SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Under to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported): October 27, 1995
Commission File Number: 1-10013
Larson Davis Incorporated
(Exact Name of Registrant as Specified in its Charter)
Nevada 87-0429944
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1681 West 820 North, Provo, Utah 84601
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code:
(801) 375-0177
(Former name, former address, and formal fiscal year, if changed
since last report)
Page 1 of _____ consecutively numbered pages, including exhibits.
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Larson Davis Incorporated (the "Company") completed the acquisition
of Sensar Corporation, a Utah corporation ("Sensar"), as a wholly-
owned subsidiary on October 27, 1995.
Sensar holds manufacturing and distribution rights to patented
proprietary technology with respect to a time-of-flight mass
spectrometer designed to detect smaller quantities of impurities
in gas vapors than is possible with competing instruments with a
much quicker analysis time. Sensar has a great deal of expertise
in mass spectrometry, which is used for chemical analysis,
chemical separation, isotope identification, and impurity detection.
Sensar has sold a limited number of its newly-developed analyzers
and does not have significant ongoing revenues. Sensar's
instrumentation is currently being used by Micron and Atmel in
connection with the fabrication of semiconductors, and it is
anticipated that future sales of this product will also be in
the semiconductor industry. Sensar also has conducted research
and development with respect to instrumentation with applications
outside the semiconductor industry, although these technologies
have not yet been reduced to marketable products.
The technology was developed by Dr. Milton Lee at Brigham Young
University ("BYU"). BYU holds the patent on the mass spectrometry
technology exclusively licensed to Sensar as well as several
related technologies. The Company also entered into a letter of
understanding with BYU to negotiate the acquisition of rights to
certain of these related technologies from BYU.
Under the terms of the agreement, the Company acquired all of the
issued and outstanding stock of Sensar in exchange for the issuance
of an aggregate 617,722 shares of restricted common stock of the
Company. The number of shares was determined by assigning a
negotiated value of $0.70 per share to the shares of Sensar and
using the average closing price of the Company's stock for the
five trading days preceding the closing of $5.15. In addition,
the Company provided Sensar with an aggregate of $260,000 to permit
the prior redemption of 1,300,000 shares of Sensar common stock.
The Company will also acquire 100,000 shares from a shareholder of
Sensar who exercised his dissenters' rights in connection with the
transaction. The Company will prepay a portion of an obligation
of Sensar to a commercial financial institution and will provide a
guarantee of the balance of such obligation in order to obtain the
release of a personal guarantee with respect to such obligation
given by a shareholder of Sensar. In connection with this
release, 600,000 shares of Sensar will be cancelled. The Company
is using proceeds it received from the exercise of issued and
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outstanding warrants to fund its obligations in connection with
this acquisition.
The Company entered into personal service agreements with Dr.
Milton L. Lee and Dr. Edgar D. Lee in connection with the closing.
In addition, the Company has employed two additional former
employees of Sensar.
Dr. Milton L. Lee is a founder and chairman of the board of Sensar.
He is the H. Tracy Hall Professor of Chemistry at Brigham Young
University, where he has taught since 1976. In addition to
providing services to the Company, Dr. Lee will continue in his
position with BYU. Dr. Lee founded and is the editor of the
Journal of MicroColumn Separations and serves on the editorial
advisory boards of Chromatographia, Journal of Supercritical
Fluids, and Polycyclic Aromatic Compounds. Dr. Lee is the
co-author of two books and over 330 scientific publications.
Dr. Lee has received numerous awards for his contributions in
chemical analysis and is listed as the inventor on nine patents.
Dr. Lee is a member of the American Chemical Society, Sigma Xi, and
the Scientific Organizing Committee of the International Symposia
on Capillary Chromatography. He received his B.A. in Chemistry
from the University of Utah in 1971, and his Ph.D. in Analytical
Chemistry from Indiana University in 1975.
Dr. Edgar D. Lee is a founder and vice-president of research of
Sensar and serves as an adjunct researcher at Brigham Young
University. Dr. Lee will become a full-time employee of the
Company and has extensive experience in a number of areas
of mass spectrometry. Dr. Lee has co-authored 21 published
articles and 45 technical papers in this field. Dr. Lee is also
the co-holder of three patents in his areas of expertise. Prior
to founding Sensar in 1990, Dr. Lee was employed at Midwest
Research Institute from December 1988 through August 1990, first
as a mass spectrometrist and later as a senior mass spectrometrist.
While at Midwest Research Institute, Dr. Lee was responsible for
research, development, and implementation of state-of-the-art mass
spectrometric techniques at its Center for Advanced Instrumentation.
Dr. Lee is a member of the American Chemical Society and the
American Society for Mass Spectrometry. He pursued undergraduate
chemistry studies at Utah State University and was awarded a B.A.
in Chemistry in 1984 from Brigham Young University. Dr. Lee
received a Ph.D. in Analytical Toxicology, with emphasis in
Analytical Chemistry and Instrumentation Engineering in 1988
from Cornell University.
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ITEM 7. EXHIBITS
Sensar had not prepared current audited financial statements in
the ordinary course of its business, making it impracticable to
provide the financial statements and pro forma information
required under this form. Such financial statements and pro
forma information will be prepared and filed not later than
60 days subsequent to the due date for this report.
Exhibit SEC
No. Reference No. Description Location
1 (10) Agreement and Plan of This Filing
Reorganization between
Larson Davis Incorporated
and Sensar Corporation
dated October 27, 1995
SIGNATURES
Pursuant to the requirements of section 13 or 15(d) of the
Securities Exchange of 1934, as amended, the Registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: November 10, 1995 LARSON DAVIS INCORPORATED
By /s/ Dan J. Johnson
Dan J. Johnson, Vice-President
Secretary/Treasurer
(Principal Financial and
Accounting Officer)
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (hereinafter referred to
as this "Agreement"), is entered into this 27th day of October,
1995, by and among LARSON DAVIS INCORPORATED, a Nevada corporation
("Larson Davis"), NEWCO, INC., a Utah corporation and a wholly-
owned subsidiary of Larson Davis ("NewCo"), SENSAR CORPORATION, a
Utah corporation ("Sensar"), MILTON L. LEE, and EDGAR D. LEE,
individuals (Milton L. Lee and Edgar D. Lee are parties to this
Agreement for the limited purposes set forth in paragraphs 2.11
and 6.07), based on the following:
Premises
A. Larson Davis is a publicly-held corporation engaged in the
development, design, and manufacture of precision instrumentation
and related software for, among other things, application in the
environmental sciences industry.
B. Sensar is a privately-held corporation engaged in the
development, design, and manufacture of time of flight mass
spectrometers and other technologies for the separation and
identification of the chemical components of liquids, gases, and
solids.
C. The parties have held discussions concerning the acquisition
of the technologies of Sensar by Larson Davis.
D. Milton L. Lee and Edgar D. Lee are both individuals, officers,
and shareholders of Sensar Corporation. As part of the transaction
contemplated herein, both individuals will enter into agreements
to provide services to Sensar (the "Service Agreements"). A
portion of the shares of Larson Davis stock to be received by
Messrs. Lee in exchange for their stock in Sensar will be placed
into escrow and will be released incrementally; provided that,
they are not in breach of the Service Agreements.
E. NewCo is a newly formed, wholly-owned subsidiary of Larson
Davis.
F. The parties have agreed that NewCo will be merged with and
into Sensar with Sensar surviving as a wholly-owned subsidiary of
Larson Davis, on the terms, and subject to the conditions, set
forth in this Agreement.
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G. The acquisition of Sensar by Larson Davis shall be effected
through the reorganization of Sensar with NewCo, with Sensar as
the surviving entity. In connection with the transaction, the
outstanding shares of common stock of Sensar will be cancelled in
exchange for shares of restricted voting common stock of Larson
Davis and cash with the result that NewCo will be merged with and
into Sensar, all for the purposes of accomplishing a
"reorganization" pursuant to sections 368(a)(1)(A) and 368(a)(2)(D)
of the Code. After consummation of the transaction, Sensar shall
succeed to the business, assets, and liabilities of Sensar and
NewCo and shall thereafter continue as a wholly-owned subsidiary
of Larson Davis.
Agreement
NOW, THEREFORE, based on the stated premises, which are
incorporated herein by this reference, and for and in consideration
of the mutual covenants and agreements hereinafter set forth and
the mutual benefits to the parties to be derived herefrom, it is
hereby agreed as follows:
ARTICLE I
DEFINITIONS
When used herein, the following terms shall have the meanings
indicated:
Section 1.01 Closing. The consummation of the transactions
contemplated by this Agreement.
Section 1.02 Closing Date. The date on which the Closing occurs.
Section 1.03 Code. The Internal Revenue Code of 1986, as amended.
Section 1.04 Effective Date. The date, as defined in the articles
of merger or plan of merger, on which the merger of Sensar with and
into NewCo shall become effective in accordance with the laws of
the state of Utah.
Section 1.05 Exchange Act. The Securities Exchange Act of 1934,
as amended.
Section 1.06 Exchanged Larson Davis Stock. The shares of Larson
Davis Common Stock to be issued and delivered by Larson Davis
pursuant to this Agreement in exchange for the shares of Sensar
Stock issued and outstanding on the Closing Date in order to
consummate the merger of NewCo with and into Sensar.
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Section 1.07 GAAP. Generally accepted accounting principles, as
in effect on the date of determination, applied on a consistent
basis.
Section 1.08 Larson Davis Common Stock. The authorized common
stock, par value $0.001 per share, of Larson Davis.
Section 1.09 SEC. The United States Securities and Exchange
Commission.
Section 1.10 Securities Act. The Securities Act of 1933, as
amended.
Section 1.11 Sensar. Sensar Corporation, a Utah corporation.
Section 1.12 Sensar Stock. The 6,544,656 shares of common stock
of Sensar, par value $0.02 per share, currently issued and
outstanding, which are to be redeemed for cash or converted into
shares of Exchanged Larson Davis Stock pursuant to the terms of
this Agreement.
