1
Exhibit 2.1
SIPEX CORPORATION
CAT ACQUISITION CORPORATION I
CALOGIC
AGREEMENT AND PLAN OF REORGANIZATION
Dated as of October 21, 1999
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TABLE OF CONTENTS
ARTICLE I. THE MERGER.........................................................1
1.1 The Merger..............................................................1
1.2 Effects of the Merger...................................................1
1.3 Closing.................................................................2
1.4 Approval by the Stockholders of Calogic.................................2
1.5 Approval by Merger Sub and Parent.......................................2
ARTICLE II. CONVERSION AND EXCHANGE OF SHARES; DISSENTING SHARES..............2
2.1 Conversion of Shares of Calogic Common Stock............................2
2.2 Escrow Shares...........................................................3
2.3 Dissenting Shares.......................................................4
2.4 Delivery of Evidence of Ownership.......................................4
2.5 No Further Ownership Rights in Calogic Common Stock.....................4
2.6 No Fractional Shares....................................................4
2.7 Assumption of Stock Options.............................................5
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF CALOGIC AND THE STOCKHOLDERS...5
3.1 Organization, Standing and Power; Subsidiaries..........................5
3.2 Capital Structure.......................................................6
3.3 Authority...............................................................7
3.4 Compliance with Laws and Other Instruments; Non-Contravention...........7
3.5 Technology and Intellectual Property Rights.............................8
3.6 Financial Statements; Business Information.............................10
3.7 Taxes..................................................................11
3.8 Absence of Certain Changes and Events..................................13
3.9 Leases in Effect.......................................................14
3.10 Personal Property; Real Estate.........................................15
3.11 Certain Transactions...................................................15
3.12 Litigation and Other Proceedings.......................................15
3.13 No Defaults............................................................16
3.14 Major Contracts........................................................16
3.15 Material Reductions....................................................17
3.16 Insurance and Banking Facilities.......................................17
3.17 Employees..............................................................17
3.18 Employee Benefit Plans.................................................18
3.19 Certain Agreements.....................................................19
3.20 Power of Attorney......................................................19
3.21 Brokers and Finders....................................................19
3.22 Certain Payments.......................................................19
3.23 Environmental Matters..................................................19
3.24 Enforceability of Contracts, etc.......................................20
3.25 Accounting Matters.....................................................20
3.26 Year 2000..............................................................20
3.27 Disclosure.............................................................21
3.29 Reliance...............................................................21
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS...............21
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB...........22
5.1 Organization and Qualification.........................................22
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5.2 Capitalization.........................................................22
5.3 Authority Relative to this Agreement...................................22
5.4 Non-Contravention......................................................23
5.5 Reports and Financial Statements.......................................23
5.6 Validity of Parent Merger Shares.......................................24
5.7 Consents and Approvals of Governmental Authorities.....................24
5.8 Absence of Certain Changes or Events...................................24
5.9 Investment Matters.....................................................24
5.10 Disclosure.............................................................24
5.11 Reliance...............................................................24
5.12 Accounting Matters.....................................................25
5.13 Warn act...............................................................25
5.14 Certain tax matters....................................................25
ARTICLE VI. COVENANTS OF CALOGIC.............................................25
6.1 Conduct of Business in Ordinary Course.................................25
6.2 Dividends, Issuance of, or Changes in Securities.......................26
6.3 Governing Documents....................................................26
6.4 No Acquisitions........................................................27
6.5 No Dispositions........................................................27
6.6 Indebtedness...........................................................27
6.7 Compensation...........................................................27
6.8 Claims.................................................................27
6.9 Access to Properties and Records.......................................27
6.10 Breach of Representations and Warranties...............................27
6.11 Consents...............................................................28
6.12 Tax Returns............................................................28
6.13 Stockholder Approval...................................................28
6.14 Preparation of Disclosure and Solicitation Materials...................28
6.15 Exclusivity; Acquisition Proposals.....................................28
6.16 Notice of Events.......................................................29
6.17 Reasonable Best Efforts................................................29
6.18 Insurance..............................................................29
ARTICLE VII. COVENANTS OF PARENT.............................................29
7.1 Breach of Representations and Warranties...............................29
7.2 Additional Information; Access.........................................29
7.3 Consents...............................................................30
7.4 Reasonable Best Efforts................................................30
7.5 Officers and Directors.................................................30
7.6 Nasdaq National Market Listing.........................................30
7.7 Notice of Events.......................................................30
7.8 Third Party Beneficiaries..............................................30
7.9 Exclusivity; Acquisition Proposals.....................................30
ARTICLE VIII. ADDITIONAL AGREEMENTS..........................................31
8.1 Investment Agreements..................................................31
8.2 Legal Conditions to the Merger.........................................31
8.3 Employee Benefits......................................................31
8.4 Expenses...............................................................32
8.5 Additional Agreements..................................................32
8.6 Public Announcements...................................................32
8.7 Confidentiality........................................................32
8.8 Pooling................................................................32
8.9 Xxxx-Xxxxx-Xxxxxx Filing...............................................33
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8.10 Environmental Matters..................................................33
ARTICLE IX. CONDITIONS PRECEDENT.............................................34
9.1 Conditions to Each Party's Obligation to Effect the Merger.............34
9.2 Conditions of Obligations of Parent and Merger Sub.....................34
9.3 Conditions of Obligation of Calogic and Stockholders...................36
ARTICLE X. INDEMNIFICATION...................................................37
10.1 Indemnification Relating to Agreement..................................37
10.2 Third Party Claims.....................................................38
10.3 Tax Contests...........................................................38
10.4 Limitations............................................................39
10.5 Binding Effect.........................................................39
10.6 Time Limit.............................................................39
10.7 Sole Remedy............................................................39
ARTICLE XA. INDEMNIFICATION BY PARENT........................................40
10.1A Indemnification Relating to Agreement.................................40
10.2A Limitations...........................................................40
10.3A Time Limit............................................................41
10.4A Sole Remedy...........................................................41
ARTICLE XI. TERMINATION......................................................41
11.1 Mutual Agreement........................................................41
11.2 Termination by Parent...................................................41
11.3 Termination by Calogic..................................................41
11.4 Outside Date............................................................41
11.5 Effect of Termination...................................................42
ARTICLE XII. MISCELLANEOUS...................................................42
12.1 Entire Agreement........................................................42
12.2 Governing Law; Consent to Jurisdiction..................................42
12.3 Notices.................................................................42
12.4 Severability............................................................43
12.5 Survival of Representations and Warranties..............................43
12.6 Assignment..............................................................44
12.7 Counterparts............................................................44
12.8 Amendment...............................................................44
12.9 Extension, Waiver.......................................................44
12.10 Interpretation..........................................................44
12.11 Knowledge...............................................................44
12.12 Transfer, Sales, Documentary, Stamp and Other Similar Taxes.............45
12.13 Remedies not Exclusive..................................................45
12.14 Limitation on Recovery..................................................45
EXHIBITS
EXHIBIT 1.1 -- Merger Documents
EXHIBIT 2.2 -- Escrow Agreement
EXHIBIT 8.1 -- Investment Agreement
EXHIBIT 8.2 -- Registration Rights Agreement
EXHIBIT 8.8 -- Calogic Affiliate Agreement
EXHIBIT 9.2 -- Opinion of Xxxxxx Godward, LLP
EXHIBIT 9.3 -- Opinion of Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
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INDEX OF DEFINED TERMS [TO BE UPDATED]
A
Acquisition Transaction................................28
Affiliate Agreement....................................32
Agreement...............................................1
Audited Balance Sheet Date.............................10
Audited Balance Sheets.................................10
B
Business Condition......................................5
C
Calogic.............................................1, 40
Calogic Affiliate......................................32
Calogic Common Stock....................................2
Calogic Disclosure Schedule.............................5
Calogic Intellectual Property...........................8
Calogic Option..........................................6
Calogic Voting Debt.....................................6
Charter Documents.......................................6
Closing.................................................2
Closing Date............................................2
Code....................................................1
Commission.............................................23
Consent.................................................8
Conversion Ratio........................................3
D
Dissenting Shares.......................................4
E
Effective Time..........................................1
Environmental Assessment Report..........................
Environmental Consultant.................................
Environmental Laws.....................................19
Environmental Liabilities..............................20
ERISA..................................................18
Escrow Agreement........................................3
Escrow Shares...........................................3
Excluded Shares.........................................2
F
Financial Statements...................................10
G
Governmental Entity.....................................8
H
Hazardous Materials....................................19
Holder Agreement.......................................38
H-S-R Act..............................................32
I
Indemnifiable Amounts..............................37, 40
Indemnified Stockholders...............................40
Investment Agreements..................................30
K
Knowledge..............................................44
L
Lease..................................................14
Leases.................................................14
Liens...................................................6
M
Merger..................................................1
Merger Documents........................................1
Merger Sub..............................................1
N
New Parent Stockholders................................30
O
Option Holder...........................................5
Outstanding Calogic Options.............................3
Outstanding Calogic Shares..............................3
P
Parent..................................................1
Parent Average Closing Price............................4
Parent Common Stock.....................................2
Parent Disclosure Schedule.............................22
Parent Merger Shares....................................3
Person..................................................6
Plan...................................................18
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R
Recent 10-Q............................................23
Registration Rights Agreement..........................30
Reports................................................23
S
Securities Act.........................................14
Stockholder Indemnifiable Amounts......................40
Stockholder Threshold Amount...........................40
Stockholders............................................1
Subsidiary..............................................5
Surviving Corporation...................................1
T
Tax....................................................11
Tax Return.............................................11
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Tax Returns............................................11
Taxes..................................................11
Threshold Amount.......................................39
Trading Day.............................................4
U
Unaudited Balance Sheet................................10
Unaudited Balance Sheet Date...........................10
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of October 21, 1999
(this "AGREEMENT"), by and among SIPEX Corporation, a Massachusetts corporation
("PARENT"); CAT Acquisition Corporation I, a Delaware corporation and a
wholly-owned subsidiary of Parent ("MERGER SUB"); Calogic, a California
corporation ("CALOGIC"); and the undersigned stockholders of Calogic (the
"STOCKHOLDERS")
Intending to be legally bound, and in consideration of the mutual
representations, warranties, covenants and agreements contained herein, Parent,
Merger Sub, Calogic and the Stockholders agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions hereof, and in
accordance with the California General Corporation Law (the "CGCL") and the
Delaware General Corporation Law ("DGCL"), Merger Sub will be merged with and
into Calogic (the "MERGER"). A Certificate of Merger and any other required
documents (collectively, the "MERGER DOCUMENTS"), substantially in the form
attached as EXHIBIT 1.1, will be duly prepared, executed and acknowledged by
Calogic and Merger Sub and thereafter delivered to the Secretary of State of
California for filing in accordance with the CGCL and to the Secretary of State
of Delaware for filing in accordance with the DGCL for filing in accordance with
the DGCL contemporaneously with the Closing (as defined in Section 1.3). The
Merger will become effective at such time as the Merger Documents have been
filed with the Secretary of State of California and Delaware (whichever is
later) (the "EFFECTIVE TIME"). Following the Merger, Calogic will continue as
the surviving corporation of the Merger (the "SURVIVING CORPORATION") under the
laws of the State of California, and the separate corporate existence of Merger
Sub will cease.
