its stockholders vote in
favor of the adoption of this Agreement and the transactions contemplated
hereby.
Section 5.5. UPDATING OF THE DISCLOSURE SCHEDULES.
(a) From the date hereof until the Closing Date, LTI shall keep up to date
the LTI Disclosure Schedule and shall promptly notify Speedcom of any
changes or additions or events which may, after the lapse of time, cause
any change or addition in the LTI Disclosure Schedule, other than changes
to the LTI Disclosure Schedule due to the consummations of the
transactions contemplated hereby. This covenant and any notices by LTI
hereunder shall not be deemed in any way to constitute a waiver by
Speedcom of the condition herein which
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provides in part that the representations and warranties of LTI set forth
herein shall be true and correct on the date hereof and on the Closing
Date.
(b) From the date hereof until the Closing Date, Speedcom shall keep up to
date the Speedcom Disclosure Schedule and shall promptly notify LTI of
any changes or additions or events which may, after the lapse of time,
cause any change or addition in the Speedcom Disclosure Schedule, other
than changes to the Speedcom Disclosure Schedule due to the consummations
of the transactions contemplated hereby. This covenant and any notices by
Speedcom hereunder shall not be deemed in any way to constitute a waiver
by LTI of the condition herein which provides in part that the
representations and warranties of Speedcom set forth herein shall be true
and correct on the date hereof and on the Closing Date.
Section 5.6. ACCESS TO INFORMATION.
(a) LTI will afford to the officers, attorneys, accountants and other
representatives of Speedcom full access during reasonable business hours
to all of the assets, properties, books and records of LTI in order to
afford Speedcom such full opportunity of review, examination and
investigation as Speedcom shall desire with respect to the affairs of
LTI, and LTI shall furnish or cause to be furnished to Speedcom such
financial and operating data and other information as to the condition
(financial or otherwise), business, net worth, assets, properties or
operations of LTI as Speedcom may reasonably request. No such review,
examination or investigation by Speedcom shall affect or in any way
diminish the representations, warranties or covenants of LTI hereunder.
(b) Speedcom will afford to the officers, attorneys, accountants and other
representatives of LTI full access during reasonable business hours to
all of the assets, properties, books and records of Speedcom in order to
afford LTI such full opportunity of review, examination and investigation
as LTI shall desire with respect to the affairs of Speedcom, and Speedcom
shall furnish or cause to be furnished to LTI such financial and
operating data and other information as to the condition (financial or
otherwise), business, net worth, assets, properties or operations of
Speedcom as LTI may reasonably request. No such review, examination or
investigation by LTI shall affect or in any way diminish the
representations, warranties or covenants of Speedcom hereunder.
Section 5.7. FULFILLMENT OF CONDITIONS AND COVENANTS. No party will take
any course of action inconsistent with satisfaction of the requirements or
conditions applicable to it set forth in this Agreement. Each party shall
promptly do all such acts and take all such measures as may be appropriate to
enable it to perform as early as possible the obligations herein provided to be
performed by it.
Section 5.8. PRESS RELEASES. No party will issue or authorize to be issued
any press release or similar announcement concerning this Agreement or any of
the transactions contemplated hereby without the prior approval of the other
parties, which approval shall not be unreasonably withheld and shall be given,
following an opportunity to review and revise the scope and content of such
disclosures, in order to allow compliance with the disclosure requirements of
applicable securities laws.
Section 5.9. CONSENTS. Each party shall use its commercially reasonable
best efforts to obtain and to cooperate with each other party in the effort to
obtain, as soon as reasonably practicable, all permits, authorizations,
consents, waivers and approvals from third parties or governmental authorities
necessary to consummate this Agreement and the transactions contemplated hereby.
Each party shall pay its own expenses in connection with fulfilling its
obligations under this Section.
Section 5.10. CERTAIN NOTIFICATIONS. Each party shall promptly notify the
others in writing of the occurrence of any event known to such party which will
or could reasonably be expected to result in
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the failure to satisfy any of the conditions to the obligations of such other
parties specified in this Agreement.
Section 5.11. ANTITRUST MATTERS. LTI and Speedcom shall prepare and file,
and shall in all respects cooperate with each other in the preparation and
filing of, any documents required, if any, in connection with providing
notification to the Federal Trade Commission and the Antitrust Division of the
Department of Justice of the transactions contemplated hereunder, and shall
respond, or cooperate in responding, to any inquiry made by either with respect
to such transactions.
Section 5.12. EXCLUSIVITY.
(a) In recognition of the fact that each party will incur significant
expenditures of time and resources to conduct its due diligence
investigation, except as may be desirable to obtain financing for
operations, (i) neither LTI nor LTI's employees, officers, agents or
other affiliates will provide any information concerning LTI to any other
prospective buyer or enter into any discussions with any third party
concerning the sale or merger, directly or indirectly, of LTI,
(ii) neither Speedcom nor Speedcom's employees, officers, agents or other
affiliates will provide any information concerning Speedcom to any other
prospective buyer or enter into any discussions with any third party
concerning the sale or merger, directly or indirectly, of Speedcom and
(iii) neither the Board of Directors of LTI nor the Board of Directors of
Speedcom shall withdraw or modify, or propose to withdraw or modify, in a
manner adverse to the other party, its approval or recommendation of the
Merger.
(b) Notwithstanding the foregoing, the provisions of Section 5.12(a) shall
not apply if a written proposal has been submitted to LTI or Speedcom by
a third party and the Board of Directors of LTI or Speedcom determines in
its good faith judgment, based as to legal matters on the written advice
of independent legal counsel, that continued compliance with
Section 5.12(a) would result in a significant possibility that the Board
of Directors could breach or violate its fiduciary duties under
applicable law.
(c) In the event either party exercises its rights pursuant to the
immediately preceding subsection and enters into a letter of intent or
definitive agreement to merge or otherwise combine with a third party on
or prior to October 30, 2000, such party hereto shall pay to the other
party, immediately upon the execution of such letter of intent or
definitive agreement, a fee of $100,000.
Section 5.13. INDEMNIFICATION; D&O INSURANCE.
(a) All rights of indemnification now existing in favor of the present or
former directors or officers of LTI and Speedcom, which rights are in
effect as of the date hereof, shall, with respect to matters occurring
prior to the Effective Time, survive the Merger and continue in full
force and effect after the Effective Time.