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF SENSAR
As an inducement to, and to obtain the reliance of Larson
Davis and NewCo, Sensar represents and warrants as follows:
Section 2.01 Organization. Sensar is a corporation duly organized,
validly existing, and in good standing under the laws of the state
of Utah and has the corporate power to own all of its properties
and assets and to carry on its business in all material respects as
it is now being conducted, and there is no jurisdiction in which it
is not so qualified in which the character and location of the
assets owned by it or the nature of the business transacted by it
requires qualification, except where failure to do so would not
have a material adverse effect on the business or properties of
Sensar. Included in the Sensar Schedules (as hereinafter defined)
are complete and correct copies of the articles of incorporation
and bylaws of Sensar as in effect on the date hereof. The
execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement
in accordance with the terms hereof will not, violate any provision
of Sensar's articles of incorporation or bylaws.
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Section 2.02 Approval of Agreement. The board of directors of
Sensar has authorized the execution and delivery of this Agreement
by Sensar and has approved the consummation of the transactions
contemplated hereby. Included in the Sensar Schedules is a signed
copy of a consent duly adopted by the board of directors of Sensar
evidencing such approval. Prior to Closing, Sensar shall obtain
approval of the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by its
shareholders. Sensar will provide a copy of such approval,
certified by the secretary of Sensar, to Larson Davis in
connection with the Closing. Subject to such shareholder
approval, Sensar has full power, authority, and legal right, and
has taken all action required by law, its articles of incorporation,
its bylaws, or otherwise, to execute and deliver this Agreement and
to consummate the transactions contemplated hereby.
Section 2.03 Capitalization. The authorized capitalization of
Sensar consists of 5,000,000 shares of preferred stock, no par
value, of which no shares are currently issued and outstanding, and
10,000,000 shares of common stock, par value $0.02 per share, of
which 6,544,656 shares are currently issued and outstanding. No
shares of Sensar are reserved for issuance on the exercise of
warrants or the conversion of other securities, or the exercise
of any other call, commitment, or right to which Sensar is a party
or to which it is subject. All issued and outstanding shares of
Sensar are validly authorized, legally issued, fully paid, and
nonassessable and not issued in violation of the preemptive or
other right of any person.
Section 2.04 No Subsidiary or Predecessor. Sensar does not own,
beneficially or of record, any equity securities in any other
entity. Since inception, Sensar has not had any predecessor, as
that term is defined under GAAP.
Section 2.05 Financial Information.
(a) Included in the Sensar Schedules are the unaudited balance
sheets of Sensar as of September 22, 1995, and the related
unaudited statements of income and retained earnings for the
period then ended.
(b) Such financial information has not been audited but has been
prepared in accordance with GAAP, except as disclosed in the Sensar
Schedules. Sensar did not have, as of the date of the included
balance sheet, except as and to the extent reflected or reserved
against therein, any liabilities or obligations (absolute or
contingent) which should be reflected in a balance sheet prepared
in accordance with GAAP and all assets reflected therein present
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fairly the assets of Sensar, as if such statements were prepared
in accordance with GAAP. The statement of income presents fairly
the information required to be set forth therein as if such
statements were prepared in accordance with GAAP.
(c) The books and records of Sensar and its accounting practices
are sufficient to permit the preparation of audited financial
statements in accordance with GAAP and regulation S-B adopted
under the Exchange Act. Sensar will maintain and preserve its
books and records in such a fashion so as to permit the preparation
of historical audited financial statements as may be required by
the Exchange Act and the rules and regulations adopted thereunder.
Sensar will cooperate fully and assist in the preparation of any
such financial statements.
(d) Sensar has filed all tax returns and, except as set forth in
the Sensar Schedules, all reports as required by law. All such
returns and reports are accurate and correct in all material
respects. There are no income taxes currently due to the federal
or state governments that have not been paid. Sensar does not
have any liabilities with respect to the payment of any federal,
state, county, local, or other taxes (including any deficiencies,
interest, or penalties) accrued for or applicable to the period
ended on the date of the balance sheet included in the Sensar
Schedules and all such dates and years and periods prior thereto
and for which Sensar may be liable in its own right or as
transferee of the assets of, or as successor to, any other
corporation or other entity, except for taxes accrued but not yet
due and payable. None of such federal income tax returns has been
audited or is currently being audited by the Internal Revenue
Service. Sensar has not elected to be treated as an S corporation
pursuant to section 1362(a) of the Code or a collapsible
corporation pursuant to section 341(f) of the Code, and Sensar has
not made any other election pursuant to the Code (other than
elections which relate solely to methods of accounting,
depreciation, or amortization) which would have a material adverse
effect on Sensar, its financial condition, its business as
presently conducted or as proposed to be conducted, or any of its
properties or material assets. There are no outstanding agreements
or waivers extending the statutory period of limitation applicable
to any tax return of Sensar.
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(e) The books and records, financial and otherwise, of Sensar are
in all material respects complete and correct and have been made
and maintained in accordance with sound business and bookkeeping
practices and, in reasonable detail, accurately and fairly reflect
the transactions involving the assets of Sensar. Sensar has
maintained a system of internal accounting controls sufficient to
provide reasonable assurances that (i) transactions have been and
are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to
permit the preparation of financial statements in conformity with
GAAP or any other criteria applicable to such statements and to
maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals, and
appropriate action is taken with respect to any differences.
(f) Except as set forth in the Sensar Schedules, the balance sheet
included in the Sensar Schedules, or in the notes thereto, Sensar
(i) has good and marketable title to its accounts receivable, and
other debts due or recorded in the records and books of account
of Sensar, free of any security interests or liens and free of
any material defenses, counterclaims, and set-offs, and all of
such accounts receivable, invoices, and debts are actual and bona
fide amounts due Sensar for the total dollar amount thereof shown
on the books of Sensar and resulted from the regular course of its
business; and (ii) the accounts receivable, invoices, and debts
set forth on the Sensar balance sheets arose in the ordinary course
of business and are, net of any reserves shown on the balance
sheet, collectible in full in all material respects on the
continuation of reasonable collection efforts by Sensar or
successor personnel and without resorting to litigation and in
any event not later than 90 days after the date billed.
Section 2.06 Information. The information concerning Sensar set
forth in this Agreement and in the Sensar Schedules is complete
and accurate in all material respects and does not contain any
untrue statement of a material fact or omit to state a material
fact required to make the statements made, in light of the
circumstances under which they were made, not misleading.
Section 2.07 Options or Warrants. There are no existing warrants,
calls, commitments, or other rights of any character relating to
authorized and unissued Sensar Stock or other securities of Sensar.
<PAGE>
Section 2.08 Absence of Certain Changes or Events. Except as set
forth in this Agreement or in the Sensar Schedules, since the date
of the balance sheet included in the Sensar Schedules:
(a) There has not been (i) any material adverse change in the
business, operations, assets, or condition of Sensar, except for
changes occurring as a result of transactions in the normal course
of business of Sensar, or (ii) any damage, destruction, or loss to
Sensar (whether or not covered by insurance) materially and
adversely affecting the business, operations, assets, or condition
of Sensar;
(b) Sensar has not (i) amended its articles of incorporation or
bylaws; (ii) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any assets of any kind
whatsoever to stockholders or purchased or redeemed, or agreed to
purchase or redeem, any of its capital stock; (iii) waived any
rights of value which in the aggregate are extraordinary or
material considering the business of Sensar; (iv) made any
material change in its method of management, operation, or
accounting; (v) entered into any other material transactions,
(vi) made any accrual or arrangement for or payment of bonuses or
special compensation of any kind or any severance or termination
pay to any present or former officer, employee, or shareholder;
(vii) increased the rate of compensation payable or to become
payable by it to any of its officers or directors or any of its
employees whose monthly compensation exceeds $3,000; or (viii)
made any increase in any profit sharing, bonus, deferred
compensation, insurance, pension, retirement, or other employee
benefit plan, payment, or arrangement made to, for, or with its
officers, directors, or employees;
(c) Sensar has not (i) granted or agreed to grant any options,
warrants, or other rights for its stocks, bonds, or other corporate
securities calling for the issuance thereof; (ii) borrowed or agreed
to borrow any funds or incurred, or become subject to, any material
obligation or liability (absolute or contingent) except liabilities
incurred in the ordinary course of business; (iii) paid any material
obligation or liability (absolute or contingent) other than current
liabilities reflected in or shown on the most recent balance sheet
included in the Sensar Schedules and current liabilities incurred
since that date in the ordinary course of business; (iv) sold or
transferred, or agreed to sell or transfer, any of its assets,
properties, or rights (except assets, properties, or rights not used
or useful in its business which, in the aggregate have a value of
less than $10,000 or assets, properties, or rights disposed of in
the ordinary course of business); (v) made or permitted any
amendment or termination of any contract, agreement, or license
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to which it is a party if such amendment or termination is
material, considering the business of Sensar; or (vi) issued,
delivered, or agreed to issue or deliver any stock, bonds, or
other corporate securities including debentures (whether
authorized and unissued or held as treasury stock); and
(d) Sensar has not become subject to any law or regulation which
materially and adversely affects the business, operations,
properties, assets, or condition of Sensar.
Section 2.09 Title to Personal and Real Property.
(a) Except as disclosed in the balance sheet included in the
Sensar Schedules, Sensar has good and marketable title to all its
properties, inventory, know-how, interests in properties, and
assets, which are reflected in the balance sheet included in the
Sensar Schedules or acquired after that date (except those sold
or otherwise disposed of since such date in the ordinary course
of business) or are used in Sensar's business, free and clear of
all material mortgages, security interests, royalties, liens,
pledges, charges, or encumbrances, except (i) statutory liens or
claims for amounts not yet delinquent; (ii) such imperfections of
title and easements as do not and will not materially detract from
or interfere with the present or proposed use of the properties
subject thereto or affected thereby or otherwise materially
impair present business operations on such properties; and
(iii) as described in the Sensar Schedules. All personal property
held by Sensar is in a state of good maintenance and repair,
excepting reasonable wear and tear, and is adequate and suitable
for the purposes for which it is presently being used.