1.2 EFFECTS OF THE MERGER. At and after the Effective Time, (i) the
Merger will have all of the effects provided by the Articles of Merger and
applicable law, (ii) the Certificate of Incorporation of Calogic will be amended
in the form attached as APPENDIX A to EXHIBIT 1.1 until duly further amended,
(iii) the bylaws of Merger Sub will be the bylaws of the Surviving Corporation
until duly amended, (iv) the directors of Merger Sub will be the directors of
the Surviving Corporation, to hold office in accordance with the bylaws of the
Surviving Corporation, (v) the officers of Calogic will be the officers of the
Surviving Corporation, to hold office in accordance with the bylaws of the
Surviving Corporation and (vi) the issued and outstanding certificates for the
capital stock of Merger Sub will be the issued and outstanding certificates
initially representing all of the issued capital stock of the Surviving
Corporation. The Merger is intended to be a reorganization within the meaning of
Section 368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the
"CODE"), and this Agreement is intended to constitute a "plan of reorganization"
within the meaning of the regulations promulgated under Section 368 of the Code.
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1.3 CLOSING. The closing of the transactions contemplated by this
Agreement (the "CLOSING") will take place as soon as practicable (but no more
than five (5) business days) after satisfaction or waiver of the last to be
fulfilled of the conditions set forth in Article IX that by their terms are not
to occur at the Closing (the "CLOSING DATE"), but in no event later than
November 30, 1999 at the offices of Xxxxx, Xxxxxxx & Xxxxxxxxx LLP in Boston,
Massachusetts, unless another date or place is agreed to in writing by Parent
and Calogic. If all of conditions set forth in Article IX hereof are determined
to be satisfied (or duly waived) at the Closing, concurrently with the Closing
the parties hereto will cause the Merger to be consummated by the filing of the
Merger Documents with the Secretary of State of California and Delaware. The
Closing will be deemed to have concluded at the Effective Time.
1.4 APPROVAL BY THE STOCKHOLDERS OF CALOGIC. Calogic will take all
action necessary in accordance with applicable law, its Charter Documents (as
defined below) and any agreements to which it is a party to solicit the approval
of this Agreement, the Merger and all of the transactions contemplated hereby by
all stockholders of Calogic by means of a unanimous written consent of
stockholders in accordance with the CGCL, or if it is unable to obtain such
written consent, by a duly convened meeting of stockholders. Calogic will use
its reasonable best efforts to obtain such stockholder approval. Calogic
represents and warrants that its Board of Directors has duly (i) approved the
Merger in accordance with the CGCL and (ii) resolved to recommend to the
stockholders of Calogic that they approve this Agreement, the Merger and all of
the transactions contemplated hereby.
1.5 APPROVAL BY MERGER SUB AND PARENT. Merger Sub represents and
warrants that its Board of Directors has duly (i) approved the Merger in
accordance with the DGCL and (ii) resolved to recommend to the stockholders of
Merger Sub that they approve this Agreement, the Merger and all of the
transactions contemplated hereby. Parent represents and warrants that (i) its
Board of Directors has duly approved the Merger in accordance with the
Massachusetts General Corporation Law (the "MGCL") and (ii) it is not necessary
under the MGCL that the shareholders of Parent approve this Agreement, the
Merger or the transactions contemplated hereby.
ARTICLE II
CONVERSION AND EXCHANGE OF SHARES; DISSENTING SHARES
2.1 CONVERSION OF SHARES OF CALOGIC COMMON STOCK.
(a) Subject, without limitation, to the provisions of Section
2.3 hereof, at the Effective Time, all of the shares of common stock, no par
value, of Calogic ("CALOGIC COMMON STOCK") issued and outstanding immediately
prior to the Effective Time (excluding any Calogic Common Stock held by Parent
or Merger Sub or any other subsidiary of Parent, or by Calogic or any subsidiary
of Calogic, which shares ("EXCLUDED SHARES") will be automatically canceled in
the Merger without payment of any consideration therefor, and excluding
Dissenting Shares (as defined in Section 2.3 hereof)), will automatically, by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into shares of common stock, $.01 par value per share, of Parent
("PARENT COMMON STOCK") in accordance with Section 2.1(c), and cash (rounded
down to the nearest whole cent) in lieu of fractional shares, if any, pursuant
to Section 2.6 below. Shares of Calogic Common Stock that are
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actually issued and outstanding immediately prior to the Effective Time,
excluding the Excluded Shares, are sometimes referred to herein as the
"OUTSTANDING CALOGIC SHARES." All rights, warrants or options to acquire Calogic
Common Stock and securities convertible into Calogic Common Stock that
areoutstanding immediately prior to the Effective Time and do not expire
pursuant to their terms on or before the Closing (each of which is specifically
identified in Section 3.2 of the Calogic Disclosure Schedule (as defined below))
are sometimes referred to herein as the "OUTSTANDING CALOGIC OPTIONS."
(b) The maximum number of shares of Parent Common Stock to be
issued in exchange for the acquisition of all Outstanding Calogic Shares and the
assumption of all Outstanding Calogic Options will be 3,400,000, provided such
maximum number shall be adjusted, as appropriate, for any stock split, stock
dividend, reclassification, recapitalization or similar event. Such shares are
herein referred to as the "PARENT MERGER SHARES".
(c) The ratio at which one Outstanding Calogic Share will be
converted into shares of Parent Common Stock at the Effective Time is herein
called the "CONVERSION RATIO" and will be calculated as set forth in this
Section 2.1(c). Subject to Section 2.3, at the Effective Time, each Outstanding
Calogic Share will be converted into the right to receive that number (which may
be a fraction) of shares of Parent Common Stock that equals the quotient
obtained by DIVIDING the number of Parent Merger Shares by the sum of the number
of Outstanding Calogic Shares PLUS the number of shares of Calogic Common Stock
issuable upon the exercise or conversion of all Outstanding Calogic Options.
Each holder of Outstanding Calogic Shares will be entitled to receive that
aggregate number of shares of Parent Common Stock equal to the Conversion Ratio
multiplied by the number of Outstanding Calogic Shares held by such holder
immediately prior to the Effective Time, subject to Section 2.3 herein.
(d) At the Effective Time, each share of common stock, $.01
par value, of Merger Sub issued and outstanding immediately prior to the
Effective Time will, by virtue of the Merger and without any action on the part
of the holder hereof, be converted into one share of common stock, no par value,
of the Surviving Corporation.
2.2 ESCROW SHARES. Ten percent of the Parent Merger Shares (the "ESCROW
SHARES") will be deposited and held in escrow in accordance with an escrow
agreement substantially in the form attached as EXHIBIT 2.2 (the "ESCROW
AGREEMENT") as the first source, but not the sole source, of indemnification
payments that may become due to Parent pursuant to Article X. The Escrow Shares
will be withheld on a pro rata basis among the holders of the Outstanding
Calogic Shares. The exact number of Escrow Shares held for the account of each
Calogic stockholder will be determined at the Closing by the agreement in
writing of Parent and Calogic. The delivery of the Escrow Shares will be made on
behalf of the holders of the Outstanding Calogic Shares in accordance with the
provisions hereof, with the same force and effect as if such shares had been
delivered by Parent directly to such holders and subsequently delivered by such
holders to the Escrow Agent. The adoption of this Agreement by stockholders of
Calogic will also constitute their approval of the terms and provisions of the
Escrow Agreement, which is an integral term of the Merger.
2.3 DISSENTING SHARES. Any holder of shares of Calogic Common Stock
that are outstanding on the record date for the determination of which holders
will be entitled to vote for or against the Merger who did not vote such shares
in favor of the Merger or sign and deliver a written consent thereto with
respect to such shares (the shares of Calogic Common Stock then outstanding that
are not
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thus voted or as to which such consents are not signed and delivered are
referred to as "DISSENTING SHARES") will be entitled to exercise dissenters'
rights pursuant to Chapter 13 of the CGCL with respect to such Dissenting Shares
provided that such holder meets all of the requirements of the CGCL with respect
to such Dissenting Shares, and will not be entitled to receive Parent Merger
Shares, unless otherwise provided by the CGCL or agreed in writing by Parent.
Calogic will, after consultation with Parent, give such notices with respect to
dissenters' rights as may be required by the CGCL as soon as practicable.
2.4 DELIVERY OF EVIDENCE OF OWNERSHIP. At the Closing, each holder of a
certificate or other documentation representing Outstanding Calogic Shares,
other than Dissenting Shares, will surrender such certificates or other
documentation to Parent, and, if not previously delivered, duly executed
counterparts of this Agreement, the Escrow Agreement, the Investment Agreement
(as defined below) and the Registration Rights Agreement (as defined below) and
such other duly executed documentation as may be reasonably required by Parent
to effect a transfer of such shares, and upon such surrender and at the
Effective Time each such holder will be entitled to receive promptly after the
Effective Time from Parent or its transfer agent certificates registered in the
name of such holder representing the applicable number of Parent Merger Shares,
and the cash (calculated pursuant to Section 2.6, which will be paid by check),
to which such holder is entitled pursuant to the provisions of this Agreement,
with a portion of such shares to be deposited in escrow pursuant to the Escrow
Agreement, as provided in Section 2.2.
