January 17, 1996
EXHIBIT A
Irell & Xxxxxxx
0000 Xxxxxx xx xxx Xxxxx
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Dear Sirs:
In connection with the opinion to be delivered by you pursuant to Section
7.3(b) of the Agreement and Plan of Reorganization dated as of December 21, 1995
(the "Agreement"), by and among Seagate Technology, Inc., a Delaware corporation
("Seagate"), Arcada Holdings, Inc., a Delaware corporation ("Arcada"), and Xxxxx
X. Xxxxxx, an individual, relating to the proposed merger (the "Merger") of
Merger Sub with and into Arcada, and recognizing that you will rely on this
letter in rendering said opinion, the undersigned, a duly authorized officer of
Seagate and acting as such, hereby certifies that to the best knowledge of the
undersigned after reasonable inquiry, the facts relating to the Merger as
described in the Agreement and the Proxy Statement/Prospectus, expected to be
dated January 19, 1996, including attachments thereto, are true, correct and
complete in all material respects and hereby certifies, to the best knowledge of
the undersigned after reasonable inquiry, to the following as of the date
hereof. Insofar as such certification pertains to any person (including Xxxxxx
Peripherals, Inc., a Delaware corporation ("Xxxxxx"), Arcada and Merger Sub)
other than Seagate and any of its subsidiaries, the voting stock of which
Seagate owns at least eighty percent (80%) (an "Affiliate"), such certification
is only as to the knowledge of the undersigned without specific inquiry. We
understand that you will reaffirm your opinion at the time of the Merger and
that, in connection with such reaffirmation, you will require that we reaffirm
this certification at that time.
Capitalized terms in this letter shall have the same meanings ascribed to
them in the Agreement unless otherwise specified herein.
A. REPRESENTATIONS OF SEAGATE
1. The Merger will be consummated in accordance with the terms of the
Agreement and none of the material terms or conditions therein have been waived
or modified and Seagate has no plan or intention to waive or modify any such
material terms or conditions.
2. The Seagate/Xxxxxx Merger will be consummated in accordance with the
terms of the Seagate/Xxxxxx Agreement and none of the material terms or
conditions therein have been waived or modified and Seagate has no plan or
intention to waive or modify any such material terms or conditions.
3. The ratio for the exchange of shares of common stock of Arcada (the
"Arcada Common Stock") for voting common stock of Seagate ("Seagate Common
Stock") in the Merger was negotiated through arm's length bargaining.
4. It is the belief of management of Seagate that the fair market value of
the Seagate Common Stock to be received by Arcada stockholders is, in the
aggregate, approximately equal to the aggregate fair market value of the Arcada
Common Stock surrendered in exchange therefor.
5. To the knowledge of Seagate, there is no present plan or intention on
the part of the stockholders of Arcada other than Xxxxxx (a "Plan"), to engage
in a sale, exchange, transfer, reduction of risk of ownership or any other
direct or indirect disposition (a "Sale") of (i) shares of Seagate Common Stock
to be issued to them in the Merger, which shares have an aggregate fair market
value, as of the period ending at the effective time of the Merger (the
"Effective Time"), in excess of fifty percent (50%) of the aggregate fair market
value, immediately prior to the Merger, of the outstanding shares of Arcada
Common Stock held by shareholders other than Xxxxxx immediately prior to the
Irell & Xxxxxxx
January 17, 1996
Page 2
Merger ("Outstanding Arcada Common Stock") (including shares of Arcada Common
Stock issued after the date hereof and prior to the Effective Time pursuant to
exercise of options to acquire Arcada Common Stock issued to present or former
employees or directors of Arcada in the ordinary course of business (the "Arcada
Options")), or (ii) more than fifty percent (50%) of the shares of Seagate
Common Stock received by such stockholders in the Merger. For purposes of the
foregoing, a Sale of Seagate Common Stock shall be considered to have occurred
pursuant to a Plan if such Sale occurs in a transaction that is in contemplation
of or related to the Merger (a "Related Transaction"). In addition, shares of
Arcada Common Stock (or the portion thereof) (i) exchanged for cash in lieu of
fractional shares of Seagate Common Stock or (ii) with respect to which a Sale
occurred in a Related Transaction prior to the Merger shall be considered to
have been Outstanding Arcada Common Stock that was exchanged for Seagate Common
Stock in the Merger and then disposed of pursuant to a Plan.
6. Seagate has no plan or intention to redeem or otherwise reacquire any of
the Seagate Common Stock to be issued in the Merger.
7. Seagate has no present plan or intention: to liquidate Arcada; to merge
Arcada into another corporation (other than the possible merger of Arcada into a
direct, wholly owned subsidiary of Seagate following a merger of Xxxxxx into
Seagate); to cause Arcada to sell or otherwise dispose of any of its assets,
except for dispositions made in the ordinary course of business; or to sell or
otherwise dispose of any of the Arcada Common Stock acquired in the Merger or
otherwise, except for transfers described in Code Section 368(a)(2)(C) and the
possible transfer of Arcada Common Stock to Seagate pursuant to a merger of
Xxxxxx into Seagate which would qualify under Code Section 332.