(b) Sensar does not own any real property in fee simple.
(c) Included in the Sensar Schedules is an accurate and complete
list of all personal property owned by Sensar or used in its
business and having a purchase price of over $10,000, together
with a description of any mortgages, financing instruments, or
other encumbrances to the title to such properties. Also included
in the Sensar Schedules are copies of all leases for real and
personal property to which Sensar is a party. Except as disclosed
in the Sensar Schedules, each such lease is in full force and
effect; all rents and additional fees due to date on each such
lease have been paid; in each case, the lessee has been in
peaceable possession since the commencement of the original term
of such lease and is not in default thereunder and no waiver,
indulgence, or postponement of the lessee's obligation thereunder
has been granted by the lessor; and there exists no event of
default or event, occurrence, condition, or act, which, with the
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giving of notice, the lapse of time, or the happening of any
further event or condition, would become a default under such
lease, the occurrence of which would have a material adverse affect
on Sensar. Except as set forth in the Sensar Schedules, Sensar
has not violated any of the terms or conditions under any such
lease in any material respect, and all of the material covenants
to be performed by any other party under any such lease have been
fully performed. The property leased by Sensar is in a state of
good maintenance and repair, except reasonable wear and tear, and
is adequate and suitable for the purposes for which it is presently
being used.
Section 2.10 Intellectual Property. Sensar holds the exclusive
rights to the commercial exploitation of the technology licensed
to Sensar under the License Agreement with Brigham Young
University ("BYU") dated December 4, 1990 (the "Technology
License"). Sensar owns the entire right, title, and interest to
the technology identified in U.S. Patent No. 5428357 and to all
other trade secrets, technology, know-how, tradenames, trademarks,
servicemarks, and other proprietary information owned by, or used
in connection with the business of, Sensar, including all
copyrights, patents, patent applications, registrations, and
applications with respect thereto (collectively the "Intellectual
Property"). Except as set forth in the Sensar Schedules, such
Intellectual Property is not subject to the payment of royalties
or any other obligation to any other person or entity. No employee
or former employee of Sensar owns, directly or indirectly, any
right, title, or interest in or to the Intellectual Property.
Milton L. Lee and Edgar D. Lee hereby waive, assign, and transfer
to Sensar any and all rights or claims they may have to the
Intellectual Property. None of the Intellectual Property is
subject to any material order, decree, judgment, stipulation,
settlement, encumbrance, or attachment. Except as set forth in
the Sensar Schedules, there are no pending or threatened
proceedings, litigation, or other adverse claims to the
Intellectual Property of which Sensar is aware. The Intellectual
Property does not infringe on the copyright, patent, trade secret,
know-how, or other proprietary right of any other person or entity
and comprises all such rights necessary to permit the operation of
the business of Sensar as now being conducted and as proposed to be
conducted.
Section 2.11 Litigation and Proceedings. Except as set forth in
the Sensar Schedules, there are no actions, suits, or proceedings
pending or, to the knowledge of Sensar or its officers and
directors, threatened in writing by or against Sensar or affecting
Sensar or its properties, at law or in equity, before any court or
other governmental agency or instrumentality, domestic or foreign,
<PAGE>
or before any arbitrator of any kind. Sensar is not in material
default with respect to any judgment, order, writ, injunction,
decree, award, rule, or regulation of any court, arbitrator, or
governmental agency or instrumentality.
Section 2.12 Contracts.
(a) Included in the Sensar Schedules is a description of every
contract, agreement, distributorship, franchise, license, or other
agreement, arrangement, or commitment to which Sensar is a party or
by which its assets or properties are bound, which calls for the
payment by Sensar of more than $2,000 a month, or $24,000 in the
aggregate;
(b) Except as described in this Agreement or in the Sensar
Schedules, Sensar is not a party to or bound by, and the properties
of Sensar are not subject to, any contract, agreement, other
commitment or instrument or any charter or other corporate
restriction or any judgment, order, writ, injunction, decree, or
award which materially and adversely affects, or in the future may
(as far as Sensar can now reasonably foresee) materially and
adversely affect, the business operations, properties, assets, or
financial condition of Sensar; and
(c) Except as included or described in the Sensar Schedules or
reflected in the accompanying Sensar balance sheet, Sensar is not
a party to any oral or written (i) contract for the employment of
any officer, director, or employee, whose compensation is greater
than $3,000 per month, which is not terminable on 30 days
(or less) notice; (ii) profit sharing, bonus, deferred
compensation, stock option, severance pay, pension benefit or
retirement plan, agreement, or arrangement covered by title IV
of the Employee Retirement Income Security Act, as amended; (iii)
agreement, contract, or indenture relating to the borrowing of
money in amounts greater than $1,000 in the aggregate; (iv)
guarantee of any obligation for the borrowing of money or
otherwise, excluding endorsements made for collection and other
guarantees of obligations, which, in the aggregate do not exceed
$1,000; (v) consulting or other similar contract with an unexpired
term of more than one year or providing for payments in excess of
$1,000 in the aggregate; (vi) collective bargaining agreement;
(vii) agreement with any present or former officer or director of
Sensar whose compensation was or is greater than $3,000 per month;
or (viii) other contract, agreement, or other commitment, except
normal ongoing monthly operating expenses, involving payments by
it in the future of more than $10,000 in the aggregate per contract.
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Section 2.13 Material Contract Defaults. Except as set forth in
the Sensar Schedules, Sensar is not in default in any material
respect under the terms of any outstanding contract, agreement,
lease, or other commitment which is material to the business,
operations, properties, assets, or financial condition of Sensar,
and there is no event of default or other event which, with notice
or lapse of time or both, would constitute a default in any
material respect under any such contract, agreement, lease, or
other commitment in respect of which Sensar has not taken adequate
steps to prevent such a default from occurring.
Section 2.14 Insurance Claims. Except as set forth in the Sensar
Schedules, during the last three years, Sensar has not received, or
informed its insurance carriers of, any claims for damages, whether
or not covered by insurance, for amounts greater than $5,000.
Sensar is not currently aware of any pending or unasserted claims.
Section 2.15 No Conflict With Other Instruments. The execution of
this Agreement and the consummation of the transactions contemplated
by this Agreement will not result in the breach of any term or
provision of, or constitute an event of default under, any
material indenture, mortgage, deed of trust, or other material
contract, agreement, or instrument to which Sensar is a party or
to which any of its properties or operations are subject, which
would have a material adverse affect on Sensar.
Section 2.16 Governmental Authorizations. Sensar has all licenses,
franchises, permits, and other governmental authorizations that are
legally required to enable it to conduct its business in all
material respects as conducted on the date hereof or as presently
contemplated. Except for compliance with federal and state
securities and corporation laws, as hereinafter provided, no
authorization, approval, consent, or order of, or registration,
declaration, or filing with, any court or other governmental body
is required in connection with the execution and delivery by Sensar
of this Agreement and the consummation by Sensar of the
transactions contemplated hereby.
<PAGE>
Section 2.17 Compliance With Laws and Regulations. Sensar has
complied with all applicable statutes and regulations of any
federal, state, or other governmental entity or agency thereof,
except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets, or
financial condition of Sensar or except to the extent that
noncompliance would not result in the incurrence of any material
liability for Sensar. Included in the Sensar Schedules is a copy
of each letter of inquiry, review, or investigation or other
writing from or to any governmental authority subsequent to
December 31, 1991, evidencing a violation or possible or alleged
violation of any of the foregoing.
Section 2.18 Insurance. Included in the Sensar Schedules is a
complete list of all business liability, casualty, automobile,
extended coverage, and other insurance policies which Sensar
maintains respecting its products, services, business, properties,
and employees, showing for each type of coverage the policy limits,
principal exclusions, deductibles, insurer, and other relevant
information. Such policies are in full force and effect and are
free from any right of termination by the insurance carriers. All
of the insurable properties of Sensar are insured for its benefit
in the amount of their full replacement value (subject to
reasonable deductibles) against losses due to fire and other
casualty, with extended coverage, and other risks customarily
insured against by persons operating similar properties in the
localities where such properties are located and under valid and
enforceable policies issued by insurers of recognized responsibility.
Section 2.19 Transactions With Affiliates. Set forth in
the Sensar Schedules is a description of every contract, agreement,
or arrangement between Sensar and any person who is or has ever
been during the previous three years an officer or director of
Sensar or person owning of record, or known by Sensar to own
beneficially, 5% or more of the issued and outstanding common stock
of Sensar and which is to be performed in whole or in part after
the date hereof. In all of such circumstances, the contract,
agreement, or arrangement was for a bona fide business purpose of
Sensar and the amount paid or received, whether in cash, in
services, or in kind, was, has been during the full term thereof,
and is required to be during the unexpired portion of the term
thereof, no less favorable to Sensar than terms available from
otherwise unrelated parties in arm's length transactions. Except
as disclosed in the Sensar Schedules or otherwise disclosed herein,
no officer or director of Sensar or 5% shareholder of Sensar has,
or has had during the preceding three years, any interest, directly
or indirectly, in any material transaction with Sensar. The Sensar
Schedules also include a description of any commitment by Sensar,
<PAGE>
whether written or oral, to lend any funds to, borrow any money
from, or enter into any other material transaction with, any such
affiliated person.
Section 2.20 Labor Agreements and Actions. Sensar is not bound
by or subject to (and none of its assets or properties is bound
by or subject to) any written or oral, express or implied,
contract, commitment, or arrangement with any labor union, and no
labor union has requested or sought to represent any of the
employees, representatives, or agents of Sensar. There is no
strike or other labor dispute involving Sensar pending or
threatened, which could have a material adverse effect on the
assets, properties, financial condition, operating results, or
business of Sensar or (as such business is presently conducted and
as it is proposed to be conducted), and Sensar is not aware of any
labor organization activity involving its employees. Sensar is
not aware that any officer or key employee, or that any group of
key employees, intends to terminate their employment with Sensar,
nor does Sensar have a present intention to terminate the employment
of any of the foregoing. Except as set forth in the Sensar
Schedules, the employment of each officer and employee of Sensar
is terminable at the will of Sensar.