2.5 NO FURTHER OWNERSHIP RIGHTS IN CALOGIC COMMON STOCK. The Merger and
its approval by the stockholders of Calogic and the execution of this Agreement
will be deemed, at the Effective Time, to constitute full satisfaction and
termination of all rights and agreements pertaining to Calogic Common Stock
pursuant to the CGCL, by contract or otherwise. After the Effective Time, there
will be no transfers on the stock transfer books of Calogic of Calogic Common
Stock. Until surrendered to Parent, each certificate for Calogic Common Stock
will, after the Effective Time, represent only the right to receive shares of
Parent Common Stock and the right to receive cash into which the shares of
Calogic Common Stock formerly represented thereby will have been converted
pursuant to this Agreement. Any dividends or other distribution declared after
the Effective Time with respect to Parent Common Stock will be paid to the
holder of any certificate for shares of Calogic Common Stock when the holder
thereof is entitled to receive a certificate for such holder's Parent Merger
Shares in accordance with this Agreement.
2.6 NO FRACTIONAL SHARES. No certificates or scrip for fractional
shares of Parent Common Stock will be issued, no Parent stock split or dividend
will be paid in respect of any fractional share interest, and no such fractional
share interest will entitle the owner thereof to vote or to any rights of or as
a stockholder of Parent. In lieu of such fractional shares, any holder of
Outstanding Calogic Shares who would otherwise be entitled to a fraction of a
share of Parent Common Stock (after aggregating all fractional shares of Parent
Common Stock to be received by such holder) will be paid the cash value of such
fraction, which will be equal to such fraction MULTIPLIED BY the Parent Average
Closing Price. For purposes of this Agreement "PARENT AVERAGE CLOSING PRICE"
will be the average closing price of the Parent Common Stock as publicly
reported by the Nasdaq National Market over the ten Trading Days ending two
Trading Days prior to the Closing Date. "TRADING DAY" will mean days on which
closing prices for purchases and sales of Parent Common Stock are reported by
the Nasdaq National Market.
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2.7 ASSUMPTION OF STOCK OPTIONS. At the Effective Time, Parent shall
assume each outstanding Calogic Option (an "Outstanding Calogic Option") and
each holder thereof (each an "OPTION HOLDER") shall thereby be entitled to
acquire, by virtue of the Merger and without any action on the part of the
Option Holder, on substantially the same terms (including the dates and extent
of exercisability) and subject to the same conditions, including vesting, as
such Outstanding Calogic Option, the number of shares of Parent Common Stock
determined by MULTIPLYING the number of shares of Calogic Common Stock for which
such Outstanding Calogic Option is then exercisable in accordance with its terms
immediately prior to the Effective Time by the Conversion Ratio (rounded down to
the nearest whole share), at an exercise or conversion price per share of Parent
Common Stock (rounded up to the nearest whole cent) determined by dividing the
exercise price per share of Calogic Common Stock of such Outstanding Calogic
Option immediately prior to the Effective Time by the Conversion Ratio.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CALOGIC
AND THE STOCKHOLDERS
Except as set forth in the disclosure schedule of Calogic dated as of
the date hereof and delivered herewith to Parent (the "CALOGIC DISCLOSURE
SCHEDULE") which identifies the section and subsection to which each disclosure
therein relates, and whether or not the Calogic Disclosure Schedule is referred
to in a specific section or subsection, Calogic and each of the Stockholders
jointly and severally represent and warrant to Parent and Merger Sub as follows:
3.1 ORGANIZATION, STANDING AND POWER; SUBSIDIARIES.
(a) Calogic is a corporation duly organized, validly existing
and in good standing under the laws of the State of California, has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its businesses as now being conducted, and is duly qualified and
in good standing to do business in each jurisdiction in which a failure to so
qualify would have a material adverse effect on the Business Condition (as
hereinafter defined) of Calogic.
As used in this Agreement, "BUSINESS CONDITION" with respect
to any Person (as defined below) means the business, financial condition,
results of operations or assets (without giving effect to the consequences of
the transactions contemplated by this Agreement, and other than changes in
general economic conditions) of such Person or Persons including its
Subsidiaries taken as a whole. For purposes of this Article III and Article VI,
"Calogic" shall refer to Calogic and its Subsidiaries. In this Agreement, a
"SUBSIDIARY" of any Person means a corporation, partnership, limited liability
company, joint venture or other entity of which such Person directly or
indirectly owns or controls a majority of the equity interests or voting
securities or other interests that are sufficient to elect a majority of the
Board of Directors or other managers of such corporation, partnership, limited
liability company, joint venture or other entity. References to Calogic in this
Agreement shall be deemed to include all Subsidiaries of Calogic, if any, unless
the context specifically requires otherwise. In this Agreement, "PERSON" means
any natural person, corporation, partnership, limited liability company, joint
venture or other entity.
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All Subsidiaries of Calogic and their jurisdiction of
incorporation are completely and correctly listed in Section 3.1 of the Calogic
Disclosure Schedule. Calogic has delivered to Parent complete and correct copies
of the articles or certificate of incorporation, bylaws and/or other primary
charter and organizational documents ("CHARTER DOCUMENTS") of Calogic, in each
case, as amended to the date hereof. Complete and correct copies of the minute
books and stock records of Calogic have been delivered to Parent. Section 3.1 of
the Calogic Disclosure Schedule contains a complete and correct list of the
officers and directors of Calogic.
(b) Section 3.1 of the Calogic Disclosure Schedule contains a
complete and correct list of the Subsidiaries of Calogic and correctly sets
forth the number of outstanding shares of capital stock of each Subsidiary of
Calogic and each shareholder of such Subsidiary and the number of shares of
capital stock of such Subsidiary owned by such shareholder. Except as set forth
in Section 3.1 of the Calogic Disclosure Schedule, all of the outstanding shares
of capital stock of each Subsidiary of Calogic are owned beneficially and of
record by Calogic, free and clear of any security interests, liens, charges,
restrictions, claims, encumbrances or assessments of any nature whatsoever
("LIENS"); and there are no outstanding subscriptions, warrants, options,
convertible securities, or other rights (contingent or other) pursuant to which
any of the Subsidiaries is or may become obligated to issue any shares of its
capital stock to any Person other than Calogic or one of the other Subsidiaries.
3.2 CAPITAL STRUCTURE.
(a) The authorized capital stock of Calogic consists of
2,500,000 shares of Calogic Common Stock, of which 345,000 shares are issued and
outstanding as of the date of this Agreement and no shares are issued and held
as treasury shares by Calogic. The Calogic Disclosure Schedule sets forth all
holders of Calogic Common Stock and the number of shares owned. The Calogic
Disclosure Schedule also sets forth any options, warrants, calls, conversion
rights, commitments, agreements, contracts, understandings, restrictions,
arrangements or rights of any character (each, an "CALOGIC OPTION") to which
Calogic is a party or by which Calogic may be bound obligating Calogic to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
the capital stock of Calogic, or obligating Calogic to grant, extend, or enter
into any such option, warrant, call, conversion right, conversion payment,
commitment, agreement, contract, understanding, restriction, arrangement or
right.
(b) All outstanding shares of Calogic Common Stock are, and
any shares of Calogic Common Stock issued upon exercise of any Outstanding
Calogic Options will be, validly issued, fully paid, nonassessable and not
subject to any preemptive rights (other than those which have been duly waived),
or to any agreement to which Calogic is a party or by which Calogic may be
bound. Calogic does not have outstanding any bonds, debentures, notes or other
indebtedness the holders of which (i) have the right to vote (or convertible or
exercisable into securities having the right to vote) with holders of shares of
Calogic Common Stock on any matter ("CALOGIC VOTING DEBT") or (ii) are or will
become entitled to receive any payment as a result of the execution of this
Agreement or the completion of the transactions contemplated hereby.
3.3 AUTHORITY. The execution, delivery and performance of this
Agreement and all other agreements contemplated hereby by Calogic have been duly
authorized by all necessary action of the Board of Directors of Calogic, and if
the Closing shall occur, shall have been duly authorized by all
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necessary action of the stockholders of Calogic. Certified copies of the
resolutions adopted by the Board of Directors of Calogic and its stockholders
approving this Agreement, all other agreements contemplated hereby and the
Merger have been or will be provided to Parent prior to the Closing. Calogic has
duly and validly executed and delivered this Agreement and has, or prior to
Closing, will have duly and validly executed and delivered all other agreements
contemplated hereby, and each of this Agreement and such other agreements
constitutes a valid, binding and enforceable obligation of Calogic in accordance
with its terms except insofar as enforceability may be affected by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, and general principles of equity.