(b) The Surviving Corporation shall maintain in effect with respect to
matters occurring prior to the Effective Time the policy of directors'
and officer's insurance currently maintained by Speedcom on behalf of its
officers and directors.
(c) The Surviving Corporation shall provide to LTI's current and past
directors and officers, for a period of at least three years after the
Effective Time, liability insurance covering acts or omissions occurring
prior to the Effective Time with respect to those persons who are
currently covered by LTI's directors' and officers' liability insurance
policy on terms with respect to such coverage and amount no less
favorable in any material respect than those of such policy in effect on
the date hereof.
(d) Notwithstanding any other provision of this Agreement to the contrary,
the provisions of this Section 5.13 (i) are intended to be for the
benefit of, and will be enforceable by, each
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indemnified or insured party, his or her heirs, representatives,
successors and assigns, and (ii) are in addition to, and not in
substitution for, any other right of indemnification or contribution such
person may have by contract, law, or otherwise.
Section 5.14. PRESERVATION OF TAX TREATMENT. Each of the LTI and Speedcom
will (a) not take any action, or fail to take any required action, that is
reasonably likely to cause the Merger to fail to qualify as a "reorganization"
within the meaning of Section 368(a) of the Code and (b) use its best efforts
(including the provision of customary representations) to permit counsel to
render the opinions described in Section 6.14 and Section 7.12. Prior to the
Effective Time, neither LTI nor Speedcom shall take or cause to be taken any
action which would cause to be untrue in any material respects (or fail to take
or cause not to be taken any action which would cause to be untrue in any
material respects) any of the representations set forth in certificates
delivered to such counsel. After the Effective Time, the Surviving Corporation
will not take or cause to be taken any action (or fail to take or cause not be
taken any action) that would violate any covenant or undertaking set forth in
such certificates.
Section 5.15. POST-EFFECTIVE AMENDMENT OF REGISTRATION STATEMENT.
(a) As promptly as practicable after the execution of this Agreement, LTI
shall prepare and file with the SEC a post-effective amendment to LTI's
Registration Statement registering LTI's Class A and Class B Warrants,
the LTI common stock issuable in connection with the exercise of such
Warrants and, to the extent required, such other securities issued or
issuable in connection with LTI's initial public offering (the
"POST-EFFECTIVE AMENDMENT"), which shall be in form and substance
reasonably satisfactory to Speedcom, bringing such Registration Statement
current.
(b) LTI shall cause the Post-Effective Amendment to comply in all material
respects with the Securities Act and the regulations thereunder. LTI
shall use its commercially reasonable best efforts to have the
Post-Effective Amendment declared effective by the SEC and shall take all
actions required under any applicable federal or state securities laws or
rules of self-regulatory organizations in connection with the registering
of securities under the Post-Effective Amendment.
(c) LTI and Speedcom each shall use all reasonable best efforts to cause to
be delivered to the other party and such other party's directors a letter
of its independent auditors, dated the date on which the Post-Effective
Amendment shall become effective, and addressed to the other party and
such other party's directors, in form and substance customary for
"comfort" letters delivered by independent public accountants in
connection with registration statements similar to the Post-Effective
Amendment.
(d) Speedcom shall supply LTI with all information in its possession
reasonably necessary for LTI to meet its obligations under this
Section 5.15, and shall otherwise reasonably cooperate with the actions
contemplated hereby. If at any time prior to the Effective Time any
information relating to LTI or Speedcom, or any of their respective
affiliates, officers or directors, should be discovered by LTI or
Speedcom which should be set forth in an amendment or supplement to the
Post-Effective Amendment so that it would not include any misstatement of
a material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, the party which discovers such information shall
promptly notify the other party hereto and an appropriate amendment or
supplement describing such information shall be promptly filed by LTI
with the SEC and, to the extent required by law, disseminated to the
holders of the Class A and Class B Warrants of LTI.
Section 5.16. MAINTENANCE OF CLASS A AND CLASS B WARRANT PROCEEDS. LTI
shall maintain in a separate account and shall not expend any proceeds received
from the date of this Agreement until the Closing Date in connection with the
exercise of any Class A or Class B Warrants.
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<PAGE>
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF SPEEDCOM
The obligations of Speedcom to consummate the transactions contemplated by
this Agreement shall be subject to the following conditions, except as Speedcom
may waive the same in writing.
Section 6.1. PERFORMANCE. LTI shall have performed and complied in all
material respects with all agreements and covenants required by this Agreement
to be performed or satisfied by it on or prior to the Closing Date.
Section 6.2. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of LTI set forth herein shall be true and correct in all material
respects on the date hereof and on the Closing Date, as if made again at and as
of such time, subject to any transactions which are contemplated or permitted by
this Agreement, except for any inaccuracies which, taken as a whole, could not
have a Material Adverse Effect.
Section 6.3 MATERIAL ADVERSE CHANGE. From the date of this Agreement to
the Closing Date, there shall have been no material adverse change in the
condition (financial or otherwise), business, net worth, assets, properties, or
operations of LTI, and there shall not have been any occurrence, circumstance or
combination thereof, including litigation pending or threatened, which might
reasonably result in any such material adverse change before or after the
Closing Date.
Section 6.4 LEGAL OPINION. Piper Marbury Rudnick & Wolfe, as counsel to
LTI, shall, immediately prior to the Closing Date, have delivered to Speedcom
its legal opinion, dated the Closing Date and addressed to Speedcom, in
substantially the form of EXHIBIT 6.4.
Section 6.5 CONSENTS. On or prior to the Closing Date, LTI shall have
obtained all permits, authorizations, consents and approvals referred to,
directly or indirectly, in this Agreement in form and substance satisfactory to
Speedcom and Speedcom shall have received evidence satisfactory to it of the
receipt of such permits, authorizations, consents and approvals.
Section 6.6. STOCKHOLDERS' APPROVAL. On or prior to the Closing Date,
Speedcom shall have obtained the approval of the stockholders of Speedcom to the
transactions contemplated by this Agreement.