Section 2.21 Pension Reform Act of 1974. Except as set forth in
the Sensar Schedules, Sensar does not have any unfunded pension
liability to the Pension Benefit Guaranty Corporation or any other
person or entity in connection with any retirement, pension plan, or
similar arrangement.
Section 2.22 Sensar Schedules. Sensar has delivered to Larson
Davis the following schedules, which are collectively referred to
as the "Sensar Schedules." The Sensar Schedules shall be updated
through the date of Closing and shall be certified by the chief
executive officer of Sensar as complete, true, and accurate:
(a) A schedule including copies of the articles of incorporation
and bylaws of Sensar in effect as of the date of this Agreement as
referred to in section 2.01;
(b) A schedule containing copies of resolutions adopted by the
board of directors of Sensar approving this Agreement and the
transactions herein contemplated as referred to in section 2.02;
(c) A schedule including the financial information identified in
section 2.05;
<PAGE>
(d) A schedule including copies of all federal income tax returns
filed for the years ended December 31, 1994, 1993, and 1992,
identified in section 2.05;
(e) A schedule listing the accounts receivable and notes and other
obligations receivable of Sensar as of the date of the most recent
balance sheet included in the Sensar Schedules or that arose
thereafter other than in their ordinary course of business,
indicating the debtor and amount, classifying the accounts to show
in reasonable detail the length of time, if any, overdue, and
stating the nature and amount of any refunds, setoffs,
reimbursements, discounts, or other adjustments, which in the
aggregate are greater than $1,000, due to or claimed by such
debtors;
(f) A schedule listing the accounts payable and notes and other
obligations payable of Sensar as of the date of the most recent
balance sheet included in the Sensar Schedules or that arose
thereafter other than in the ordinary course of the business of
Sensar, indicating the creditor and amount, classifying the
accounts to show in reasonable detail the length of time, if any,
overdue, and stating the nature and amount of any refunds, setoffs,
reimbursements, discounts, or other adjustments, which in the
aggregate are greater than $1,000, payable to Sensar from any one
such creditor;
(g) A schedule setting forth a description of any material adverse
change in the business, operations, property, inventory, assets, or
financial condition of Sensar since the most recent balance sheet
included in the Sensar Schedules, required to be provided pursuant
to section 2.08 hereof;
(h) Copies of all agreements or arrangements and all written
statements of practice followed with regard to the payment of
compensation, bonuses, deferred compensation, profit sharing,
pension, vacation, retirement, or other compensation benefits to
officers, directors, or employees whose monthly compensation
exceeds $3,000 (and descriptions of any such agreements,
arrangements, or practices which are not in writing), together
with a schedule setting forth the name or identification of each
officer, director, or employee whose monthly compensation exceeds
$3,000 and of each former officer or former employee of Sensar who
is currently being paid or who is entitled to, or may become
entitled to, compensation in amounts greater than $3,000 per month
of any of such compensation benefits and the rate or amounts
thereof and showing the nature of any family relationship of such
person to each stockholder owning 5% or more of the common stock of
Sensar;
<PAGE>
(i) A schedule containing a description of all personal property
owned by Sensar or used in its business and having a purchase price
of over $10,000, including a description of every material mortgage,
financing instrument, or encumbrance to which such personal property
of Sensar is subject (except statutory liens or claims not yet
delinquent and except liens, claims, encumbrances, or equities which
do not or in the future will not materially detract from or
interfere with the present or proposed use of the property subject
thereto or affected thereby);
(j) A schedule containing a description of each lease, rental
agreement, or similar instrument, including a description of each
oral arrangement;
(k) A schedule setting forth the litigation and proceedings as
referred to in section 2.11;
(l) A schedule listing all material contracts, agreements,
franchises, license agreements, or other commitments to which
Sensar is a party or by which their properties are bound, as
referred to in section 2.13, but excluding those with affiliates
which are described in section 2.19;
(m) A schedule of any insurance claims as referenced in
section 2.14;
(n) Copies of all licenses, permits, and other governmental
authorizations (or requests or applications therefor) pursuant to
which Sensar carries on or proposes to carry on its business
(except those which are immaterial to the present or proposed
business of Sensar), as referred to in section 2.16;
(o) A schedule describing the matters regarding compliance with
laws and regulations, as referred to in section 2.17;
(p) A schedule showing details of all insurance coverage as
referred to in section 2.18;
(q) A schedule containing a description of all material contracts,
leases, agreements, and other instruments between Sensar and any
affiliates, as referred to in section 2.19;
(r) A schedule showing the name and location of each bank or other
institution in which Sensar has an account or safe deposit box, and
the names of all persons authorized to draw thereon or to have
access thereto;
<PAGE>
(s) Copies of all powers of attorney given by Sensar now in effect
or to be in effect; and
(t) A schedule setting forth any other information, together with
any required copies of documents, required to be disclosed in the
Sensar Schedules by sections 2.01 through 2.21.
ARTICLE III
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF LARSON DAVIS
AND NEWCO
As an inducement to, and to obtain the reliance of, Sensar,
Larson Davis and NewCo represent and warrant as follows:
Section 3.01 Organization. Larson Davis and NewCo are corporations
duly organized, validly existing, and in good standing under the
laws of the state of Nevada and Utah, respectively, and have the
corporate power to own all of their properties and assets and to
carry on their business in all material respects as it is now being
conducted, and there is no jurisdiction in which they are not so
qualified in which either the character and location of the assets
owned by them or the nature of the business transacted by them
requires qualification, except where failure to do so would not
have a material adverse effect on the business or properties of
Larson Davis and NewCo, respectively. Included in the Larson Davis
Schedules (as hereinafter defined) are complete and correct copies
of the articles of incorporation and bylaws of Larson Davis and
NewCo in effect on the date hereof. The execution and delivery
of this Agreement does not, and the consummation of the
transactions contemplated by this Agreement in accordance with
the terms hereof will not, violate any provision of the articles
of incorporation or bylaws of Larson Davis or NewCo. Larson Davis
and NewCo have full power, authority, and legal right and have
taken all action required by law, their articles of incorporation,
bylaws, and otherwise to consummate the transactions herein
contemplated.
Section 3.02 Approval of Agreements. The boards of directors of
Larson Davis and NewCo, respectively, have authorized the execution
and delivery of this Agreement by Larson Davis and NewCo and have
approved the consummation of the transactions contemplated hereby.
Included in the Larson Davis Schedules are copies of resolutions
duly adopted by the boards of directors of Larson Davis and NewCo
evidencing such approval. Larson Davis and NewCo, respectively,
have full power, authority, and legal right, and have taken all
action required by law, their articles of incorporation, their
bylaws, or otherwise, to execute this Agreement and consummate the
transactions contemplated hereby.
<PAGE>
Section 3.03 Capitalization. The authorized capitalization of
Larson Davis consists of 10,000,000 shares of preferred stock, par
value $0.001 per share, of which no shares are issued and
outstanding, and 290,000,000 shares of Larson Davis Common Stock,
par value $0.001 per share, of which 7,586,726 shares are issued and
outstanding. In addition, Larson Davis has reserved 3,097,135
shares of Larson Davis Common Stock for issuance on the exercise
of outstanding and committed options and warrants. All issued and
outstanding shares of Larson Davis Common Stock are validly
authorized, legally issued, fully paid, and nonassessable and not
issued in violation of the preemptive or other right of any person.
All shares of Exchanged Larson Davis Stock to be issued pursuant
to this Agreement are validly authorized and will be, when issued,
legally issued, fully paid, and nonassessable and not issued in
violation of the preemptive or other right of any person. The
authorized capitalization of NewCo consists of 1,000 shares of
common stock, par value $0.001 per share, of which all shares are
issued and outstanding and held solely by Larson Davis (the "NewCo
Common Stock").
Section 3.04 Financial Statements. NewCo has no assets or
liabilities and has not conducted any operations as of this date.
Therefore, NewCo has not prepared any financial statements.
(a) Included in the Larson Davis Schedules are the audited balance
sheet of Larson Davis as of June 30, 1995, and the related audited
statements of income, stockholders' equity, and cash flows for each
of the three fiscal years ended June 30, 1995, 1994, and 1993,
including the notes thereto, together with the related opinions of
the independent certified public accountants of Larson Davis.
(b) All such financial statements have been prepared in accordance
with GAAP consistently applied throughout the periods involved.
The balance sheets of Larson Davis present fairly, as of their
respective dates, the financial position of Larson Davis.
Larson Davis did not have, as of the date of any of such Larson
Davis balance sheets, except as and to the extent reflected or
reserved against therein, any liabilities or obligations (absolute
or contingent) which should be reflected in a balance sheet or the
notes thereto prepared in accordance with GAAP, and all assets
reflected therein present fairly the assets of Larson Davis, in
accordance with GAAP. The statements of operations, stockholders'
equity, and cash flows present fairly the information required to
be set forth therein under GAAP. Larson Davis has maintained and
will continue to maintain a standard system of accounting in a
manner permitting the preparation of financial statements in
accordance with GAAP.
<PAGE>
(c) All such financial statements have been prepared in
accordance with regulation S-B promulgated by the SEC regarding the
form and content of and requirements for financial statements to be
filed with the SEC.
(d) Larson Davis has filed all tax returns and reports as required
by law. All such returns and reports are accurate and correct in all
material respects. Larson Davis has no material liabilities with
respect to the payment of any federal, state, county, local, or
other taxes (including any deficiencies, interest, or penalties)
accrued for or applicable to the period ended on the date of the
most recent Larson Davis balance sheets and all such dates and
years and periods prior thereto and for which Larson Davis may at
said date have been liable in its own right or as transferee of the
assets of, or as successor to, any other corporation or other
entity, except for taxes accrued but not yet due and payable. None
of such federal income tax returns have been audited or is
currently being audited by the Internal Revenue Service. Larson
Davis has not elected pursuant to the Code to be treated as an
S corporation pursuant to section 1362(a) of the Code or a
collapsible corporation pursuant to section 341(f) of the Code,
nor has Larson Davis made any other elections pursuant to the Code
(other than elections which relate solely to methods of accounting,
depreciation, or amortization) which would have a material adverse
effect on Larson Davis, its financial condition, its business as
presently conducted or as proposed to be conducted, or any of its
properties or material assets. There are no outstanding agreements
or waivers extending the statutory period of limitation applicable
to any tax return of Larson Davis.