3.4 COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS; NON-CONTRAVENTION.
Calogic holds, and at all times has held, all licenses, permits and
authorizations from all Governmental Entities (as defined below) necessary for
the lawful conduct of its business pursuant to all applicable statutes, laws,
ordinances, rules and regulations of all such Governmental Entities having
jurisdiction over it or any part of its operations, excepting, however, when
such failure to hold would not have a material adverse effect on Calogic's
Business Condition. There are no material violations or claimed violations known
by Calogic of any such license, permit or authorization or any such statute,
law, ordinance, rule or regulation. Assuming the receipt of all Consents (as
defined below) and assuming the accuracy of the representations and warranties
of Parent and Merger Sub contained in this Agreement and the other agreements
contemplated hereby, neither the execution, delivery or performance of this
Agreement and all other agreements contemplated hereby by Calogic and the
Stockholders, nor the consummation of the Merger or any other transaction
described herein, does or will, after the giving of notice, or the lapse of
time, or otherwise, conflict with, result in a breach of, or constitute a
default under, the Charter Documents of Calogic or any federal, foreign, state
or local court or administrative order or process, statute, law, ordinance, rule
or regulation, or any contract, agreement or commitment to which Calogic is a
party, or under which Calogic is obligated, or by which Calogic or any of the
rights, properties or assets of Calogic are subject or bound; result in the
creation of any Lien upon, or otherwise adversely affect, any of the rights,
properties or assets of Calogic; terminate, amend or modify, or give any party
the right to terminate, amend, modify, abandon or refuse to perform or comply
with, any contract, agreement or commitment to which Calogic is a party, or
under which Calogic is obligated, or by which Calogic or any of the rights,
properties or assets of Calogic are subject or bound; or accelerate, postpone or
modify, or give any party the right to accelerate, postpone or modify, the time
within which, or the terms and conditions under which, any liabilities, duties
or obligations are to be satisfied or performed, or any rights or benefits are
to be received, under any contract, agreement or commitment to which Calogic is
a party, or under which Calogic may be obligated, or by which Calogic or any of
the rights, properties or assets of Calogic are subject or bound. Section 3.4 of
the Calogic Disclosure Schedule sets forth each agreement, contract or other
instrument binding upon Calogic requiring a notice or consent (by its terms or
as a result of any conflict or other contravention required to be disclosed in
the Calogic Disclosure Schedule pursuant to the preceding provisions of this
Section 3.4) as a result of the execution, delivery or performance of this
Agreement and all other agreements contemplated hereby by Calogic and the
Stockholders or the consummation of the Merger or any other transaction
described herein (each such notice or consent, a "CONSENT"). Assuming the
accuracy of the representations and warranties of Parent and Merger Sub
contained in this Agreement and the other agreements contemplated hereby, no
consent, approval, order, or authorization of or registration, declaration, or
filing with or exemption (also a "CONSENT") by, any court, administrative agency
or commission or other governmental authority or instrumentality, whether
domestic or foreign (each a "GOVERNMENTAL ENTITY") is required to be made or
obtained by Calogic or any of its Subsidiaries
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in connection with the execution, delivery or performance of this Agreement and
all other agreements contemplated hereby by Calogic and the Stockholders or the
consummation of the Merger or any other transaction described herein, except for
(i) the filing by Calogic and Merger Sub of the appropriate Merger Documents
with the Secretary of State of California and Delaware and (ii) any filings
required by the H-S-R Act (as defined in Section 8.9), and (iii) the filings
described in Section 5.7.
3.5 TECHNOLOGY AND INTELLECTUAL PROPERTY RIGHTS.
(a) For the purposes of this Agreement, "CALOGIC INTELLECTUAL
PROPERTY" consists of the following intellectual property:
(i) all patents, trademarks, trade names, service marks, trade
dress, copyrights and any renewal rights therefor, mask works,
schematics, software, firmware, technology, manufacturing processes,
supplier lists, customer lists, trade secrets, know-how, moral rights
and applications and registrations for any of the foregoing;
(ii) all documents, records and files relating to design, end
user documentation, manufacturing, quality control, sales, marketing or
customer support for all intellectual property described herein;
(iii) all other tangible or intangible proprietary information
and materials; and
(iv) all license and other rights in any third party product
or any third party intellectual property described in (i) through (iii)
above;
that are owned or held by or on behalf of Calogic or that are being, and/or have
been, used, or are currently under development for use, in the business of
Calogic as it (i) has been conducted during the past two years (ii) is currently
conducted or (iii) is currently planned in written documentation to be
conducted; provided, however, that Calogic Intellectual Property will not
include any commercially available third party software or related intellectual
property.
(b) Section 3.5 of the Calogic Disclosure Schedule lists: (i)
all patents, copyright registrations, mask works, registered trademarks,
registered service marks, trade dress, any renewal rights for any of the
foregoing, and any applications and registrations for any of the foregoing, that
are included in Calogic Intellectual Property and owned by or on behalf of
Calogic; (ii) all hardware products and tools, software products and tools and
services that are currently published, offered, or under development by Calogic;
and (iii) all licenses, sublicenses and other agreements to which Calogic is a
party and pursuant to which Calogic or any other person is authorized to use any
Calogic Intellectual Property or exercise any other right with regard thereto.
The disclosures described in (iii) hereof include the identities of the parties
to the relevant agreements, a description of the nature and subject matter
thereof, the term thereof and the applicable royalty or summary of any formula
or procedure for determining such royalty.
(c) To the knowledge of Calogic, based solely upon the fact
that Calogic has not received written notice to the contrary and without further
investigation, Calogic Intellectual Property consists solely of items and rights
that are either: (i) owned solely by Calogic; (ii) in the public domain; or
(iii) rightfully used and authorized for use by Calogic and its successors
pursuant to a valid
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license. All Calogic Intellectual Property that consists of license or other
rights to third party property is separately set forth in Section 3.5 of the
Calogic Disclosure Schedule. To the knowledge of Calogic, Calogic has all rights
in Calogic Intellectual Property necessary to carry out Calogic's activities,
including without limitation rights to make, use, exclude others from using,
reproduce, modify, adapt, create derivative works based on, translate,
distribute (directly and indirectly), transmit, display and perform publicly,
license, rent, lease, assign or otherwise transfer Calogic Intellectual Property
in all geographic locations and fields of use, and to sublicense any or all such
rights to third parties, including the right to grant further sublicenses.
(d) Calogic is not, nor as a result of the execution or
delivery of this Agreement and all other agreements contemplated hereby, or
performance of Calogic's obligations hereunder or the consummation of the
Merger, will Calogic be, in violation of any license, sublicense or other
agreement relating to any Calogic Intellectual Property to which Calogic is a
party or otherwise bound. Calogic is not obligated to provide any consideration
(whether financial or otherwise) to any third party, nor is any third party
otherwise entitled to any consideration, with respect to any exercise of rights
by Calogic or Parent, as successor to Calogic, in Calogic Intellectual Property
pursuant to any license, sublicense or other agreement.
(e) To the knowledge of Calogic, based solely upon the fact
that Calogic has not received written notice to the contrary and without further
investigation, the use, reproduction, modification, distribution, licensing,
sublicensing, sale, or any other exercise of rights in any product, work,
technology, service or process as used, provided, or offered at any time, or as
proposed for use, reproduction, modification, distribution, licensing,
sublicensing, sale, or any other exercise of rights, by Calogic does not
infringe any copyright, patent, trade secret, trademark, service xxxx, trade
name, firm name, logo, trade dress, mask work, moral right, other intellectual
property right, right of privacy, or right in personal data of any Person. No
claims (i) challenging the validity, effectiveness, or ownership by Calogic of
any Calogic Intellectual Property, or (ii) to the effect that the use,
reproduction, modification, manufacturing, distribution, licensing,
sublicensing, sale, or any other exercise of rights in any product, work,
technology, service, or process as used, provided or offered at any time, or as
proposed for use, reproduction, modification, distribution, licensing,
sublicensing, sale, or any other exercise of rights, by Calogic infringes or
will infringe on any intellectual property or other proprietary or personal
right of any Person have been asserted to Calogic or, to the knowledge of
Calogic (as defined below), are threatened by any Person. There are no legal or
governmental proceedings, including interference, re-examination, reissue,
opposition, nullity, or cancellation proceedings pending that relate to any
Calogic Intellectual Property, other than review of pending applications for
patent, and to the knowledge of Calogic no such proceedings are threatened by
any Governmental Entity or any other Person. All granted or issued patents and
mask works and all registered trademarks and copyright registrations owned by
Calogic are valid, enforceable and subsisting. To the knowledge of Calogic and
without investigation, there is no unauthorized use, infringement, or
misappropriation of any Calogic Intellectual Property by any third party,
employee or former employee.
(f) Section 3.5(f) of the Calogic Disclosure Schedule
separately lists all parties, including, without limitation, employees) and
consultants, who have created any portion of, or otherwise have any rights in or
to, such Calogic Intellectual Property, other than Calogic Intellectual Property
that is licensed to Calogic. Calogic has not secured from any party identified
in Section 3.5(f) of the Calogic Disclosure Schedule a valid and enforceable
written assignment of any such work or
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other rights to Calogic. To the knowledge of Calogic, no party has asserted any
rights in or to, or made any claims for payments or royalties in respect of,
Calogic Intellectual Property, other than Calogic Intellectual Property that is
licensed to Calogic.
3.6 FINANCIAL STATEMENTS; BUSINESS INFORMATION.
(a) Calogic has delivered to Parent an unaudited balance sheet
(the "UNAUDITED BALANCE SHEET") as of September 30, 1999 (the "UNAUDITED BALANCE
SHEET DATE") and audited balance sheets (the "AUDITED BALANCE SHEETS") as of
June 30, 1999 (the "AUDITED BALANCE SHEET DATE") and June 30, 1997 and 1998,
unaudited statements of income and cash flows for the three-month period ended
September 30, 1999 and audited statements of income and cash flows for its 1996,
1997 and 1998 fiscal years (all of such balance sheets and statements of income
and cash flows are collectively referred to as the "FINANCIAL STATEMENTS"). The
Financial Statements: (i) are in accordance with the books and records of
Calogic; (ii) present fairly, in all material respects, the financial position
of Calogic as of the date indicated and the results of its operations and cash
flows for such periods; and (iii) have been prepared in accordance with
generally accepted accounting principles consistently applied (subject, in the
case of unaudited statements, to the absence of footnote disclosure and in the
case of interim statements to year-end adjustments, which will not be material
either individually or in the aggregate and except as described in the Section
3.6 of the Calogic Disclosure Schedule). As of the Unaudited Balance Sheet Date,
there were no liabilities, claims or obligations of any nature in excess of
$250,000 in the aggregate, whether accrued, absolute, contingent, anticipated or
otherwise, whether due or to become due, that are intentionally not shown or are
intentionally improperly recorded in the Unaudited Balance Sheet . Since the
Unaudited Balance Sheet Date, Calogic has incurred no material liabilities,
claims or obligations of any nature, whether accrued, absolute, contingent,
anticipated or otherwise other than in the ordinary course of business and
except for liabilities incurred by Calogic in connection with the preparation
and execution of this Agreement and the consummation of the transactions
contemplated herein.