Section 6.7. DELIVERY OF CORPORATE RECORDS. LTI shall, on or immediately
prior to the Closing Date, have delivered to Speedcom LTI's (a) original minute
books, and (b) original stock record and transfer books held by LTI's transfer
agent, reflecting as of the Closing Date the name and address of, and the number
of shares of capital stock owned of record by, any person or entity, and all
stock certificates in its possession or control.
Section 6.8. RESIGNATIONS. LTI shall have delivered to Speedcom
resignations, effective on the Closing Date, of each of the employees, directors
and officers of LTI.
Section 6.9. EFFECTIVENESS OF S-4 REGISTRATION STATEMENT AND POST-EFFECTIVE
AMENDMENT. The S-4 Registration Statement and Post-Effective Amendment shall
have been declared effective by the SEC.
Section 6.10. FINANCIAL CONDITIONS. At the Effective Time, the net worth
and total cash of LTI, determined in accordance with GAAP, shall each not be
less than $1.0 million.
Section 6.11. NO LITIGATION. Immediately prior to the Effective Time,
there shall (a) have been no order, decree or ruling issued or any other action
taken by any court of competent jurisdiction or other governmental or
self-regulatory authority, which has become final and nonappealable,
restraining, enjoining or otherwise prohibiting the transactions contemplated
under this Agreement; (b) be no litigation or proceeding pending against LTI or
Speedcom, which, if decided adversely to such party would materially and
adversely affect transactions contemplated by this Agreement. Immediately prior
to the Closing Date, there shall be no governmental or self-regulatory
investigation or inquiry pending
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<PAGE>
or threatened which might lead to or result in any litigation or proceeding of
the nature referred to in the foregoing sentence.
Section 6.12. CLOSING CERTIFICATES. LTI shall have furnished to Speedcom
such certificates to evidence its compliance with the conditions set forth in
this Article as may be reasonably requested by Speedcom.
Section 6.13. TAX OPINION. Speedcom shall have received an opinion of
Foley & Lardner in form and substance reasonably satisfactory to Speedcom, on
the basis of certain facts, representations and assumptions set forth in such
opinion, dated the Effective Time, to the effect that the Merger will be treated
for federal income tax purposes as a reorganization qualifying under the
provisions of Section 368(a) of the Code and that each of Speedcom and LTI will
be a party to the reorganization within the meaning of Section 368(a) of the
Code. In rendering such opinion, such counsel shall be entitled to rely upon
certain representations of officers of Speedcom and LTI.
Section 6.14. OPINION OF FINANCIAL ADVISOR. The Board of Directors of LTI
shall have received the opinion of its financial advisor to the effect that the
Merger is fair from a financial point of view to the holders of LTI Common Stock
and outstanding options and warrants.
Section 6.15. GENERAL RELEASES. At the Effective Time, all directors and
officers of LTI shall deliver general releases to Speedcom, in form and
substance reasonably satisfactory to Speedcom and its counsel, by which each
such director and officer shall release the Surviving Corporation and the
directors, officers, agents and employees of the Surviving Corporation from all
claims prior to the Effective Time; provided, however, that such releases shall
not affect or otherwise limit (i) any rights benefiting such directors or
officers under the certificate of incorporation or bylaws of LTI or the
Surviving Corporation, as in effect as of the Effective Time; (ii) the
provisions of this Agreement that are specifically intended to run to the
benefit of such directors and officers, including, but not limited to,
Section 5.13 of this Agreement; (iii) any right of Michael Noonan pursuant to
the Executive Employment Agreement dated July 26, 1999 between LTI and
Mr. Noonan, including, but not limited to, the right of Mr. Noonan to severance
pay upon termination of his employment as set forth in the Executive Employment
Agreement and (iv) any rights arising under outstanding options to purchase LTI
Common Stock or Class A and Class B Warrants held by such officers and directors
and referenced in the LTI Disclosure Schedule (provided, however, that such
release shall release the Surviving Corporation from any liability relating to
any failure of LTI to maintain an updated registration statement relating to
such options or warrants prior to the Effective Time).
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF LTI
The obligations of LTI to consummate the transactions contemplated by this
Agreement shall be subject to the following conditions, except as LTI may waive
the same in writing.
Section 7.1. PERFORMANCE. Speedcom shall have performed and complied in
all material respects with all agreements and covenants required by this
Agreement to be performed or satisfied by it on or prior to the Closing Date.
Section 7.2. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Speedcom set forth in herein shall be true and correct in all
material respects on the date hereof and on the Closing Date, as if made again
at and as of such time, subject to any transactions which are contemplated or
permitted by this Agreement, except for any inaccuracies which, taken as a
whole, could not have a Material Adverse Effect.
Section 7.3. LEGAL OPINION. Foley & Lardner shall, immediately prior to
the Closing Date, have delivered to LTI an opinion, dated the Closing Date and
addressed to LTI, in substantially the form of EXHIBIT 7.3.
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<PAGE>
Section 7.4. CONSENTS. On or prior to the Closing Date, Speedcom shall
have obtained all permits, authorizations, consents and approvals referred to,
directly or indirectly, in this Agreement in form and substance satisfactory to
LTI and LTI shall have received evidence satisfactory to it of the receipt of
such permits, authorizations, consents and approvals.
Section 7.5. STOCKHOLDERS' APPROVAL. On or prior to the Closing Date, in
accordance with Section 5.4(a), LTI shall have obtained the approval of the
stockholders of LTI to the transactions contemplated by this Agreement.
Section 7.6. NO LITIGATION. Immediately prior to the Closing Date, there
shall (a) have been no order, decree or ruling issued or any other action taken
by any court of competent jurisdiction or other governmental or self-regulatory
authority, which has become final and nonappealable, restraining, enjoining or
otherwise prohibiting the transactions contemplated under this Agreement;
(b) be no litigation or proceeding pending against LTI or Speedcom, which, if
decided adversely to such party would materially and adversely affect
transactions contemplated by this Agreement. Immediately prior to the Closing
Date, there shall be no governmental or self-regulatory investigation or inquiry
pending or threatened which might lead to or result in any litigation or
proceeding of the nature referred to in the foregoing sentence.
Section 7.7. CLOSING CERTIFICATES. Speedcom shall have furnished to LTI
such certificates to evidence its compliance with the conditions set forth in
this Article as may be reasonably requested by LTI.