(e) The books and records, financial and otherwise, of Larson Davis
are in all material respects complete and correct and have been
made and maintained in accordance with sound business and
bookkeeping practices and, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of
Larson Davis. Larson Davis has maintained a system of internal
accounting controls sufficient to provide reasonable assurances
that (i) transactions have been and are executed in accordance
with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP or any other criteria
applicable to such statements and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
<PAGE>
(f) Except as set forth in the latest balance sheets of Larson
Davis or in the notes thereto, Larson Davis (i) has good and
marketable title to its receivables, and other debts due or
recorded in the records and books of Larson Davis, free of any
security interests or liens and free of any material defenses,
counterclaims, and set-offs, and all of such receivables are
actual and bona fide receivables representing obligations for the
total dollar amount thereof shown on the books of Larson Davis
and resulted from the regular course of its business.
Section 3.05 Information. The information concerning Larson
Davis and NewCo set forth in this Agreement and in the Larson Davis
Schedules and in all filings and reports made by Larson Davis with
and to the SEC is complete and accurate in all material respects
and, as of the date of such information, does not contain any
untrue statement of a material fact or omit to state a material
fact required to make the statements made, in light of the
circumstances under which they were made, not misleading.
Section 3.06 Absence of Certain Changes or Events. Except as set
forth in this Agreement or in the Larson Davis Schedules, since the
date of the most recent Larson Davis balance sheet described in
section 3.04 and included in the Larson Davis Schedules:
(a) There has not been (i) any material adverse change in the
business, operations, assets, or condition of Larson Davis or
NewCo or (ii) any damage, destruction, or loss to Larson Davis or
NewCo (whether or not covered by insurance) materially and
adversely affecting the business, operations, assets, or condition
of Larson Davis or NewCo;
(b) Larson Davis and NewCo have not (i) amended their articles of
incorporation or bylaws; (ii) declared or made, or agreed to declare
or make, any payment of dividends or distributions of any assets of
any kind whatsoever to stockholders or purchased or redeemed, or
agreed to purchase or redeem, any of their capital stock; (iii)
waived any rights of value which in the aggregate are extraordinary
or material; (iv) made any change in its method of management,
operation, or accounting which is material to Larson Davis or
NewCo; or (v) entered into any other transaction which is material
to Larson Davis or NewCo;
(c) Larson Davis and NewCo have not granted or agreed to grant any
options, warrants, or other rights for their respective stocks,
bonds, or other corporate securities calling for the issuance
thereof; and
<PAGE>
(d) To the best knowledge of Larson Davis and NewCo, Larson Davis
and NewCo have not become subject to any law or regulation which
materially and adversely affects, or in the future may materially
and adversely affect, the business, operations, properties, assets,
or financial condition of Larson Davis or NewCo.
Section 3.07 Material Contract Defaults. Larson Davis and NewCo
are not in default in any material respect under the terms of any
outstanding contract, agreement, lease, or other commitment which
is material to the business, operations, properties, assets, or
condition of Larson Davis or NewCo, and there is no event of
default or other event which, with notice or lapse of time or both,
would constitute a default in any material respect under any such
contract, agreement, lease, or other commitment in respect of
which Larson Davis or NewCo has not taken adequate steps to
prevent such a default from occurring.
Section 3.08 No Conflict With Other Instruments. The execution
of this Agreement and the consummation of the transactions
contemplated by this Agreement will not result in the breach of
any term or provision of, or constitute an event of default under,
any material indenture, mortgage, deed of trust, or other material
contract, agreement, or instrument to which Larson Davis or NewCo
is a party or to which any of their properties or operations are
subject which would have a material adverse affect on Larson Davis
or NewCo.
Section 3.09 Governmental Authorizations. Except as set forth in
the Larson Davis Schedules, to the best knowledge of Larson Davis
and NewCo, they have all licenses, franchises, permits, and other
governmental authorizations that are legally required to enable
them to conduct their business in all material respects as
conducted on the date hereof or as presently contemplated. Except
for compliance with federal and state securities and corporation
laws, as hereinafter provided, to the best of their knowledge, no
authorization, approval, consent, or order of, or registration,
declaration, or filing with, any court or other governmental body
is required in connection with the execution and delivery by
Larson Davis or NewCo of this Agreement and the consummation by
Larson Davis and NewCo of the transactions contemplated hereby.
Section 3.10 Compliance With Laws and Regulations. Except as set
forth in the Larson Davis Schedules, Larson Davis and NewCo have
complied with all applicable statutes and regulations of any
federal, state, or other governmental entity or agency thereof,
except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets, or
condition of Larson Davis or NewCo or except to the extent that
<PAGE>
noncompliance would not result in the incurrence of any material
liability for Larson Davis or NewCo. Included in the Larson Davis
Schedules is a copy of each letter of inquiry, review, or
investigation or other writing from or to any governmental
authority subsequent to December 31, 1991, evidencing a violation
or possible or alleged violation of any of the foregoing.
Section 3.11 Labor Agreements and Actions. Larson Davis and NewCo
are not bound by or subject to (and none of their assets or
properties are bound by or subject to) any written or oral, express
or implied, contract, commitment, or arrangement with any labor
union, and no labor union has requested or, to the best knowledge
of Larson Davis or NewCo, has sought to represent any of the
employees, representatives, or agents of Larson Davis or NewCo.
There is no strike or other labor dispute involving Larson Davis
or NewCo pending, or to the best knowledge of Larson Davis or NewCo
threatened, which could have a material adverse effect on the
assets, properties, financial condition, operating results, or
business of Larson Davis or NewCo (as such business is presently
conducted and as it is proposed to be conducted), nor is Larson
Davis or NewCo aware of any labor organization activity involving
its employees. Larson Davis and NewCo are not aware that any
officer or key employee, or that any group of key employees,
intends to terminate their employment with Larson Davis or NewCo,
nor does Larson Davis or NewCo have a present intention to
terminate the employment of any of the foregoing. Except as set
forth in the Larson Davis Schedules, the employment of each
officer and employee of Larson Davis and NewCo is terminable at
the will of Larson Davis or NewCo.
Section 3.12 Pension Reform Act of 1974. Neither Larson Davis nor
NewCo have any unfunded pension liability to the Pension Benefit
Guaranty Corporation or any other person or entity in connection
with any retirement, pension plan, or similar arrangement.
Section 3.13 Larson Davis Schedules. Larson Davis has delivered
to Sensar the following schedules, which are collectively referred
to as the "Larson Davis Schedules" and which consist of separate
schedules dated as of the date of execution of this Agreement and
updated through the date of Closing, and instruments and data as
of such date, or the date indicated on such schedules, all
certified by the chief executive officer of Larson Davis as
complete, true, and accurate:
(a) A schedule including copies of the articles of incorporation
and bylaws of Larson Davis and NewCo in effect as of the date of
this Agreement, as referred to in section 3.01;
<PAGE>
(b) A schedule containing copies of resolutions adopted by the
boards of directors of Larson Davis and NewCo approving this
Agreement and the transactions herein contemplated as referred
to in section 3.02;
(c) A schedule containing the annual report of Larson Davis on
form 10-KSB for the year ended June 30, 1995;
(d) A schedule setting forth a description of any material change
in the business, operations, assets, or condition of Larson Davis
or NewCo since June 30, 1995, required to be provided pursuant to
section 3.06 hereof; and
(e) A schedule setting forth any other information, together with
any required copies of documents, required to be disclosed in the
Larson Davis Schedules by sections 3.01 through 3.12.
ARTICLE IV
PLAN OF REORGANIZATION
Section 4.01 Terms of the Reorganization. The acquisition of
Sensar as a wholly-owned subsidiary of Larson Davis, shall be
completed, subject to all of the terms, covenants, and conditions
set forth in this Agreement, as follows:
(a) Sensar shall reduce the number of its issued and outstanding
common stock by 1,900,000 so that no more than 4,644,656 shares
are issued and outstanding. Larson Davis shall assist in this by
assuming in connection with the closing, the outstanding obligation
of Sensar with regard to a line of credit currently guaranteed by
Dennis Webb in consideration of the cancellation of 600,000 shares
of Sensar Stock held by Mr. Webb and by providing $260,000 to be
used by Sensar to redeem 1,300,000 shares of Sensar Stock, 700,000
of such shares being currently held by Doug Lloyd and 600,000 of
such shares being currently held by Garth Weber.
(b) Larson Davis shall issue to the shareholders of Sensar, in
exchange for all such shares of Sensar Stock then issued and
outstanding, that number of shares of Exchanged Larson Davis Stock
determined by multiplying the number of shares of Sensar Stock
issued and outstanding at the Closing by $0.70 and dividing the
resulting product by the average closing price for the Larson
Davis Common Stock as reported by Nasdaq for the five trading
days preceding the Closing.
<PAGE>
(c) In the event that shareholders of Sensar exercise dissenter's
rights under applicable Utah law, the parties will offer to pay such
shareholders $0.20 per share of Sensar Stock. To the extent that
such rights are exercised, the number of shares of Larson Davis
Common Stock to be issued pursuant to this Agreement will be
proportionately reduced.
Section 4.02 The Merger. The articles of merger and plan of
merger shall provide for the merger of NewCo with and into Sensar,
with Sensar as the surviving entity. The merger shall result in
the following:
(a) The Sensar Stock shall be converted into the Exchanged Larson
Davis Stock. The shares of Larson Davis Common Stock to be issued
shall not be registered under the Securities Act or applicable
state securities laws and the certificates representing such
shares shall contain the legend set forth in section 5.02.
(b) On the Effective Date of the merger, the shareholders of
Sensar shall, on the surrender of the certificate or certificates
representing the Sensar Stock, receive a certificate or
certificates evidencing shares of the Exchanged Larson Davis Stock
as provided herein.