(b) All of the accounts, notes and other receivables which are
reflected in the Audited Balance Sheet were acquired in the ordinary course of
business; and, except to the extent reserved against in the Audited Balance
Sheet, all of the accounts, notes and other receivables which are reflected
therein have been collected in full, or, to the knowledge of Calogic, are valid,
binding and enforceable in accordance with their terms in the ordinary course of
business, and arise from bona fide transactions, and Calogic has not received
notice that the same are subject to counterclaims, refusals to pay or other
rights of setoff. All of the accounts, notes and other receivables which have
been acquired by Calogic since the Audited Balance Sheet Date were acquired in
the ordinary course of business and have been collected in full, or to the
knowledge of Calogic, are valid, binding and enforceable in accordance with
their terms in the ordinary course of business, and arise from bona fide
transactions, and Calogic has not received notice that the same are subject to
counterclaims, refusals to pay or other rights of setoff, subject to an
appropriate reserve. No accounts, notes or other receivables are contingent upon
the performance by Calogic of any obligation or contract. No Person has any Lien
on any of such receivables and no agreement for deduction or discount has been
made with respect thereto.
(c) The business information prepared by Calogic in connection
with this Agreement and the transactions contemplated herein and delivered to
Parent was prepared in good faith.
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3.7 TAXES.
(a) The term "TAXES" as used herein means all federal, state,
local and foreign income tax, alternative or add-on minimum tax, estimated,
gross income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, capital profits, lease, service, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit taxes, customs, duties and other taxes,
governmental fees and other like assessments and charges of any kind whatsoever,
together with all interest, penalties, additions to tax and additional amounts
with respect thereto, and the term "TAX" means any one of the foregoing Taxes.
The term "TAX RETURNS" as used herein means all returns, declarations, reports,
claims for refund, information statements and other documents relating to Taxes,
including all schedules and attachments thereto, and including all amendments
thereof, and the term "TAX RETURN" means any one of the foregoing Tax Returns.
(b) Calogic has timely filed all Tax Returns required to be
filed and has paid all Taxes owed (whether or not shown as due on such Tax
Returns), including, without limitation, all Taxes which Calogic is obligated to
withhold for amounts owing to employees, creditors and third parties. All Tax
Returns filed by Calogic were complete and correct in all material respects, and
such Tax Returns correctly reflected the facts regarding the income, business,
assets, operations, activities, status and other matters of Calogic and any
other information required to be shown thereon. None of the Tax Returns filed by
Calogic or Taxes payable by Calogic have been the subject of an audit, action,
suit, proceeding, claim, examination, deficiency or assessment by any
Governmental Entity, and no such audit, action, suit, proceeding, claim,
examination, deficiency or assessment is currently pending or, to the knowledge
of Calogic, threatened. Calogic is not currently the beneficiary of any
extension of time within which to file any Tax Return, and Calogic has not
waived any statute of limitation with respect to any Tax or agreed to any
extension of time with respect to a Tax assessment or deficiency. All material
elections with respect to Taxes affecting Calogic, as of the date hereof, are
set forth in the Financial Statements or in Section 3.7 of the Calogic
Disclosure Schedule. None of the Tax Returns filed by Calogic contain a
disclosure statement under former Section 6661 of the Code or Section 6662 of
the Code (or any similar provision of state, local or foreign Tax law). Calogic
is not a party to any Tax sharing agreement or similar arrangement. Calogic has
never been a member of a group filing a consolidated federal income Tax Return
(other than a group the common parent of which was Calogic), and Calogic does
not have any liability for the Taxes of any Person (other than Calogic) under
Treasury Regulation Section 1.1502-6 (or any corresponding provision of state,
local or foreign Tax law), as a transferee or successor, by contract, or
otherwise.
(c) Calogic is not a party to any agreement, contract,
arrangement or plan that has resulted or would result, separately or in the
aggregate, in the payment of (i) any "excess parachute payments" within the
meaning of Section 280G of the Code (without regard to the exceptions set forth
in Sections 280G(b)(4) and 280G(b)(5) of the Code) or (ii) any amount for which
a deduction would be disallowed or deferred under Section 162 or Section 404 of
the Code. Calogic has not agreed to make any adjustment under Section 481(a) of
the Code (or any corresponding provision of state, local or foreign law) by
reason of a change in accounting method or otherwise, and Calogic will not be
required to make any such adjustment as a result of the transactions set forth
in this Agreement. Calogic does not have and has not had a permanent
establishment in any foreign country, as defined in any applicable Tax treaty or
convention between the United States and such foreign country. No portion of
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the Parent Merger Shares is subject to the Tax withholding provisions of
Section 3406 of the Code, or of Subchapter A of Chapter 3 of the Code or of any
other provision of law. None of the assets of Calogic is property which is
required to be treated as being owned by any other Person pursuant to the
so-called "safe harbor lease" provisions of former Section 168(f)(8) of the
Code. None of the assets of Calogic directly or indirectly secures any debt, the
interest on which is tax exempt under Section 103(a) of the Code. None of the
assets of Calogic is "tax-exempt use property" within the meaning of Section
168(h) of the Code. No claim has ever been made by any Governmental Entity in a
jurisdiction where Calogic does not file Tax Returns that it is or may be
subject to Tax in that jurisdiction. Calogic has not participated in an
international boycott as defined in Section 999 of the Code. None of the shares
of outstanding capital stock of Calogic are subject to a "substantial risk of
forfeiture" within the meaning of Section 83 of the Code.
(d) There are no liens for Taxes (other than for ad valorem
Taxes not yet due and payable) upon the assets of Calogic. The unpaid Taxes of
Calogic did not, as of the Unaudited Balance Sheet Date, exceed the reserve for
actual Taxes (as opposed to any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) as shown on the
Unaudited Balance Sheet, and will not exceed such reserve as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of Calogic in filing its Tax Returns (taking into account any Taxes
incurred as a result of the transactions contemplated by this Agreement).
Section 3.7 of the Calogic Disclosure Schedule sets forth Calogic's Tax basis in
each of its assets. Calogic is not a party to any joint venture, partnership,
limited liability company or other arrangement or contract which could be
treated as a partnership for federal income tax purposes.
(e) Calogic has no net operating losses or other tax
attributes presently subject to limitation under sections 382, 383 or 384 of the
Code or the federal consolidated return regulations promulgated thereunder
(other than limitations imposed as a result of the transactions contemplated by
this Agreement). Calogic is not, and has not been a U.S. Real Property Holding
Company (as defined in Section 897(c)(2) of the Code) during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code. Calogic has never
filed a consent pursuant to Section 341(f) of the Code, relating to collapsible
corporations. To the knowledge of Calogic, neither Calogic nor any of its
shareholders has taken or agreed to take any action that would reasonably be
expected to cause the Merger to fail to qualify as a reorganization within the
meaning of Section 368(a) of the Code.
3.8 ABSENCE OF CERTAIN CHANGES AND EVENTS. From the Audited Balance
Sheet Date, there has not been, except as consented to in writing by Parent
(such consent not to be unreasonably withheld):
(a) Any transaction involving more than $50,000 entered into
by Calogic other than in the ordinary course of business ("ORDINARY COURSE OF
BUSINESS"); any change (or any development or combination of developments of
which Calogic has knowledge which is reasonably likely to result in such a
change) in Calogic's Business Condition, other than changes in the ordinary
course of business which in the aggregate have not been and are not expected to
be materially adverse to Calogic's Business Condition; or, without limiting the
foregoing, any loss of or damage to any of the properties of Calogic due to fire
or other casualty or other loss, whether or not insured, amounting to more than
$50,000 in the aggregate;
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(b) Any declaration, setting aside or payment of any dividend
or other distribution with respect to any shares of capital stock of Calogic, or
any repurchase, redemption, retirement or other acquisition by Calogic of any
outstanding shares of capital stock, any Calogic Option, or other securities of,
or other equity or ownership interests in, Calogic;
(c) Any discharge or satisfaction of any Lien or payment or
satisfaction of any obligation or liability (whether absolute, accrued,
contingent or otherwise and whether due or to become due) other than current
liabilities shown on the Audited Balance Sheet and current liabilities incurred
since the Audited Balance Sheet Date in the ordinary course of business;
(d) Any change in the Charter Documents of Calogic or any
amendment of any term of any outstanding security of Calogic;
(e) Any incurrence, assumption or guarantee by Calogic of any
indebtedness for borrowed money other than in the ordinary course of business
and in an aggregate amount exceeding $50,000;
(f) Any creation or assumption by Calogic of any Lien on any
asset in excess of $50,000;
(g) Any making of any loan, advance or capital contributions
to, or investment in, any Person in an aggregate amount exceeding $50,000;
(h) Any sale, lease, pledge, transfer or other disposition of
any material capital asset in an aggregate amount exceeding $50,000;
(i) Any material transaction or commitment made, or any
material contract or agreement entered into, by Calogic relating to its assets
or business (including the acquisition or disposition of any assets) or any
relinquishment by Calogic of any contract or other right in an aggregate amount
exceeding $50,000;
(j) Any (A) grant of any severance or termination pay to any
director, officer or employee of Calogic, (B) entering into of any employment,
severance, management, consulting, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any director,
officer or employee of Calogic, (C) change in benefits payable under existing
severance or termination pay policies or employment, severance, management,
consulting or other similar agreements, (D) change in compensation, bonus or
other benefits payable to directors, officers or employees of Calogic or (E)
change in the payment or accrual policy with respect to any of the foregoing;
(k) Any labor dispute or any activity or proceeding by a labor
union or representative thereof to organize any employees of Calogic, or any
lockouts, strikes, slowdowns, work stoppages or threats thereof by or with
respect to any employees of Calogic;
(l) Any notes or accounts receivable or portions thereof
written off by Calogic as uncollectible in an aggregate amount exceeding
$50,000;
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(m) Any issuance or sale of any stock, bonds, phantom stock
interest or other securities of which Calogic is the issuer, or the grant,
issuance or change of any stock options, warrants, or other rights to purchase
securities of Calogic or phantom stock interest in Calogic;
(o) Any cancellation of any debts or claims or waiver of any
rights of substantial value in an aggregate amount exceeding $50,000;
(p) Any sale, assignment or transfer of any Calogic
Intellectual Property or other similar assets, including licenses therefor;
(q) Any capital expenditures, or commitment to make any
capital expenditures, for additions to property, plant or equipment in an
aggregate amount exceeding $100,000;
(r) Payment of any amounts to, or liability incurred to or in
respect of, or sale of any properties or assets (real, personal or mixed,
tangible or intangible) to, or any transaction or any agreement or arrangement
with, any corporation or business in which Calogic or any of its stockholders,
officers or directors, or any "affiliate" or "associate" (as such terms are
defined in the rules and regulations promulgated under the Securities Act of
1933, as amended (the "SECURITIES ACT") of any such Person, has any direct or
indirect ownership interests; or
(s) Any agreement undertaking or commitment to do any of the
foregoing.