Section 7.8. MATERIAL ADVERSE CHANGE. From the date of this Agreement to
the Closing Date, there shall have been no material adverse change in the
condition (financial or otherwise), business, net worth, assets, properties, or
operations of Speedcom that would have a Material Adverse Effect on Speedcom,
and there shall not have been any occurrence, circumstance or combination
thereof which would result in any such material adverse change before or after
the Closing Date.
Section 7.9. EFFECTIVENESS OF S-4 REGISTRATION STATEMENT AND POST-EFFECTIVE
AMENDMENT. The S-4 Registration Statement and Post-Effective Amendment shall
have been declared effective by the SEC.
Section 7.10. OPINION OF FINANCIAL ADVISOR. The Board of Directors of LTI
shall have received the opinion of its financial advisor to the effect that the
Merger is fair from a financial point of view to the holders of LTI Common Stock
and outstanding options and warrants.
Section 7.11. TAX OPINION. LTI shall have received an opinion of Piper
Marbury Rudnick & Wolfe, in form and substance reasonably satisfactory to LTI,
on the basis of certain facts, representations and assumptions set forth in such
opinion, dated the Effective Time, to the effect that the Merger will be treated
for federal income tax purposes as a reorganization qualifying under the
provisions of Section 368(a) of the Code and that each of Speedcom and LTI will
be a party to the reorganization within the meaning of Section 368(a) of the
Code. In rendering such opinion, such counsel shall be entitled to rely upon
certain representations of officers of Speedcom and LTI.
ARTICLE VIII
TERMINATION
Section 8.1. TERMINATION. This Agreement may be terminated as follows:
(a) By mutual written consent of LTI and Speedcom.
(b) By Speedcom (i) at any time if any representation and warranty of LTI
contained in this Agreement was incorrect in any material respect
when made or becomes incorrect in any material respect at any time
after the date hereof and prior to the Closing Date and is incapable
of being cured by LTI or is not cured within 15 days of written
notice thereof from Speedcom; (ii) at any time if LTI fails to comply
in any material respect with any
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<PAGE>
provision of Article V binding upon it; (iii) upon written notice to
LTI given on or at any time after October 15, 2000 if all the
conditions precedent set forth in this Agreement to be performed by
LTI have not been performed by that date; or (iv) if Speedcom
provides written notice of termination of this Agreement as
contemplated by Section 5.12.
(c) By LTI (i) at any time if any representation and warranty of Speedcom
contained in this Agreement was incorrect in any material respect
when made or becomes incorrect in any material respect at any time
after the date hereof and prior to the Effective Time, such that a
Material Adverse Effect on Speedcom would result and is incapable of
being cured by Speedcom or is not cured within 15 days of written
notice thereof from LTI; (ii) at any time if Speedcom fails to comply
in any material respect with any provision of Article V binding upon
it; (iii) upon written notice to Speedcom given on or at any time
after October 15, 2000 if all the conditions precedent set forth in
this Agreement to be performed by Speedcom have not been performed by
that date; or (iv) if LTI provides written notice of termination of
this Agreement as contemplated by Section 5.12.
Section 8.2. EFFECT OF TERMINATION. Termination of this Agreement pursuant
to Section 8.1(b) or 8.1(c) shall not in any way terminate, limit or restrict
the rights and remedies of any party against any other party that has violated,
breached or failed to satisfy any of the representations, warranties, covenants,
agreements, conditions or other provisions of this Agreement prior to
termination hereof; provided, however, that all rights and remedies shall be
terminated in the event of a termination of this Agreement as contemplated by
either Section 8.1(b)(iv) or Section 8.1(c)(iv) provided that the terminating
party pays the other the fee required by Section 5.12.
ARTICLE IX
MISCELLANEOUS
Section 9.1. NOTICES. Any notice or other communication required or which
may be given hereunder shall be in writing and either delivered personally to
the addressee, by facsimile to the addressee or mailed, certified or registered
mail, postage prepaid, and shall be deemed given when so delivered personally,
sent by facsimile, or if mailed, two days after the date of mailing as follows:
if to LTI:
LTI Holdings, Inc.
5115 New Peachtree Road
Suite 200
Atlanta, GA 30341
Attention: Michael E. Noonan
Fax: (770) 451-9131
with a copy to:
Piper Marbury Rudnick & Wolfe
1200 Nineteenth St., NW
Washington, D.C. 20036
Attention: Thomas Hanley
Fax: (202) 223-2085
A-31
<PAGE>
if to Speedcom or, after the Effective Time, the Surviving Corporation:
Speedcom Wireless International Corporation
1748 Independence Blvd. D-4
Sarasota, FL 34234
Attention: Jay O. Wright
Fax: (941) 358-6208
with a copy to:
Foley & Lardner
One IBM Plaza
330 N. Wabash Ave.
Chicago, IL 6061
Attention: Edwin D. Mason
Fax: (312) 755-1925
Section 9.2. ENTIRE AGREEMENT. This Agreement (including the Disclosure
Schedule and Exhibits) contains the entire agreement among the parties with
respect to the transactions contemplated hereby and supersedes all prior
agreements, written or oral, with respect thereto.
Section 9.3. WAIVERS AND AMENDMENTS. This Agreement may be amended,
modified, superseded, cancelled, renewed or extended, and the terms and
conditions hereof may be waived, only by a written instrument signed by the
parties or, in the case of a waiver, by the party waiving compliance. No delay
on the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any party
of any right, power or privilege hereunder, nor any single or partial exercise
of any right, power or privilege hereunder, preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder.
Section 9.4. CONFIDENTIALITY. All information which is not public
knowledge disclosed heretofore or hereafter by any party to any other party
(including its attorneys, accountants or other representatives) in connection
with this Agreement (including the existence of this Agreement and the terms
thereof) shall be kept confidential by such other party, and shall not be used
by such other party otherwise than for use as herein contemplated, except to the
extent (a) it is or hereafter becomes public knowledge or becomes lawfully
obtainable from other sources, including a third party who is under no
obligation of confidentiality to the party disclosing such information or to
whom information was released without restriction, or (b) such other party is
compelled to disclose such information by judicial or administrative process or,
in the opinion of its counsel, by other requirements of law, or (c) such duty as
to confidentiality and non-use is waived by such disclosing party.