(c) On the Effective Date of the merger, the Sensar Stock shall
be cancelled and all rights in respect thereof shall cease.
(d) On the Effective Date of the Merger, Sensar shall issue 1,000
shares of its stock, constituting all of the issued and outstanding
stock of Sensar, to Larson Davis. Sensar shall continue as a
wholly-owned subsidiary of Larson Davis.
(e) On the effective date of the merger, the current members of
the board of directors of Sensar shall resign and Brian G. Larson,
Larry J. Davis, and Dan J. Johnson shall be elected to fill the
vacancies created thereby and to serve as directors of Sensar until
their resignation or their replacements have been duly elected and
qualified.
Section 4.03 Tax Obligations. The shareholders of Sensar shall be
solely responsible for any tax due from such shareholders with
respect to the receipt by the shareholders of the consideration set
forth in section 4.01 of this Agreement.
Section 4.04 Closing Events. At the Closing,
<PAGE>
(a) NewCo and Sensar shall execute and deliver multiple copies of
the articles of merger and related plan of merger in the forms
attached hereto as Exhibit "A" and incorporated herein by
reference and all other documents necessary to effectuate the
merger herein contemplated, all in such form as shall be acceptable
to the parties hereto and their respective legal counsel and shall
file such articles of merger and related plan of merger with the
state of Utah;
(b) Each of the respective parties hereto shall execute,
acknowledge, and deliver (or shall cause to be executed,
acknowledged, and delivered) any and all articles of merger, plans
of merger, certificates, financial statements, schedules,
agreements, resolutions, or other instruments required by this
Agreement to be so delivered at or prior to the Closing together
with such other items as may be reasonably requested by the
parties hereto and their respective legal counsel in order to
effectuate or evidence the transactions contemplated hereby,
including the Service Agreements; and
(c) In addition to the foregoing, each of the parties shall
execute and deliver such additional documents as may reasonably be
required in order to effectuate the transactions herein contemplated
in accordance with the requirements of the Code and shall treat such
transactions for all tax purposes consistently with the other
parties' treatment thereof and with such characterization as a
reorganization under Code sections 368(a)(1)(A) and 368(a)(2)(D).
Section 4.05 Effective Date. For corporate law purposes, the
Effective Date of the merger shall be the date, as defined in the
articles of merger or plan of merger, on which the merger of Sensar
with and into NewCo shall become effective in accordance with the
laws of the state of Utah. To the extent permitted by GAAP, the
effective date for financial reporting purposes shall be November
1, 1995.
Section 4.06 Effect of Merger. On the Effective Date of the
merger, NewCo and Sensar shall cease to exist separately, and NewCo
shall be merged with and into Sensar, the surviving corporation, in
accordance with the provisions of this Agreement, the articles of
merger, and the plan of merger, and in accordance with the
provisions of and with the effect provided in the corporation laws
of the state of Utah. Sensar, as the surviving corporation, shall
possess all the rights, privileges, franchises, and trust and
fiduciary duties, powers, and obligations, of a private as well as
of a public nature, and be subject to all the restrictions,
obligations, and duties of each of NewCo and Sensar; all property,
real, personal, and mixed, and all debts due to either of NewCo or
<PAGE>
Sensar on whatever account and all other things belonging to each
of NewCo and Sensar and all property, rights, privileges, powers,
and franchises, and all and every other interest shall be
thereafter the property of Sensar as they were of NewCo and
Sensar; the title to any real estate, whether vested by deed or
otherwise, in either NewCo or Sensar shall not revert or be in any
way impaired by reason of the merger; provided, however, that all
rights of creditors and all liens on any property of either NewCo
or Sensar shall be preserved unimpaired, and all debts, liabilities,
and duties of NewCo and Sensar shall thenceforth attach to Sensar
and may be enforced against it to the same extent as if such debts,
liabilities, and duties had been incurred or contracted by Sensar.
Section 4.07 Termination.
(a) This Agreement and the merger contemplated hereby may be
terminated at any time prior to the Effective Date by the consent
of both Larson Davis and Sensar through action of their respective
boards of directors. In the event of termination pursuant to this
subparagraph (a) of section 4.07, no obligation, right, remedy, or
liability shall arise hereunder, and the parties shall bear their
own costs incurred in connection with the preparation and execution
of this Agreement, the preparation and review of financial
statements required to be delivered pursuant hereto, and the
negotiation of the transactions contemplated hereby.
(b) This Agreement and the merger may be terminated at any time
prior to the Effective Date by action of Larson Davis' board of
directors if Sensar shall fail to comply in any material respect
with any of its covenants or agreements contained in this Agreement
or if any of the representations or warranties of Sensar contained
herein shall be inaccurate in any material respect. In the event of
termination pursuant to this subparagraph (b) of section 4.07,
Sensar shall reimburse Larson Davis for its costs and obligations
with respect to the negotiation and documentation of this Agreement
and the transactions contemplated hereby.
(c) This Agreement and the merger may be terminated at any time
prior to the Effective Date by action of Sensar's board of
directors if Larson Davis or NewCo shall fail to comply in any
material respect with any of their covenants or agreements
contained in this Agreement or if any of the representations or
warranties of Larson Davis or NewCo contained herein shall be
inaccurate in any material respect. In the event of termination
pursuant to this subparagraph (c) of section 4.07, Larson Davis
shall reimburse Sensar for its costs and obligations with respect
to the negotiation and documentation of this Agreement and the
transactions contemplated hereby.
<PAGE>
Section 4.08 Post-Closing Covenants of Larson Davis and Sensar.
Subsequent to the Closing of the transactions contemplated by this
Agreement, Larson Davis, neither Larson Davis nor Sensar shall
undertake (or fail to undertake) any action that would result in
the merger failing to qualify as a reorganization within the
meaning of section 368(a) of the Code. Larson Davis and Sensar
shall execute and deliver any and all documents, instruments, and
agreements necessary to effectuate the purposes of this Agreement.
All of the provisions of this section 4.08 shall survive the
Closing and the consummation of the transactions contemplated
herein.
ARTICLE V
THE ACQUISITION OF THE EXCHANGED LARSON DAVIS STOCK
Section 5.01 Sale of Securities. The consummation of this
Agreement and the issuance of the Exchanged Larson Davis Stock as
contemplated herein constitutes the offer and sale of securities as
those terms are defined under the Securities Act and applicable
state statutes. Such transaction shall be consummated in reliance
on certain exemptions from the registration requirements of the
Securities Act and applicable state statutes which depend, among
other items, on the circumstances under which such securities are
acquired.
Section 5.02 Representations by the Shareholders of Sensar. In
order to provide documentation for reliance upon such exemptions,
each shareholder of Sensar (a "Shareholder"), in approving this
Agreement and the transactions contemplated herein, shall be
required to provide Larson Davis with an investment letter
containing the following representations and warranties:
(a) The Shareholder has not offered or sold any securities of
Sensar or interest in this Agreement and has no present intention
of dividing the Exchanged Larson Davis Stock to be received or the
rights under this Agreement with others or of reselling or otherwise
disposing of any portion of such stock or rights, either currently
or after the passage of a fixed or determinable period of time or
on the occurrence or nonoccurrence of any predetermined event or
circumstance.
(b) The Shareholder acknowledges that neither the Securities and
Exchange Commission nor the securities commission of any state or
other federal agency has made any determination as to the merits
of acquiring the Exchanged Larson Davis Stock, and that the
acquisition and ownership of the Exchanged Larson Davis Stock
involves certain risks.
<PAGE>
(c) The Shareholder has received and read this Agreement and the
annual report of Larson Davis on form 10-KSB for the year ended
June 30, 1995, and understands the risks related to the consummation
of the transactions herein contemplated. The Shareholder has been
given an opportunity to meet with and ask questions of management
of Larson Davis concerning the business, operations, and assets of
Larson Davis and the transactions contemplated by this Agreement.
(d) The Shareholder has such knowledge and experience in business
and financial matters that he or she is capable of evaluating
Larson Davis and its business operations.
(e) The Shareholder is acquiring the Exchanged Larson Davis Stock
for his or her own account and not with a view for resale to others.
(f) The Shareholder was at no time solicited by any leaflet, public
promotional meeting, circular, newspaper or magazine article, radio
or television advertisement, or any other form of general
advertising or solicitation in connection with the offer, sale, or
purchase of the Exchanged Larson Davis Stock through this Agreement.
(g) The Shareholder has adequate means of providing for the
Shareholder's current needs and possible contingencies and have no
need now, and anticipate no need in the foreseeable future, to sell
the Exchanged Larson Davis Stock. The Shareholder is able to bear
the economic risks of this investment, and consequently, without
limiting the generality of the foregoing, is able to hold the
Exchanged Larson Davis Stock to be received for an indefinite
period of time and have a sufficient net worth to sustain a loss
of the entire investment, in the event such loss should occur.
(h) The Shareholder understands that the Exchanged Larson Davis
Stock has not been registered, but is being acquired by reason of a
specific exemption under the Securities Act as well as under certain
state statutes for transactions by an issuer not involving any
public offering and that any disposition of the subject Exchanged
Larson Davis Stock may, under certain circumstances, be
inconsistent with this exemption and may make the Shareholder an
"underwriter" within the meaning of the Securities Act. It is
understood that the definition of "underwriter" focuses upon the
concept of "distribution" and that any subsequent disposition of
the subject Exchanged Larson Davis Stock can only be effected in
transactions which are not considered synonymous with "public
offering" or any other offer or sale involving general solicitation
or general advertising. Under present law, in determining whether
a distribution occurs when securities are sold into the public
market, under certain circumstances one must consider the
availability of public information regarding the issuer, a holding
<PAGE>
period for the securities sufficient to assure that the persons
desiring to sell the securities without registration first bear
the economic risk of their investment, and a limitation on the
number of securities which the shareholder is permitted to sell and
on the manner of sale, thereby reducing the potential impact of
the sale on the trading markets. These criteria are set forth
specifically in rule 144 promulgated under the Securities Act, and,
after two years after the date the Exchanged Larson Davis Stock is
fully paid for, as calculated in accordance with rule 144(d), sales
of securities in reliance upon rule 144 can only be made in limited
amounts in accordance with the terms and conditions of that rule.