3.9 REAL PROPERTY. All real property leases, subleases and occupancy
agreements as to which Calogic is a party and any amendments or modifications
thereof (i) are listed in Section 3.9 of the Calogic Disclosure Schedule (each a
"LEASE" and collectively, the "LEASES"); (ii) to the knowledge of Calogic, are
valid, in full force and effect and enforceable, and (iii) there are no existing
defaults thereunder on the part of Calogic. Calogic has not received or given
notice of default or claimed default with respect to any Lease, nor is there any
event that with notice or lapse of time, or both, would constitute a default on
the part of Calogic or to the knowledge of Calogic any landlord thereunder. In
addition, copies of any non-disturbance agreements which relate to any of the
Leases are listed in Section 3.9 of the Calogic Disclosure Schedule. All rent
and other sums and charges payable by Calogic under each Lease have been paid
through the date hereof and shall be paid by Calogic through the Closing. The
premises demised under each of the Leases and the improvements, equipment and
fixtures therein are in good operating condition and repair reasonable wear and
tear excepted. To the knowledge of Calogic, the premises demised under each of
the Leases (i) is in compliance with all applicable laws, (ii) is not subject to
any official complaint or notice of violation of any applicable zoning ordinance
or building code, (iii) is not subject to any use or occupancy restriction, and
(iv) is not subject to any pending or threatened condemnation proceeding.
Calogic does not own, or have options to purchase, any real property.
3.10 PERSONAL PROPERTY. Calogic has good and marketable title, free and
clear of all title defects and Liens, except for any liens that do not exceed
$50,000 in the aggregate and any lien for current taxes not yet due and payable,
to all inventory, receivables, furniture, machinery, equipment and other
personal property, tangible or otherwise, reflected on the Unaudited Balance
Sheet or used in Calogic's business, except for acquisitions and dispositions
since the Unaudited Balance Sheet Date in the ordinary course of business. The
Calogic Disclosure Schedule lists (i) all computer equipment and (ii) all other
personal property, in each case having a depreciated book value of $25,000 or
more, which
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are used by Calogic in the conduct of its business, and all such equipment and
property, in the aggregate, is in good operating condition and repair,
reasonable wear and tear excepted. There is no tangible asset used or required
by Calogic in the conduct of its business as presently operated which is not
either owned by it or licensed or leased to it.
3.11 CERTAIN TRANSACTIONS. Except for (a) relationships with Calogic as
an officer, director, or employee thereof (and compensation by Calogic in
consideration of such services) and (b) relationships with Calogic as
stockholders or option holders therein, none of the directors, officers, or
stockholders of Calogic, or any member of any of their families, is presently a
party to, or was a party to during the year preceding the date of this
Agreement, any transaction, or series of similar transactions, with Calogic, in
which the amount involved exceeds $60,000, including, without limitation, any
material contract, agreement, or other arrangement (i) providing for the
furnishing of services to or by, (ii) providing for rental of real or personal
property to or from, or (iii) otherwise requiring payments to or from, any such
Person or any other Person in which any such Person has or had a 5%-or-more
interest (as a stockholder, partner, beneficiary, or otherwise) or is or was a
director, officer, employee, or trustee. None of Calogic's officers or directors
has any interest in any property, real or personal, tangible or intangible,
including inventions, copyrights, trademarks, or trade names, used in or
pertaining to the business of Calogic, or any supplier, distributor, or customer
of Calogic, except for the normal rights of a stockholder, and except for rights
under existing employee benefit plans.
3.12 LITIGATION AND OTHER PROCEEDINGS. There is no action, suit, claim,
investigation or proceeding pending against or, to the knowledge of Calogic,
threatened against Calogic or its properties and assets before any court or
arbitrator or any Governmental Entity. Calogic is not subject to any order,
writ, judgment, decree, or injunction that has a material adverse effect on
Calogic's Business Condition.
3.13 NO DEFAULTS. Calogic is not, nor has Calogic received notice that
it would be with the passage of time, in default or violation of any term,
condition, or provision of (i) the Charter Documents; (ii) any judgment, decree,
or order applicable to Calogic; or (iii) any loan or credit agreement, note,
bond, mortgage, indenture, contract, agreement, lease, license, or other
instrument to which Calogic is now a party or by which it or any of its
properties or assets may be bound, except for defaults and violations which,
individually or in the aggregate, would not have a material adverse effect on
the Business Condition of Calogic.
3.14 MAJOR CONTRACTS. Calogic is not a party to or subject to:
(a) Any union contract, or any employment contract or
arrangement (other than "at-will" employment arrangements) providing for future
compensation, written or oral, with any officer, consultant, director, or
employee;
(b) Any plan or contract or arrangement, written or oral,
providing for bonuses, pensions, deferred compensation, retirement payments,
profit-sharing or the like;
(c) Any joint venture contract or arrangement or any other
agreement which has involved or is expected to involve a sharing of profits;
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(d) Any OEM agreement, reseller or distribution agreement,
volume purchase agreement, corporate end user sales or service agreement,
reproduction or replication agreement or manufacturing agreement in which the
amount involved exceeds annually, or is expected to exceed in the aggregate over
the life of the contract, $50,000 or pursuant to which Calogic has granted or
received manufacturing rights, most favored nation pricing provisions, or
exclusive marketing, production, publishing or distribution rights related to
any product, group of products or territory;
(e) Any lease for real or personal property in which the
amount of payments which Calogic is required to make on an annual basis exceeds
$50,000;
(f) Any agreement, license, franchise, permit, indenture, or
authorization which has not been terminated or performed in its entirety and not
renewed which may be, by its terms, terminated, impaired, or materially
adversely affected by reason of the execution of this Agreement and all other
agreements contemplated hereby, the consummation of the Merger, or the
consummation of the transactions contemplated hereby or thereby;
(g) Except for trade indebtedness incurred in the ordinary
course of business, any instrument evidencing or related in any way to
indebtedness incurred in the acquisition of companies or other entities or
indebtedness for borrowed money by way of direct loan, sale of debt securities,
purchase money obligation, conditional sale, guarantee, or otherwise which
individually is in the amount of $50,000 or more;
(h) Any license agreement, either as licensor or licensee
(excluding nonexclusive hardware and software licenses granted to distributors
or end-users and commercially available in-licensed software applications);
(i) Any contract or agreement containing covenants purporting
to limit Calogic's freedom to compete in any line of business in any geographic
area; or
(j) Any contract or agreement, not elsewhere specifically
disclosed pursuant to this Agreement, other than in the ordinary course of
business and involving the payment or receipt by Calogic of more than $50,000 in
the aggregate.
To the knowledge of Calogic, based upon the fact that Calogic has not
received written notice to the contrary, all contracts, arrangements, plans,
agreements, leases, licenses, franchises, permits, indentures, authorizations,
instruments and other commitments which are listed in the Calogic Disclosure
Schedule pursuant to this Section 3.14 are valid and in full force and effect
and Calogic has not, nor, has any other party thereto, materially breached any
material provisions of, or entered into material default in any material respect
under the terms thereof. Since the Audited Balance Sheet Date, Calogic has not
amended, modified or terminated the terms of the contracts or agreements
referred to in this Section 3.14 unless such amendment, modification or
termination was in the ordinary course of business and Calogic has provided
Parent with written notification of such.
3.15 MATERIAL REDUCTIONS. To Calogic's knowledge, none of the parties
to any of the contracts identified in the Calogic Disclosure Schedule pursuant
to Section 3.14 have terminated, or, expressed to Calogic an intent to reduce or
terminate the amount of its business with Calogic by an amount in excess of
$50,000 in the aggregate.
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3.16 INSURANCE AND BANKING FACILITIES. Section 3.16 of the Calogic
Disclosure Schedule contains a complete and correct list of (i) all contracts of
insurance or indemnity of Calogic in force at the date of this Agreement
(including name of insurer or indemnitor, agent, annual premium, coverage,
deductible amounts and expiration date) and (ii) the names and locations of all
banks in which Calogic has accounts or safe deposit boxes, the designation of
each such account and safe deposit box, and the names of all persons authorized
to draw on or have access to each such account and safe deposit box. All
premiums and other payments due from Calogic with respect to any such contracts
of insurance or indemnity have been paid, and Calogic has not received any
notice that any such contract is to be canceled or terminated. All known claims
for insurance or indemnity have been presented subject to any deductible.
3.17 EMPLOYEES. Section 3.17 of the Calogic Disclosure Schedule sets
forth a list of (a) the names, titles, salaries and all other compensation of
all salaried Calogic employees (such term meaning permanent and temporary,
full-time and part-time employees) and (b) the wage rates for non-salaried
Calogic employees (by classification). To the knowledge of Calogic, any persons
engaged by Calogic as independent contractors, rather than employees, have been
properly classified as such and have been so engaged in accordance with all
applicable federal, foreign, state or local laws. No employee has stated to
Calogic that such employee intends to resign or retire as a result of the
transactions contemplated by this Agreement or otherwise within six months after
the Closing Date. Hours worked by and payments made to employees of Calogic have
not been in violation of the Fair Labor Standards Act or any other applicable
federal, foreign, state or local laws dealing with such matters. Calogic is not
and during the past 2 years has not been engaged in any dispute or litigation
with an employee or former employee regarding matters pertaining to intellectual
property or assignment of inventions. To the knowledge of Calogic, it is not
now, nor has it been during the past 2 years, subject to a union organizing
effort. Calogic does not have any written contract of employment or other
employment, severance or similar agreement with any of its employees or any
established policy or practice relating thereto, and all of its employees are
employees-at-will. Calogic is not a party to any pending, or to Calogic's
knowledge, threatened, labor dispute. Calogic has complied in all material
respects with all applicable federal, state and local laws, ordinances, rules
and regulations and requirements relating to the employment of labor, including
but not limited to the provisions thereof relating to wages, hours, collective
bargaining and ensuring equality of opportunity for employment and advancement
of minorities and women. There are no claims pending, or, to the knowledge of
Calogic, threatened to be brought, in any court or administrative agency by any
former or current Calogic employees for compensation, pending severance
benefits, vacation time, vacation pay or pension benefits, or, to the knowledge
of Calogic any other claim threatened or pending in any court or administrative
agency from any current or former employee or any other Person arising out of
Calogic's status as employer, whether in the form of claims for employment
discrimination, harassment, unfair labor practices, grievances, wrongful
discharge, or otherwise.