Section 9.5. SURVIVAL. The representations and warranties of LTI and
Speedcom contained in this Agreement shall terminate as of the Effective Time.
Section 9.6. EXPENSES. Except as otherwise expressly provided herein, each
party shall bear the respective legal, accounting and other costs and expenses
of any nature, relating to or in connection with the consummation of the
transactions contemplated by this Agreement, incurred by each of them, whether
or not this Agreement is consummated or terminated. Notwithstanding the
foregoing, with respect to printing and filing costs incurred by LTI for
documents distributed to stockholders by LTI, Speedcom and LTI shall pay such
costs in the proportion of the number of stockholders of each to the aggregate
number of stockholders of Speedcom and LTI; provided, however, that Speedcom
shall not be required to pay any such costs if LTI exercises its rights pursuant
to Section 5.12(b).
A-32
<PAGE>
Section 9.7. FURTHER ACTIONS. At any time and from time to time, each
party agrees, without further consideration, to take such actions and to execute
and deliver such documents as may be reasonably necessary to effectuate the
purposes of this Agreement.
Section 9.8. GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the internal laws of the State of Delaware.
Section 9.9. NO ASSIGNMENT. This Agreement is not assignable except by
operation of law.
Section 9.10. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 9.11. THE DISCLOSURE SCHEDULE AND EXHIBITS. The Disclosure
Schedule and the Exhibits are a part of this Agreement as if set forth in full
herein.
Section 9.12. HEADINGS. The headings in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
Section 9.13. KNOWLEDGE. For purposes of this Agreement, "knowledge" as of
any date that a representation or warranty is given by a party shall mean the
actual or constructive knowledge of the management of such party, at the level
of vice president or above, and "knows" shall have a correlative meaning.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
SPEEDCOM WIRELESS INTERNATIONAL CORPORATION
By:
-------------------------------------------------
Title
------------------------------------------------
LTI HOLDINGS, INC.
By:
-------------------------------------------------
Title
------------------------------------------------
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<PAGE>
INDEX
<TABLE>
<S> <C>
Agreement................................................... 1
Buyer....................................................... 1
CBCA........................................................ 1
Certificates................................................ 4
Closing..................................................... 2
Closing Date................................................ 2
Dissenting Shares........................................... 4
Effective Time.............................................. 2
employee pension benefit plan............................... 13, 25
Environmental Laws.......................................... 12
ERISA....................................................... 13
Exchange Agent.............................................. 4
FBCA........................................................ 1
Financial Statements........................................ 9
GAAP........................................................ 3
Hazardous Materials......................................... 12
knowledge................................................... 39
knows....................................................... 40
LTI......................................................... 1
LTI Common Stock............................................ 2
LTI Contracts............................................... 11
LTI Disclosure Schedule..................................... 7
Material Adverse Effect..................................... 10
Merger...................................................... 1
Net Cash.................................................... 3
Pension Plans............................................... 13
Plans....................................................... 14
Property.................................................... 12, 22
Proprietary Rights.......................................... 15, 23
S-4 Registration Statement.................................. 27
SEC......................................................... 16
Securities Act.............................................. 16
Securities Exchange Act..................................... 16
Speedcom Contracts.......................................... 21
Speedcom Disclosure Schedule................................ 17
Speedcom Option............................................. 3
Speedcom Warrant............................................ 3
Surviving Corporation....................................... 1
Welfare Plans............................................... 13
</TABLE>
A-35
<PAGE>
APPENDIX B
FORM OF AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
B-1
<PAGE>
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SPEEDCOM WIRELESS CORPORATION
ARTICLE I
The name of the corporation is Speedcom Wireless Corporation.
ARTICLE II
The registered office of the corporation is located at 30 Old Rudnick Lane,
Suite 100, in the City of Dover, in the County of Kent, in the State of
Delaware. The name of its initial registered agent at the address is Lexis
Document Services Inc.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
ARTICLE IV
The total number of shares of capital stock which the corporation is
authorized to issue is forty million (40,000,000) of which thirty million
(30,000,000) shares shall be common stock, $0.001 par value per share ("Common
Stock"), and ten million (10,000,000) shall be preferred stock, $0.001 par value
per share ("Preferred Stock").
A. Common Stock.
1. Each share of Common Stock shall, subject to provisions contained
elsewhere herein, have one vote, and except as provided by
resolutions adopted by the corporation's board of directors providing
for the issuance of any class or series of Preferred Stock, the
exclusive voting power for all purposes shall be vested in the
holders of Common Stock.
2. Subject to any preferential rights of holders of Preferred Stock,
holders of Common Stock shall be entitled to receive their pro rata
share, based upon the number of shares of Common Stock held by them,
of such dividends or other distributions as may be declared by the
board of directors from time to time, and of any distribution, after
the payment or provision for payment of debts and other liabilities
of the corporation, of the assets of the corporation upon its
liquidation, dissolution or winding up, whether voluntary or
involuntary.
B. Preferred Stock.
1. The Preferred Stock may be issued from time to time in one or more
class or series pursuant to a resolution or resolutions providing for
such issue duly adopted by the board of directors (authority to do so
being hereby expressly vested in the board). The board of directors
is further authorized to determine or alter the rights, preferences,
privileges and restrictions granted to or imposed upon any wholly
unissued class or series of Preferred Stock and to fix the number of
shares of any class or series of Preferred Stock and the designation
of any such class or series of Preferred Stock. The board of
directors, within the limits and restrictions stated in any
resolution or resolutions of the board of directors originally fixing
the number of shares constituting any class or series, may increase
or decrease (but not below the number of shares in any such class or
series then
B-2
<PAGE>
outstanding) the number of shares of any class or series subsequent
to the issue of shares of that class or series.