After three years from the date the securities are fully paid for,
as calculated in accordance with rule 144(d), they can generally be
sold without meeting those conditions, provided the holder is not
(and has not been for the preceding three months) an affiliate of the
issuer.
(i) The Shareholder acknowledges that the shares of Exchanged
Larson Davis Stock must be held and may not be sold, transferred,
or otherwise disposed of for value unless they are subsequently
registered under the Securities Act or an exemption from such
registration is available. Larson Davis is under no obligation
to register the Exchanged Larson Davis Stock under the Securities
Act, except as may be expressly agreed to by it in writing. If
rule 144 is available (and no assurance is given that it will be)
after two years and prior to three years following the date the
shares are fully paid for, only sales of such Exchanged Larson
Davis Stock in limited amounts can be made in reliance upon rule
144 in accordance with the terms and conditions of that rule.
Larson Davis is under no obligation to the undersigned to make
rule 144 available, except as may be expressly agreed to by it in
writing in this Agreement, and in the event rule 144 is not
available, compliance with regulation A or some other disclosure
exemption may be required before the Shareholder can sell,
transfer, or otherwise dispose of such Exchanged Larson Davis Stock
without registration under the Securities Act. Larson Davis'
registrar and transfer agent will maintain a stop transfer order
against the registration of transfer of the Exchanged Larson
Davis Stock, and the certificate representing the Exchanged
Larson Davis Stock will bear a legend in substantially the
following form so restricting the sale of such securities:
<PAGE>
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") AND ARE "RESTRICTED SECURITIES" WITHIN THE
MEANING OF RULE 144 PROMULGATED UNDER THE SECURITIES ACT. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD
OR TRANSFERRED WITHOUT COMPLYING WITH RULE 144 IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION OR OTHER COMPLIANCE UNDER THE SECURITIES
ACT.
Section 5.03 Stop Order. Larson Davis may refuse to register
transfer of the Exchanged Larson Davis Stock in the absence of
compliance with rule 144 unless the Shareholders furnish the
issuer with an opinion of counsel reasonably acceptable to
Larson Davis stating that the transfer is proper.
Section 5.04 Additional Documentation. In order to more fully
document reliance on the exemptions as provided herein, Sensar
agrees to obtain from each Shareholder and deliver to Larson Davis
such further letters of representation, acknowledgment,
suitability, or the like, as Larson Davis and its counsel may
reasonably request in connection with reliance on exemptions from
registration under such securities laws.
Section 5.05 No Legal Opinion. Sensar and Larson Davis
acknowledge that the basis for relying on exemptions from
registration or qualifications are factual, depending on the
conduct of the various parties, and that no legal opinion or
other assurance will be required or given to the effect that the
transactions contemplated hereby are in fact exempt from
registration or qualification.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF LARSON DAVIS AND NEWCO
The obligations of Larson Davis and NewCo under this Agreement
are subject to the satisfaction, at or before the Closing Date, of
the following conditions:
Section 6.01 Accuracy of Representations. The representations and
warranties made by Sensar in this Agreement shall be true as of the
Closing, and Sensar shall have performed or complied with all
material covenants and conditions required by this Agreement to be
performed or complied with by Sensar prior to or at the Closing.
Larson Davis and NewCo shall be furnished with certificates, signed
by the chief executive officer of Sensar and dated the Closing Date,
to the foregoing effect.
<PAGE>
Section 6.02 Redemption of Stock. Sensar shall have reduced the
number of issued and outstanding shares of Sensar Stock to no more
than 4,644,656 by obtaining the agreement of Dennis Webb to cancel
600,000 shares of Sensar Stock held by him on assumption of the
bank obligation which Lee guaranteed by Larson Davis and the
redemption of an aggregate of 1,300,000 shares currently held by
Doug Lloyd and Garth Weber for a total of $260,000.
Section 6.03 Sensar Shareholder Meeting; Dissenter's Rights. The
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby shall be approved by the
shareholders of Sensar at a duly noticed and constituted meeting
of the shareholders of Sensar. Holders of no more than 1,000,000
shares of Sensar Stock shall exercise any dissenters' rights they
may have in connection with such approval.
Section 6.04 License Agreements With Brigham Young University.
Larson Davis and/or Sensar shall have entered into a license
agreement satisfactory to Larson Davis with Brigham Young
University ("BYU") with respect to that Intellectual Property set
forth on Exhibit "B" attached hereto and incorporated herein by
this reference.
Section 6.05 Officer's Certificate. Larson Davis and NewCo
shall have been furnished with a certificate dated the Closing
Date and signed by the duly authorized chief executive officer of
Sensar to the effect that:
(a) This Agreement has been duly approved by Sensar's board of
directors and shareholders and has been duly executed and delivered
in the name and on behalf of Sensar by its duly authorized officers
pursuant to, and in compliance with, authority granted by Sensar's
board of directors;
(b) The representations and warranties of Sensar set forth in
this Agreement are true and correct as of the date of the
certificate;
(c) There has been no material adverse change since the date of
the balance sheet included in the Sensar Schedules in the
financial condition, business, or operations of Sensar nor has
any event occurred which, with the lapse of time or giving of
notice, may cause or create any material adverse change in the
financial condition, business, or operations of Sensar up to and
including the date of the certificate, except as authorized by
this Agreement;
<PAGE>
(d) All material conditions required by this Agreement to have
been met, satisfied, or performed by Sensar and have been met;
(e) The consummation of the transactions contemplated by this
Agreement does not violate any material law, regulation, order,
writ, injunction, or decree of any court or governmental body or
result in the creation or imposition of any material mortgage,
lien, charge, or encumbrance of any nature upon any of the
properties of Sensar, pursuant to any mortgage, resolution,
agreement, or instrument to which Sensar is a party;
(f) All material authorizations, consents, approvals,
registrations, and/or filings with any governmental body, agency,
or court required in connection with the execution and delivery of
the documents contemplated by this Agreement by Sensar and have
been obtained and are in full force and effect or, if not required
to have been obtained will be in full force and effect by such time
as may be required; and
(g) There is no action, suit, proceeding, inquiry, or
investigation at law or in equity by any public board or body
pending or threatened in writing against Sensar, wherein an
unfavorable decision, ruling, or finding would have a material
adverse effect on the financial condition of Sensar, the operations
or business of Sensar, the acquisition and reorganization
contemplated herein.
Section 6.06 Good Standing. Larson Davis and NewCo shall have
received a certificate of good standing from the Secretary of State
of the State of Utah with respect to Sensar, dated as of a date
within ten days prior to the Closing Date, certifying that Sensar
is in good standing as a corporation in Utah.
Section 6.07 UCC Certificate. Larson Davis and NewCo shall have
received a Utah Uniform Commercial Code certificate as of a date
within five days of the Closing Date to the effect that there are
no encumbrances of record on the assets of Sensar, other than those
disclosed in the Sensar Schedules.
Section 6.08 Personal Service Agreements. Sensar and Milton L. Lee
and Edgar D. Lee have entered into personal service agreements in
form and substance as the forms attached hereto as Exhibits "C" and
"D" and incorporated herein by this reference.
<PAGE>
Section 6.09 Escrow of Certain Shares of Exchanged Larson Davis
Stock. Larson Davis on the one hand and Milton L. Lee and Edgar D.
Lee on the other have entered into an agreement to place one-half
of the shares of Exchanged Larson Davis Stock received by them in
connection with the acquisition of Sensar into escrow, such shares
to be released 20% per year on each of the first five anniversaries
of the Closing provided that the respective individuals are then
employees of Sensar. In the event that either individual terminates
his respective employment, the shares owned by such individual
remaining in escrow shall be cancelled. Notwithstanding the
foregoing, if at any time the employment is terminated as a result
of death, disability, or at the election of Larson Davis for other
than Cause, as defined in the Service Agreements, all of the shares
held by the affected person shall immediately be released from
Escrow.
Section 6.10 Other Items. Larson Davis shall have received such
further documents, certificates, or instruments relating to the
transactions contemplated hereby as Larson Davis may reasonably
request.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SENSAR
The obligations of Sensar under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following
conditions:
Section 7.01 Accuracy of Representations. The representations and
warranties made by Larson Davis and NewCo in this Agreement shall
be true as of the Closing and Larson Davis and NewCo shall have
performed and complied with all material covenants and conditions
required by this Agreement to be performed or complied with by
Larson Davis and NewCo prior to or at the Closing. Sensar shall
have been furnished with a certificate, signed by the duly
authorized chief executive and principal financial or accounting
officer or officers of Larson Davis and NewCo and dated the Closing
Date, to the foregoing effect.
Section 7.02 Officer's Certificate. Sensar shall have been
furnished with certificates dated the Closing Date and signed by
the duly authorized officer or officers of Larson Davis and NewCo
to the effect that:
<PAGE>
(a) This Agreement has been duly approved by Larson Davis' and
NewCo's boards of directors and has been duly executed and delivered
in the name and on behalf of Larson Davis and NewCo by duly
authorized officers pursuant to, and in compliance with, authority
granted by Larson Davis' and NewCo's boards of directors;
(b) The representations and warranties of Larson Davis and NewCo
set forth in this Agreement are true and correct as of the date of
the certificate;
(c) There has been no material adverse change since the date of
the balance sheet included in the Larson Davis Schedules in the
financial condition, business, or operations of Larson Davis and
NewCo nor has any event occurred which, with the lapse of time or
giving of notice, may cause or create any material adverse change
in the financial condition, business, or operations of Larson
Davis and NewCo, up to and including the date of the certificate;
(d) All material conditions required by this Agreement to have
been met, satisfied, or performed by Larson Davis and NewCo have
been met;
(e) The consummation of the transactions contemplated by this
Agreement does not violate any material law, regulation, order,
writ, injunction, or decree of any court or governmental body or
result in the creation or imposition of any material mortgage,
lien, charge, or encumbrance of any nature upon any of the
properties of Larson Davis and NewCo, pursuant to any mortgage,
resolution, agreement, or instrument to which Larson Davis and
NewCo is a party;
(f) All material authorizations, consents, approvals,
registrations, and/or filings with any governmental body, agency,
or court required in connection with the execution and delivery of
the documents contemplated by this Agreement by Larson Davis and
NewCo have been obtained and are in full force and effect or, if
not required to have been obtained, will be in full force and
effect by such time as may be required; and
(g) There is no action, suit, proceeding, inquiry, or
investigation at law or in equity by any public board or body
pending or threatened in writing against Larson Davis and NewCo,
wherein an unfavorable decision, ruling, or finding would have a
material adverse effect on the financial condition or operation
of Larson Davis or NewCo, or the acquisition and reorganization
contemplated herein.