3.18 EMPLOYEE BENEFIT PLANS. Each Plan (as defined below) covering
active, former, or retired employees of Calogic is listed in Section 3.18 of the
Calogic Disclosure Schedule. "PLAN" means any employee benefit plan as defined
in Section 3(3) of ERISA (as defined below) and will also include any Code
Section 125 flexible benefit plan, dependent care reimbursement plan,
employment, severance or similar contract, arrangement or policy and each plan
or arrangement providing for medical care benefits, insurance coverage
(including any self-insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits, pension or
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retirement benefits or for deferred compensation, profit-sharing, bonuses,
phantom stock, stock options, stock appreciation rights or other forms of
incentive compensation or post-retirement insurance, compensation or benefits.
Calogic has provided to Parent a copy of each Plan, and where applicable, any
related trust agreement, annuity, or insurance contract, test results for Code
Section 401(k) and 401(m) nondiscrimination requirements and Code Section 416
top-heavy requirements for the past three years; any material correspondence
with the Internal Revenue Service or Department of Labor; and ; a copy of the
most recent IRS determination or opinion letter. All annual reports (Form 5500)
required to be filed with the Internal Revenue Service have been properly filed
on a timely basis, and Calogic has provided copies of the three most recently
filed Forms 5500 for each Plan for which such Forms 5500 were required to be
filed. Each Plan intended to be qualified under Section 401(a) of the Code has
been determined by the Internal Revenue Service to be so qualified and, to the
knowledge of Calogic, no event has occurred and no condition exists with respect
to the form or operation of such Plans that would cause the loss of such
qualification or the imposition of any material liability, penalty or tax under
ERISA or the Code. To the knowledge of Calogic, each trust maintained in
connection with a Plan is exempt from federal income tax under Section 501(a) of
the Code.. No operational error has occurred which would adversely affect the
qualified status of the Plan. No Plan is covered by Title IV of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or Section 412 of
the Code. No "prohibited transaction," as defined in ERISA Section 406 or Code
Section 4975 has occurred with respect to any Plan, unless such a transaction
was exempt from such rules. Each Plan has been maintained and administered in
material compliance with its terms and with the requirements prescribed by any
and all statutes, orders, rules and regulations, including but not limited to
ERISA and the Code, which are applicable to such Plans. To the knowledge of
Calogic, there are no pending or threatened claims against or otherwise
involving any of the Plans and no suit, action, or other litigation (excluding
claims for benefits incurred in the ordinary course of Plan activities) has been
brought against or with respect to any Plan. All contributions, reserves, or
premium payments to the Plan, accrued to the date hereof have been made or
provided for. Neither Calogic nor any entity which is considered one employer
with Calogic under Section 414 of the Code or Section 4001 of ERISA has ever
maintained or contributed to or incurred or, to the knowledge of Calogic,
expects to incur liability with respect to any Plan subject to Title IV of ERISA
or any "multi-employer plan" within the meaning of Section 4001(a)(3) of ERISA.
There are no restrictions on the rights of Calogic to amend or terminate any
Plan without incurring any liability thereunder. Calogic has not engaged in or
is a successor or parent corporation to an entity that has engaged in a
transaction described in ERISA Section 4069. There have been no amendments to,
written interpretation of, or announcement (whether or not written) by Calogic
relating to, or change in employee participation or coverage under, any Plan.
Neither Calogic nor any of its ERISA affiliates have any current or projected
liability in respect of post-employment or post-retirement welfare benefits for
retired or former employees of Calogic other than health care continuation
benefits required to be provided under applicable law. No tax under Section
4980B or 4980D of the Code has been incurred in respect of any Plan that is a
group health plan, as defined in Section 5000(b)(1) of the Code. Neither Calogic
nor any Plan has received a distribution of stock from any converted mutual
insurance company.
3.19 CERTAIN AGREEMENTS. Except as contemplated by this Agreement,
neither the execution and delivery of this Agreement and all other agreements
contemplated hereby, nor the consummation of the transactions contemplated
hereby will: (i) result in any payment by Calogic (including, without
limitation, severance, unemployment compensation, parachute payment, bonus or
otherwise) becoming due to any director, employee, or independent contractor of
Calogic under any Plan, agreement, or
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xxxxxxxxx, (xx) increase any benefits otherwise payable under any Plan or
agreement or (iii) result in the acceleration of the time of payment or vesting
of any such benefits.
3.20 POWER OF ATTORNEY. Calogic has no powers of attorney outstanding
(other than those issued in the ordinary course of business).
3.21 BROKERS AND FINDERS. Neither Calogic nor any of its stockholders
has retained any broker, finder, or investment banker in connection with this
Agreement or any of the transactions contemplated by this Agreement, nor does or
will Calogic owe any fee or other amount to any broker, finder, or investment
banker in connection with this Agreement or the transactions contemplated by
this Agreement.
3.22 CERTAIN PAYMENTS. To the knowledge of Calogic, neither Calogic nor
any Person acting on behalf of Calogic has, directly or indirectly, on behalf of
or with respect to Calogic: (i) made an unreported political contribution, (ii)
made or received any payment which was not legal to make or receive, (iii)
engaged in any material transaction or made or received any material payment
which was not properly recorded on the books of Calogic, (iv) created or used
any "off-book" bank or cash account or "slush fund," or (v) engaged in any
conduct constituting a violation of the Foreign Corrupt Practices Act of 1977.
3.23 ENVIRONMENTAL MATTERS. Except as set forth in the Environmental
Assessment Report (as defined in section 8.10) (i) to the knowledge of Calogic,
Calogic has complied in all material respects with all federal, state and local
laws (including, without limitation, case law, rules, regulations, orders,
judgments, decrees, permits, licenses and governmental approvals) which are
intended to protect the environment and/or human health or safety (collectively,
"ENVIRONMENTAL LAWS"); (ii) Calogic has not handled, generated, used, stored,
transported or disposed of any material, substance or waste which is regulated
by Environmental Laws ("HAZARDOUS MATERIALS"), except in material compliance
with Environmental Laws; (iii) to the knowledge of Calogic there is not now, nor
has there ever been, any underground storage tank or asbestos on any real
property owned, operated or leased by Calogic; (iv) Calogic has not conducted,
nor has it received notice of, any environmental investigations, studies,
audits, tests, reviews or analyses, the purpose of which was to discover,
identify, or otherwise characterize the condition of the soil, groundwater, air
or the presence of Hazardous Materials at any real property owned, operated or
leased by Calogic; and (v) Calogic has received no notice of any "Environmental
Liabilities". For purposes of this Agreement, "ENVIRONMENTAL LIABILITIES" are
any claims, demands, or liabilities under Environmental Laws which (i) arise out
of or in any way relate to Calogic's operations or activities, or any real
property at any time owned, operated or leased by Calogic, whether vested or
unvested, contingent or fixed, actual or potential, and (ii) arise from or
relate to actions occurring (including any failure to act) or conditions
existing on or before the Closing Date.
3.24 ENFORCEABILITY OF CONTRACTS, ETC.
(a) To the knowledge of Calogic, based upon the fact that
Calogic has not received written notice to the contrary, no Person that is a
party to any contract, agreement, commitment or plan to which Calogic is a party
has a valid defense, on account of non-performance or malfeasance by Calogic,
which would make any such contracts, agreement, commitment or plan not valid and
binding upon or enforceable against such parties in accordance with their terms,
except to the extent such
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26
enforceability may be subject to or limited by bankruptcy, insolvency,
reorganization, arrangement or similar laws affecting the rights of creditors
generally and usual equity principles.
(b) To the knowledge of Calogic, based upon the fact that
Calogic has not received written notice to the contrary, neither Calogic nor any
other Person, is in material breach or violation of, or default under, any
material contract, agreement, arrangement, commitment or plan to which Calogic
is a party, and no event or action has occurred, is pending, or, to the
knowledge of Calogic, is threatened, which, after the giving of notice, or the
lapse of time, or otherwise, would constitute a material breach or a default by
Calogic or, to the knowledge of Calogic, any other Person, under any material
contract, agreement, arrangement, commitment or plan to which Calogic is a
party.
3.25 ACCOUNTING MATTERS. To the knowledge of Calogic, neither Calogic
nor any of its affiliates has taken or agreed to, or plans to, take any action
that would prevent Parent from accounting for the Merger as a "pooling of
interests" in accordance with generally accepted accounting principles.
Accounting Principles Board Opinion No. 16 and all published rules, regulations
and policies of the Commission.
3.26 YEAR 2000. To the knowledge of Calogic, any reprogramming required
to permit the proper functioning, in and following the year 2000, of Calogic's
computer systems and equipment containing embedded microchips used in Calogic's
business, and the testing of all such systems and equipment, as so reprogrammed,
will be completed by December 31, 1999. To the knowledge of Calogic, the cost to
the Company of such reprogramming and testing and the reasonably foreseeable
consequences of year 2000 to the Company (including, without limitation,
reprogramming errors, products or services provided by Calogic and the failure
of others' systems or equipment) will not have a material adverse effect on
Calogic's Business Condition.
3.27 DISCLOSURE. Neither the representations or warranties made by
Calogic or the Stockholders in this Agreement, nor the Calogic Disclosure
Schedule or any other certificate executed and delivered by Calogic or the
Stockholders pursuant to this Agreement, when taken together, contains any
untrue statement of a material fact, or omits to state a material fact necessary
to make the statements or facts contained herein or therein not misleading in
light of the circumstances under which they were furnished.