The authority of the board of directors with respect to each such class or
series shall include, without limitation of the foregoing, the right to
determine and fix:
(a) the distinctive designation of such class or series and the
number of shares to constitute such class or series;
(b) the rate at which dividends on the shares of such class or series
shall be declared and paid, or set aside for payment, whether
dividends at the rate so determined shall be preferential and
cumulative or accruing, and whether the shares of such class or
series shall be entitled to any participating or other dividends
in addition to dividends at the rate so determined, and if so, on
what terms;
(c) the right or obligation, if any, of the corporation to redeem
shares of the particular class or series of Preferred Stock and,
if redeemable, the price, terms and manner of such redemption;
(d) the special and relative rights and preferences, if any, and the
amount or amounts per share, which the shares of such class or
series shall be entitled to receive upon any voluntary or
involuntary liquidation, dissolution or winding up of the
corporation;
(e) the terms and conditions, if any, upon which shares of such class
or series shall be convertible into, or exchangeable for, shares
of capital stock of any other class or series, including the
price or prices or the rate or rates of conversion or exchange
and the terms of adjustment, if any;
(f) the obligation, if any, of the corporation to retire, redeem or
purchase shares of such class or series pursuant to a sinking
fund or fund of a similar nature or otherwise, and the terms and
conditions of such obligation;
(g) voting rights, if any, on the issuance of additional shares of
such class or series or any shares of any other class or series
of Preferred Stock;
(h) limitations, if any, on the issuance of additional shares of such
class or series or any shares of any other class or series of
Preferred Stock; and
(i) such other preferences, powers, qualifications, special or
relative rights and privileges thereof as the board of directors
of the corporation, acting in accordance with this certificate of
incorporation, may deem advisable and are not inconsistent with
law and the provisions of this certificate of incorporation.
ARTICLE V
The corporation is to have perpetual existence.
ARTICLE VI
A. Limitation of Liability. To the fullest extent permitted by the General
Corporation Law of the State of Delaware as the same exists or as may
hereafter be amended, a director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director.
B. Indemnification. The corporation shall indemnify to the fullest extent
permitted by law any person made or threatened to be made a party to an
action or proceeding, whether criminal, civil, administrative or
investigative, by reason of the fact that such person or his or her
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<PAGE>
testator or intestate is or was a director, officer or employee of the
corporation, or any predecessor of the corporation, or serves or served
at any other enterprise as a director, officer or employee at the request
of the corporation or any predecessor to the corporation.
C. Amendments. Neither any amendment nor repeal of this Article nor the
adoption of any provision of the corporation's certificate of
incorporation inconsistent with this Article, shall eliminate or reduce
the effect of this Article, in respect of any matter occurring, or any
action or proceeding accruing or arising or that, but for this Article,
would accrue or arise, prior to such amendment, repeal or adoption of an
inconsistent provision.
ARTICLE VII
The corporation reserves the right to amend, alter, change or repeal any
provision contained in this certificate of incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon the stockholders
herein are granted subject to this right.
ARTICLE VIII
A. Number of Directors. The number of directors which constitutes the whole
board of directors of the corporation shall be designated in the bylaws
of the corporation.
B. Election of Directors. Election of directors need not be by written
ballot unless bylaws of the corporation shall so provide.
C. Classes of Directors. The directors shall be divided into three classes,
as equal in number as possible, with the term of office of the first
class to expire at the annual meeting of stockholders to be held in 2001,
the term of office of the second class to expire at the annual meeting of
stockholders to be held in 2002, and the term of office of the third
class to expire at the annual meeting of stockholders to be held in 2003,
with each director to hold office until his successor shall have been
duly elected and qualified. At each annual meeting of stockholders
following such initial classification, directors elected to succeed those
directors whose terms expire shall be elected for a term of office to
expire at the third succeeding annual meeting of stockholders after their
election with each director to hold office until his successor shall have
been duly elected and qualified.
ARTICLE IX
In furtherance and not in limitation of the powers conferred by statute, the
board of directors is expressly authorized to make, alter, amend or repeal the
bylaws of the corporation without the assent or vote of the stockholders. The
stockholders shall not have the right to make, alter, amend or repeal the bylaws
of the corporation.
ARTICLE X
No action shall be taken by the stockholders of the corporation except at an
annual or special meeting of the stockholders called in accordance with the
bylaws and no action shall be taken by the stockholders by written consent.
ARTICLE XI
Meetings of stockholders may be held within or without the State of
Delaware, as the bylaws may provide. The books of the corporation may be kept,
subject to any provision contained in the statutes, outside of the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the bylaws of the corporation.
B-4
<PAGE>
APPENDIX C
OPINION OF MARSHALL & STEVENS INCORPORATED
C-1
<PAGE>
August 4, 2000
Board of Directors
LTI Holdings, Inc.
5115 New Peachtree Road
Suite 200
Atlanta, GA 30341
Gentlemen:
We have been asked to render an opinion (the "Opinion") with respect to the
fairness, from a financial point of view, to the shareholders (the
"Shareholders") of LTI Holdings, Inc. (LTI or the "Company") of the proposed
merger of the Company and Speedcom Wireless International Corporation
(Speedcom), with LTI being the surviving corporation, pursuant to the Agreement
and Plan of Merger dated August 4, 2000 by and between LTI Holdings, Inc. and
Speedcom Wireless International Corporation.
The agreement calls for the reverse stock split of LTI at 4.26 shares to 1.
The Speedcom shareholders will then receive 1 share of LTI for each share of
Speedcom. As consideration for the merger the current LTI shareholders will
receive between 6% and 8% of the new LTI, to be renamed Speedcom Wireless
Corporation.
In the course of our analyses for rendering this opinion, we have:
1. Reviewed the Agreement and Plan of Merger dated August 4, 2000;
2. Reviewed LTI's (and it predecessor company Laminating
Technologies Inc.) annual reports to shareholders and Annual Reports on
Form 10-KSB for the fiscal years ended March 31, 1997, 1998, 1999 and
2000 and its internal financial statements for June 30, 2000;
3. Reviewed information concerning the effort to market the company;
4. Reviewed the historical prices and trading volume of the common shares
of the Company;
5. Reviewed certain operating and financial information, including
financial projections, provided to us by Speedcom's management relating
to Speedcom's business plan;
6. Met with certain members of Speedcom's senior management to discuss
Speedcom's history, financial performance and future prospects;
7. Performed valuation tests and analysis of the proposed combined company;
8. Conducted such other studies, analyses, inquiries and investigations as
we deemed appropriate.