<PAGE>
Section 7.03 Good Standing. Sensar and the Shareholders shall
have received a certificate of good standing from the Secretary
of State of Nevada with respect to Larson Davis and Utah with
respect to NewCo, dated as of a date within ten days prior to the
date of this Agreement, certifying that Larson Davis is in good
standing as a corporation in the state of Nevada and NewCo is in
good standing as a corporation in the state of Utah.
Section 7.04 Personal Service Agreements With Milton L. Lee and
Edgar D. Lee. Sensar shall have entered into personal service
agreements with Milton L. Lee and Edgar D. Lee in accordance with
the terms and conditions of the form of service agreement attached
hereto as Exhibits "C" and "D," respectively, and incorporated
herein by this reference (the "Service Agreements").
Section 7.05 Other Items. Sensar shall have received such further
documents, certificates, or instruments relating to the
transactions contemplated hereby as Sensar may reasonably request.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Brokers. Larson Davis and Sensar agree that there
were no finders or brokers involved in bringing the parties together
or who were instrumental in the negotiation, execution, or
consummation of this Agreement. Further, Larson Davis and Sensar
each agree to indemnify the other against any claim by any third
person for any commission, brokerage, or finder's fee or other
payment with respect to this Agreement or the transactions
contemplated hereby based on any alleged agreement or understanding
between such party and such third person, whether express or
implied, resulting from the actions of such party. The covenants
set forth in this section 8.01 shall survive the Closing and the
consummation of the transactions herein contemplated.
Section 8.02 Indemnification by Sensar. Sensar agrees to
indemnify and hold harmless Larson Davis and NewCo each of their
respective directors and officers, and each person, if any, who
controls Larson Davis or NewCo within the meaning of the
Securities Act, from and against any and all losses, claims,
damages, expenses, liabilities, or actions and will reimburse them
for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any claims or actions,
resulting in liability, insofar as such losses, claims, damages,
expenses, liabilities, or actions arise out of or are based upon
any breach of any representation, warranty, covenant, or agreement
in this Agreement by Sensar. The indemnity agreement contained
<PAGE>
this section 8.02 shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of
Larson Davis and shall survive the consummation of the transactions
contemplated by this Agreement for a period of three years after
the Closing Date. Sensar shall only be liable for any indemnity
provided under this section 8.02 related to loss in excess of
$100,000 (in the aggregate) and up to a maximum equal to the
consideration received by the Shareholders under section 4.01
hereof (in the aggregate).
Section 8.03 Indemnification by Larson Davis. Larson Davis agrees
to indemnify and hold harmless Sensar from and against any and all
losses, claims, damages, expenses, liabilities, or actions and will
reimburse them for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any claims
or actions, resulting in liability, insofar as such losses,
claims, damages, expenses, liabilities, or actions arise out of or
are based upon any breach of any representation, warranty,
covenant, or agreement in this Agreement by Larson Davis or NewCo.
The indemnity agreement contained in this section 8.03 shall
remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Shareholders and shall
survive the consummation of the transactions contemplated by this
Agreement for a period of three years after the Closing Date.
Larson Davis shall only be liable for any indemnity provided under
this section 8.03 related to loss in excess of $100,000 (in the
aggregate) and up to a maximum equal to the consideration received
by the shareholders of Sensar under section 4.01 hereof (in the
aggregate).
Section 8.04 Tax Treatment. No representation or warranty is
being made or legal opinion given by any party to any other
regarding the treatment of this transaction for federal or state
income taxation. All parties intend for the transaction to be
treated as a "tax-free" reorganization under the provisions of the
Code and agree to take all corporate action necessary, to file all
tax returns and reports, and prepare financial statements
consistent with the treatment of the transaction as a
reorganization under sections 368(a)(1)(A) and 368(a)(2)(D) of the
Code. Although this transaction has been structured in an effort to
qualify for treatment under sections 368(a)(1)(A) and 368(a)(2)(D)
of the Code, there is no assurance that any part of this
transaction in fact meets the requirements for such qualification.
Each party has relied exclusively on its own legal, accounting,
and other tax advisers regarding the treatment of this transaction
for federal and state income taxes.
<PAGE>
Section 8.05 Governing Law. This Agreement shall be governed by,
enforced, and construed under and in accordance with the laws of
the United States of America and, with respect to matters of state
law, with the laws of the state of Utah.
Section 8.06 Notices. Any notices or other communications
required or permitted hereunder shall be in writing and shall be
deemed sufficiently given if personally delivered, if sent by
facsimile or telecopy transmission or other electronic
communication confirmed by registered or certified mail, postage
prepaid, or if sent by prepaid overnight courier addressed as follows:
If to Larson Davis or NewCo, to: Larson Davis Incorporated
Attn: Dan J. Johnson
1681 West 820 North
Provo, Utah 84601
Fax: (801) 375-0182
Confirmation: (801) 375-0177
With copies to: Keith L. Pope, Esq.
Kruse, Landa & Maycock, L.L.C.
Eighth Floor, Bank One Tower
50 West Broadway
Salt Lake City, Utah 84101
Fax: (801) 359-3954
Confirmation: (801) 531-7090
If to Sensar, to: Sensar Corporation
435 West 9160 South
Sandy, Utah 84070
Fax: (801) 561-1577
Confirmation: (801) 561-8679
With copies to: Arden Engebretsen, Esq.
222 Delaware Avenue
P. O. Box 2306
Wilmington, Delaware 19899
Fax: (302) 571-1750
Confirmation: (302) 888-6909
or such other addresses as shall be furnished in writing by any
party in the manner for giving notices hereunder, and any such
notice or communication shall be deemed to have been given as of
the date so delivered or sent by facsimile or telecopy transmission
or other electronic communication, or one day after the date so
sent by overnight courier.
<PAGE>
Section 8.07 Attorneys' Fees. In the event that any party
institutes any action or suit to enforce this Agreement or to
secure relief from any default hereunder or breach hereof, the
breaching party or parties shall reimburse the nonbreaching party
or parties for all costs, including reasonable attorneys' fees,
incurred in connection therewith and in enforcing or collecting
any judgment rendered therein.
Section 8.08 Costs. Each of the parties shall bear its respective
costs associated with this Agreement and the transactions
contemplated hereby, including legal fees, accounting fees, and
other costs and expenses.
Section 8.09 Schedules; Knowledge. Whenever in any section of
this Agreement reference is made to information set forth in the
Larson Davis Schedules or Sensar Schedules such reference is to
information specifically set forth in such schedules and clearly
referenced to identify the section of this Agreement to which the
information relates. Whenever any representation is made to the
"knowledge" of any party, it shall be deemed to be a representation
that such officer or director has made a reasonable investigation
of such matters.
Section 8.10 Third-Party Beneficiaries. This Agreement is solely
between Larson Davis and Sensar and the Shareholders, and no
director, officer, stockholder, employee, agent, independent
contractor, or any other person or entity shall be deemed to be
a third party beneficiary of this Agreement.
Section 8.11 Entire Agreement. This Agreement, together with the
other agreements entered into between the parties contemporaneously
with this Agreement (this Agreement and such other documents
collectively referred to as the "Transaction Documents"), represent
the entire agreement between the parties relating to the subject
matter hereof. All previous agreements between the parties,
whether written or oral, have been merged into the Transaction
Documents. The Transaction Documents fully and completely express
the agreement of the parties relating to the subject matter hereof.
There are no other courses of dealing, understandings, agreements,
representations, or warranties, written or oral, except as set
forth in the Transaction Documents.
Section 8.12 Survival. The representations, warranties, and
covenants of the respective parties shall survive the Closing of
the transactions contemplated hereby.
<PAGE>
Section 8.13 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original
and all of which taken together shall be but a single instrument.
Section 8.14 Amendment or Waiver. Every right and remedy provided
herein shall be cumulative with every other right and remedy,
whether conferred herein, at law, or in equity, and may be enforced
concurrently herewith, and no waiver by any party of the performance
of any obligation by the other shall be construed as a waiver of the
same or any other default then, theretofore, or thereafter occurring
or existing. This Agreement shall only be amended by a writing
signed by all parties hereto, with respect to any of the terms
contained herein, and any term or condition of this Agreement may
be waived or the time for performance thereof may be extended by a
writing signed by the party or parties for whose benefit the
provision is intended.
Section 8.15 Severability. If and to the extent that any court of
competent jurisdiction holds any provision, or any part thereof, of
this Agreement to be invalid or unenforceable, such holding shall
in no way affect the validity of the remainder of this Agreement
which shall continue in full force and effect.
Section 8.16 Successors and Assigns. This Agreement shall insure
to the benefit of and be binding on the parties and their
successors, assigns, heirs, executors, and administrators.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers, hereunto duly
authorized, and the individuals have caused this Agreement to be
executed as of the date first above written.
Larson Davis:
LARSON DAVIS INCORPORATED
By /s/ Brian G. Larson
Brian G. Larson, President
<PAGE>
NewCo:
NEWCO, INC.
By /s/ Brian G. Larson
Brian G. Larson, President
Sensar:
SENSAR CORPORATION
By /s/ Edgar D. Lee
Edgar D. Lee, President
/s/ Milton L. Lee
Milton L. Lee
/s/ Edgar D. Lee
Edgar D. Lee