8. Seagate, Xxxxxx, Merger Sub, Arcada and the stockholders of Arcada will
each pay separately its or their own expenses incurred in connection with the
Merger.
9. Xxxxxx will acquire Arcada Common Stock solely in exchange for Seagate
voting stock and immediately after the acquisition, Xxxxxx will have control of
Arcada, as defined in Section 368(c) of the Code. Furthermore, no liabilities of
Arcada or Arcada shareholder's will be assumed by Xxxxxx, nor will any of the
Arcada Common Stock be subject to any liabilities.
10. Neither Seagate, nor any Affiliate of Seagate, excluding Xxxxxx and any
of its subsidiaries, owns, nor has owned within the preceding five years,
directly or indirectly, any Arcada Common Stock.
11. Seagate is not an "investment company" as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code, nor will Seagate be an investment
company at the Effective Time.
12. Arcada will pay its dissenting shareholders the value of their stock out
of its own funds. No funds will be supplied for that purpose, directly or
indirectly, by Seagate, nor will Seagate directly or indirectly reimburse Arcada
for any payments to dissenters.
13. The fair market value of the assets of Arcada does and at the Effective
Time will exceed the aggregate liabilities of Arcada plus the amount of any
other liabilities to which such assets are subject that are not included in the
aggregate.
14. No fractional shares of Seagate Common Stock will be issued in the
Merger. In lieu thereof, cash will be paid to Arcada stockholders otherwise
entitled to a fractional share of Seagate Common Stock. The payment of cash in
lieu of fractional shares of Seagate Common Stock is made solely for the purpose
of avoiding the expense and inconvenience of issuing and transferring fractional
shares and is not separately bargained for consideration. The total amount of
cash that any holder of Seagate Common Stock will receive in lieu of a
fractional share interest will not equal or exceed the fair market value (as
determined in accordance with the Merger Agreement) of one full share of Seagate
Common Stock on the last trading day prior to the Effective Time, and the total
cash consideration that will be paid in the transaction to Arcada stockholders
in lieu of issuing fractional shares of Seagate Common Stock will not exceed one
percent (1%) of the total consideration that will be issued in the transaction
to the Arcada stockholders in exchange for their shares of Arcada Common Stock.
Irell & Xxxxxxx
January 17, 1996
Page 3
15. Any compensation paid to stockholders of Arcada who enter (or who have
entered) into an employment, consulting or non-competition contract, if any,
with Seagate (or any member of a Controlled Group in which Seagate is also a
member other than Xxxxxx and any of its subsidiaries) at any time or with Arcada
after the Effective Time will be for services actually rendered or to be
rendered (or compliance with restrictions on competition) and will be
commensurate with amounts paid to third parties bargaining at arm's length for
similar services (or compliance). None of such compensation represents
consideration for the exchange of shares of Arcada Common Stock for Seagate
Common Stock. None of the shares of Seagate Common Stock received by Arcada
stockholders in the Merger is separate consideration for or otherwise allocable
to anything other than Arcada Common Stock, such as for services or any covenant
not to compete.
16. The Seagate Common Stock issued pursuant to the Merger will not be
subject to any restriction, other than any restrictions imposed under any
applicable securities laws or any existing restrictions with respect to the
Arcada Common Stock exchanged therefor.
17. All shares of Arcada Common Stock owned directly or indirectly by Arcada
will be canceled at the Effective Time, and no consideration will be delivered
in exchange therefor. Such cancellation is solely for the purpose of avoiding
the expense and inconvenience of causing Seagate to issue shares to Arcada.
18. Seagate formed Merger Sub solely for the purpose of the Merger.
19. None of the shares of Seagate Common Stock received by any party
pursuant to the Merger is separate consideration for or allocable to the Arcada
Options or the Arcada Xxxxxx Options which remain outstanding after the
Effective Time.
20. Seagate is authorized to make all the representations made by it and set
forth herein.
B. LIMITATIONS ON OPINION: RELIANCE
1. Seagate has read and understands all the limitations and qualifications
to which your opinion is subject and the items upon which you have relied.
2. Seagate recognizes that your opinion will be based, in part, on the
representations herein and that such opinion will not be effective if any of
such representations is not accurate and complete in all material respects at
all relevant times.
This letter is being furnished to you solely for your benefit and for use in
rendering your opinion and is not to be used, circulated, quoted or otherwise
referred to for any purpose (other than inclusion in your opinion) without the
express written consent of Seagate. All of the foregoing certifications are true
to the best knowledge of the management of Seagate.
Very truly yours,
SEAGATE TECHNOLOGY, INC.
By:___________________________________
Its:__________________________________