In the course of our review, we have relied upon and assumed the accuracy of
the financial and other information provided to us. We do not assume any
responsibility for the information or projections provided to us. We have relied
upon the assurances of the management of the "Company" that they are unaware of
any facts that would make the information provided to us incomplete or
misleading. Our opinion is necessarily based on economic, market and other
conditions, and the information made available to us as of the date hereof. This
opinion does not address the "Company's" underlying decision to effect the
merger.
We have based our conclusion on the comparison of the expected value of the
LTI shareholder's stake in the combined company compared to the standalone value
of LTI, including the future prospects of each alternative.
C-2
<PAGE>
It is understood that this letter is intended solely for the benefit and use
of the Board of Directors of LTI Holdings, Inc. and is subject to the attached
Assumptions and Limiting Conditions.
Based on the above referenced reviews and analyses, it is our opinion that
the merger is fair, from a financial point of view, to the shareholders of LTI
Holdings, Inc.
We are independent of the management of the "Company" and have no current or
anticipated financial interest in either the "Company" or "Speedcom." Our
compensation is not contingent on the results of our analysis.
Very truly yours,
Marshall & Stevens Incorporated
C-3
<PAGE>
ASSUMPTIONS AND LIMITING CONDITIONS
DATE OF OPINION
We assume no responsibility for economic or physical factors occurring
subsequent to the date of value which may affect the opinions reported.
NON-APPRAISAL EXPERTISE
No opinion is intended to be expressed for matters which require legal or
specialized expertise, investigation, or knowledge, beyond that customarily
employed by us.
INFORMATION AND DATA
Information supplied by others that was considered in this analysis is from
sources believed to be reliable, and no further responsibility is assumed for
its accuracy. We reserve the right to make such adjustments to the opinion
herein reported based upon consideration of additional or more reliable data
that may become available subsequent to the issuance of this report.
MANAGEMENT
The opinions expressed herein assume the continuation of prudent management
policies over whatever period of time is deemed reasonable and necessary to
maintain the character and integrity of the subject business enterprise.
PURPOSE
All opinions are presented as Marshall & Stevens Incorporated's considered
opinion based on the facts and data obtained during the course of the
investigation. This opinion has been prepared for the sole purpose stated herein
and shall not be used for any other purpose.
UNEXPECTED CONDITIONS
We assume there are no hidden or unexpected conditions associated with the
subject property that might adversely affect our opinion. Further, we assume no
responsibility for changes in market conditions.
FEE
The fee established for the formulation and reporting of these conditions
has not been contingent upon the results of our analysis.
FUTURE EVENTS
The reader is advised that this opinion is heavily dependent upon future
events with respect to industry performance, economic conditions, and the
ability or lack there of for certain product lines and business divisions to
meet certain performance levels. The operating projections are deemed to be
reasonable and valid at the date of this appraisal; however, there is no
assurance or implied guarantee that the assumed facts and circumstances will
actually occur.
C-4
<PAGE>
APPENDIX D
SECTION 262 OF DELAWARE GENERAL CORPORATION LAW
D-1
<PAGE>
(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 Section 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 Section 251 (other than a merger effected
pursuant to Section 251(g) of this title), Section 252, Section 254,
Section 257, Section 258, Section 263, or Section 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 Section 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 SectionSection251, 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 Section 253 of this title is not
owned by the parent corporation immediately
D-2
<PAGE>
prior to the merger, appraisal rights shall be available for the
shares of the subsidiary Delaware corporation.
(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 Section228 or
Section 253 of this title, each constituent corporation, either
before the effective date of the merger or consolidation or within
ten 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; provided that, if the
notice is given on or after the effective date of the merger or
consolidation, such notice shall be given by the surviving or
resulting corporation to all such holders of any class or series of
stock of a constituent corporation that are entitled to appraisal
rights. 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 constituent
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 constituent 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
D-3
<PAGE>
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 constituent 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
entitled to appraisal rights, may file a petition in the Court of
Chancery demanding a determination of the value of the stock of all
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.
D-4
<PAGE>
(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, 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.
D-5
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware general corporation law ("Section 145") permits
indemnification of directors, officers, agents and controlling persons of a
corporation under certain conditions and subject to certain limitations. Our
certificate of incorporation and bylaws include provisions to require us to
indemnify our directors and officers to the fullest extent permitted by
Section 145, including circumstances in which indemnification is otherwise
discretionary. Section 145 also empowers us to purchase and maintain insurance
that protects our officers, directors, employees and agents against any
liabilities incurred in connection with their service in such positions. We have
also entered into separate indemnification agreements with our directors and
executive officers.
At present, there is no pending litigation or proceeding involving any of
our directors or officers as to which indemnification is being sought nor are we
aware of any threatened litigation that may result in claims for indemnification
by any officer or director.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.1(1) Asset Purchase Agreement between Packaging Atlanta
Corporation and Laminating Technologies Inc. dated April 26,
1999
*2.2 Agreement and Plan of Merger by and between Speedcom
Wireless International Corporation and LTI Holdings, Inc.,
dated as of August 4, 2000 (included as Appendix A to the
proxy statement/prospectus filed as part of this
Registration Statement and incorporated herein by reference)
3.1(2) Amended and Restated Certificate of Incorporation of LTI
Holdings, Inc.
3.2(2) Amended and Restated Bylaws of LTI Holdings, Inc.
*3.3 Form of Amended and Restated Certificate of Incorporation,
to be effective upon completion of the Merger (included as
Appendix B to the proxy statement/ prospectus filed as part
of this Registration Statement and incorporated herein by
reference)
4.1(2) Form of Bridge Note
4.2(2) Form of Warrant Agreement
4.3(2) Form of Underwriter's Unit Purchase Option
*5.1 Opinion of Piper Marbury Rudnick & Wolfe LLP
8.1 Opinion of Piper Marbury Rudnick & Wolfe LLP as to certain
tax matters
8.2 Opinion of Foley & Lardner as to certain tax matters
10.1(3) Employment Agreement between the registrant and Michael E.
Noonan
10.2(3) Registration Rights Agreement between the registrant and
Michael E. Noonan
10.3(2) Escrow Agreement between the registrant, American Stock
Transfer & Trust Company and certain security holders of the
registrant
10.3A(3) Amendment to Escrow Agreement between the registrant,
American Stock Transfer & Trust Company and certain security
holders of the registrant
10.4(2) Form of Debt Conversion Agreement between the registrant and
the Conversion Investors
10.5(2) Memorandum of Understanding dated August 26, 1994, between
the Registrant and TMR, as amended
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.6(2) Outsourcing Agreement dated September 1, 1994, between the
registrant and TMR
10.7(2) Amended and Restated 1996 Stock Option Plan
10.8(2) Form of Indemnification Agreement
*16.1 Letter re: Change in certifying accountant
*23.1 Consent of Piper Marbury Rudnick & Wolfe LLP (included in
Exhibits 5.1 and 8.1)
23.2 Consent of Foley & Lardner (included in Exhibit 8.2)
23.3 Consent of Grant Thornton, LLP
23.4 Consent of Ernst & Young LLP
*23.5 Consent of Marshall & Stevens Incorporated
*24.1 Power of Attorney (included on Signature Page)
*99.1 Opinion of Marshall & Stevens Incorporated (included as
Appendix C to the proxy statement/prospectus filed as part
of this Registration Statement and incorporated herein by
reference)
*99.2 Proxy Card for LTI Holdings Special Meeting of Stockholders
</TABLE>
------------------------
* Previously filed.
(1) Incorporated by reference to the registrant's Definitive Proxy Statement
dated May 27, 1999.
(2) Incorporated by reference to the registrant's Registration Statement on Form
SB-2 (File No. 333-6711) filed with the SEC on June 24, 1996.
(3) Incorporated by reference to Amendment No. 1 to the registrant's
Registration Statement on Form SB-2 (File No. 333-6711) filed with the SEC
on July 31, 1996.
(B) FINANCIAL STATEMENT SCHEDULES:
Not applicable.
ITEM 22. UNDERTAKINGS
(1) The undersigned Registrant hereby undertakes as follows: that prior to any
public offering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such offering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
(2) The Registrant undertakes that every prospectus (i) that is filed pursuant
to paragraph (1) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) Insofar as the indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to Directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other
II-2
<PAGE>
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(4) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
(5) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Atlanta,
State of Georgia, on the 25th day of August, 2000.
<TABLE>
<S> <C> <C>
LTI HOLDINGS, INC.
By: /s/ MICHAEL E. NOONAN
-----------------------------------------
Michael E. Noonan
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ MICHAEL E. NOONAN Chairman of the Board, August 25, 2000
------------------------------------------- President and Chief
Michael E. Noonan Executive Officer
(Principal Executive
Officer)
* Chief Financial Officer August 25, 2000
------------------------------------------- (Principal Financial
Donald L. Aldridge Officer)
* Controller (Principal August 25, 2000
------------------------------------------- Accounting Officer)
Shirley A. Pigg
* Director August 25, 2000
-------------------------------------------
Ronald L. Christensen
* Director August 25, 2000
-------------------------------------------
William J. Warren
</TABLE>
<TABLE>
<C> <C> <S> <C>
*By: /s/ MICHAEL E. NOONAN
------------------------------------
Michael E. Noonan
Attorney-in-fact
</TABLE>
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<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.1(1) Asset Purchase Agreement between Packaging Atlanta
Corporation and Laminating Technologies Inc. dated April 26,
1999
*2.2 Agreement and Plan of Merger by and between Speedcom
Wireless International Corporation and LTI Holdings, Inc.,
dated as of August 4, 2000 (included as Appendix A to the
proxy statement/prospectus filed as part of this
Registration Statement and incorporated herein by reference)
3.1(2) Amended and Restated Certificate of Incorporation of LTI
Holdings, Inc.
3.2(2) Amended and Restated Bylaws of LTI Holdings, Inc.
*3.3 Form of Amended and Restated Certificate of Incorporation,
to be effective upon completion of the Merger (included as
Appendix B to the proxy statement/ prospectus filed as part
of this Registration Statement and incorporated herein by
reference)
4.1(2) Form of Bridge Note
4.2(2) Form of Warrant Agreement
4.3(2) Form of Underwriter's Unit Purchase Option
*5.1 Opinion of Piper Marbury Rudnick & Wolfe LLP
8.1 Opinion of Piper Marbury Rudnick & Wolfe LLP as to certain
tax matters
8.2 Opinion of Foley & Lardner as to certain tax matters
10.1(3) Employment Agreement between the registrant and Michael E.
Noonan
10.2(3) Registration Rights Agreement between the registrant and
Michael E. Noonan
10.3(2) Escrow Agreement between the registrant, American Stock
Transfer & Trust Company and certain security holders of the
registrant
10.3A(3) Amendment to Escrow Agreement between the registrant,
American Stock Transfer & Trust Company and certain security
holders of the registrant
10.4(2) Form of Debt Conversion Agreement between the registrant and
the Conversion Investors
10.5(2) Memorandum of Understanding dated August 26, 1994, between
the Registrant and TMR, as amended
10.6(2) Outsourcing Agreement dated September 1, 1994, between the
registrant and TMR
10.7(2) Amended and Restated 1996 Stock Option Plan
10.8(2) Form of Indemnification Agreement
*16.1 Letter re: Change in certifying accountant
*23.1 Consent of Piper Marbury Rudnick & Wolfe LLP (included in
Exhibits 5.1 and 8.1)
23.2 Consent of Foley & Lardner (included in Exhibit 8.2)
23.3 Consent of Grant Thornton, LLP
23.4 Consent of Ernst & Young LLP
*23.5 Consent of Marshall & Stevens Incorporated
*24.1 Power of Attorney (included on Signature Page)
*99.1 Opinion of Marshall & Stevens Incorporated (included as
Appendix C to the proxy statement/prospectus filed as part
of this Registration Statement and incorporated herein by
reference)
*99.2 Proxy Card for LTI Holdings Special Meeting of Stockholders
</TABLE>
------------------------
* Previously filed.
(1) Incorporated by reference to the registrant's Definitive Proxy Statement
dated May 27, 1999.
(2) Incorporated by reference to the registrant's Registration Statement on Form
SB-2 (File No. 333-6711) filed with the SEC on June 24, 1996.
(3) Incorporated by reference to Amendment No. 1 to the registrant's
Registration Statement on Form SB-2 (File No. 333-6711) filed with the SEC
on July 31, 1996.