3.29 RELIANCE. The foregoing representations and warranties are made by
Calogic and the Stockholders with the knowledge and expectation that Parent and
Merger Sub are placing reliance thereon.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
Except as set forth in the disclosure schedule of the Stockholders
dated as of the date hereof and delivered herewith to Parent (the "Stockholder
Disclosure Schedule") which identifies the section and subsection to which each
disclosure therein relates, and whether or not the Stockholder Disclosure
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Schedule is referred to in a specific section or subsection, each Stockholder
severally represents and warrants to Parent and Merger Sub as follows:
(a) Subject to applicable community property laws, such
Calogic Stockholder is the lawful owner of the shares of Calogic Common Stock to
be exchanged for the Parent Merger Shares pursuant to this Agreement and has,
and on the Closing Date will have, good and clear title to such shares of
Calogic Common Stock, free of all Liens.
(b) Such Stockholder has, and on the Closing Date will have,
full legal right, power and authority to enter into this Agreement and to sell
and deliver the shares of Calogic Common Stock owned by him, her or it in the
manner provided herein. Such Stockholder has duly and validly executed this
Agreement and has, or prior to the Closing, will have duly and validly executed
and delivered all other agreements contemplated hereby to be executed by such
stockholder, and each of this Agreement and such other agreements constitutes a
valid, binding and enforceable obligation of such Stockholder in accordance with
its terms except insofar as enforceability may be affected by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, and general principles of equity.
(c) The execution, delivery and performance of this Agreement
and the other agreements contemplated hereby by such Stockholder, and the
consummation of the transactions contemplated hereby or thereby, will not
require, on the part of such Stockholder, any consent, approval, authorization
or other order of, or any filing with, any Governmental Entity, or under any
contract, agreement or commitment to which such Stockholder is a party or by
which such Stockholder or property of such Stockholder is bound, assuming the
accuracy of the representations and warranties of Parent and Merger Sub
contained in this Agreement and the other agreements contemplated hereby, except
for (i) the filing by Calogic and Merger Sub of the appropriate Merger Documents
with the Secretary of State of California and Delaware, (ii) any filings
required by the H-S-R Act, and (iii) the filings described in Section 5.7, and
will not constitute a violation on the part of such Stockholder of any law,
administrative regulation or ruling or court decree, or any contract, agreement
or commitment, applicable to such Stockholder or property of such Stockholder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the disclosure schedule of Parent dated as of
the date hereof and delivered herewith to Calogic (the "PARENT DISCLOSURE
SCHEDULE") which identifies the section and subsection to which each disclosure
therein relates, and whether or not the Parent Disclosure Schedule is referred
to in a specific section or subsection, Parent and Merger Sub jointly and
severally represent and warrant to Calogic as follows:
5.1 ORGANIZATION AND QUALIFICATION. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts, has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its businesses as now
being conducted, and is duly qualified and in good standing to do business in
each jurisdiction in
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which a failure to so qualify would have a material adverse effect on the
Business Condition of Parent. Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, is recently organized and has conducted no business activities,
other than as contemplated by this Agreement.
5.2 CAPITALIZATION. The authorized capital stock of Parent consists of
1,000,000 shares of preferred stock, $.01 par value per share, of which no
shares are issued or outstanding or held in Parent's treasury, and 40,000,000
shares of Parent Common Stock, of which, as of September 30, 1999: (a)
18,093,000 shares were validly issued and outstanding, fully paid and
nonassessable and (b) 3,499,692 shares were reserved for issuance pursuant to
Parent's stock option and stock purchase plans for its employees and directors.
Except for options and rights relating to shares described in clause (b) of the
preceding sentence, and except as set forth in Section 5.2 of the Parent
Disclosure Schedule or the Reports (as defined in Section 5.5), there are no
options, warrants or other rights, agreements or commitments (contingent or
otherwise) obligating Parent to issue shares of its capital stock or any other
securities convertible into or evidencing the right to subscribe to shares of
its capital stock.
5.3 AUTHORITY RELATIVE TO THIS AGREEMENT. The execution, delivery and
performance of this Agreement and all other agreements contemplated hereby by
Parent and Merger Sub have been duly authorized by all necessary action of the
Boards of Directors and stockholders of Parent and Merger Sub. Certified copies
of the resolutions adopted by the Boards of Directors of Parent and Merger Sub
and Parent as sole stockholder of Merger Sub approving this Agreement, all other
agreements contemplated hereby and the Merger have been or will be provided to
Calogic prior to Closing. Each of Parent and Merger Sub has duly and validly
executed and delivered this Agreement and has, or prior to Closing, will have
duly and validly executed and delivered all other agreements contemplated hereby
to be executed by it, and each of this Agreement and such other agreements
constitutes a valid, binding and enforceable obligation of each of Parent and
Merger Sub in accordance with its terms except insofar as enforceability may be
affected by bankruptcy, insolvency, reorganization, moratorium of similar laws
affecting creditors' rights generally, and general principles of equity.
5.4 NON-CONTRAVENTION. Assuming the accuracy of the representations and
warranties of Calogic and its stockholders contained in the Agreement and the
other agreements contemplated hereby, neither the execution, delivery or
performance of this Agreement and all other agreements contemplated hereby by
Parent and Merger Sub, nor the consummation of the Merger or any other
transaction described herein, does or will, after the giving of notice, or the
lapse of time, or otherwise, conflict with, result in a breach of, or constitute
a default under, the Charter Documents of Parent or Merger Sub or any federal,
foreign, state or local court or administrative order or process, statute, law,
ordinance, rule or regulation, or any contract, agreement or commitment to which
Parent is a party, or under which Parent is obligated, or by which Parent or any
of the rights, properties or assets of Parent are subject or bound; result in
the creation of any Lien upon, or otherwise adversely affect, any of the rights,
properties or assets of Parent; terminate, amend or modify, or give any party
the right to terminate, amend, modify, abandon or refuse to perform or comply
with, any contract, agreement or commitment to which Parent is a party, or under
which Parent is obligated, or by which Parent or any of the rights, properties
or assets of Parent are subject or bound; or accelerate, postpone or modify, or
give any party the right to accelerate, postpone or modify, the time within
which, or the terms and conditions under which, any liabilities, duties or
obligations are to be satisfied or performed, or any rights or benefits are to
be received, under any contract, agreement or commitment to which Parent is a
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party, or under which Parent may be obligated, or by which Parent or any of the
rights, properties or assets of Parent are subject or bound, other than any of
the foregoing which would not have, individually or in the aggregate, a material
adverse effect on Business Condition of Parent.
5.5 REPORTS AND FINANCIAL STATEMENTS. Parent has previously furnished
or made available to Calogic true and correct copies of its (i) Form 10-K for
the period ended December 31, 1998, (ii) its Quarterly Report on Form 10-Q for
the period ended June 30, 1999 (the "RECENT 10-Q"), (iii) all other reports
filed by it with the Securities and Exchange Commission (the "COMMISSION") under
the Securities Exchange Act of 1934, as amended (the "Exchange Act") since
January 1, 1999 and (iv) Parent hereby agrees to furnish to Calogic true and
correct copies of all reports filed by it with the Commission after the date
hereof and prior to the Closing all in the form (including exhibits) so filed
(collectively, the "REPORTS"). As of their respective dates, the Reports
complied or will comply in all material respects with the then applicable
published rules and regulations of the Commission with respect thereto at the
date of their issuance and did not or will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. As of the date hereof, no additional
filings or amendments to previously filed Reports are required pursuant to such
rules and regulations. Each of the audited consolidated financial statements and
unaudited interim financial statements included in Parent's Reports complied as
to form in all material respects with the published rules and regulations of the
Commission applicable thereto and has been prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as may be
indicated therein or in the notes thereto) and fairly presents the financial
position of the entity or entities to which it relates as at its date or the
results of operations, stockholders' equity or cash flows of such entity or
entities (subject, in the case of unaudited statements, to the absence of
footnote disclosure and in the case of unaudited interim statements to year-end
adjustments, which will not be material either individually or in the aggregate,
and except as described in Section 5.5 of the Parent Disclosure Schedule).
5.6 VALIDITY OF PARENT MERGER SHARES. The Parent Merger Shares to be
issued in the Merger will, when issued, be, validly issued, fully paid and
nonassessable and not subject to any preemptive rights (other than those which
have been duly waived) or to any agreement to which Parent is a party or by
which Parent may be bound.
5.7 CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES. Assuming the
accuracy of the representations and warranties of Calogic and its stockholders
contained in the Agreement and the other agreements contemplated hereby, except
for (a) the requirements of state securities (or "Blue Sky") laws, (b) the
filing and recording of the Merger Documents as provided by the CGCL and the
DGCL, (c) the filing of appropriate documents with the Nasdaq Stock Market and
(d) the filing of a Form D and a Form 8-K with the Commission, if applicable,
and (e) any filings required by the H-S-R Act, no consent, approval order, or
authorization of, or registration, declaration, or filing with or exemption by,
any Governmental Entity is required to be made or obtained by Parent or Merger
Sub in connection with the execution, delivery and performance of this Agreement
and all other agreements contemplated hereby by Parent and Merger Sub or the
consummation of the Merger or any other transaction described herein.
5.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30, 1999,
there has not been any material adverse change in the Business Condition of
Parent.
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5.9 INVESTMENT MATTERS. Parent is acquiring the Calogic Common Stock
for its own account for investment purposes only and not with a view to, or for
sale in connection with, any resale or distribution thereof.
5.10 DISCLOSURE. Neither the representations or warranties made by
Parent in this Agreement, nor the Parent Disclosure Schedule or any other
certificate executed and delivered by Parent pursuant to this Agreement, when
taken together and with knowledge of the contents of the Reports, contains any
untrue statement of a material fact, or omits to state a material fact necessary
to make the statements or facts contained herein or therein not misleading in
light of the circumstances under which they were furnished.
5.11 RELIANCE. The foregoing representations and warranties are made by
Parent with the knowledge and expectation that Calogic and the Stockholders are
placing reliance thereon.
5.12 ACCOUNTING MATTERS. To the knowledge of Parent, neither Parent nor
any of its affiliates has taken or agreed to, or plans to, take any action that
would prevent Parent from accounting for the Merger as a "pooling of interests"
in accordance with generally accepted accounting principles. Accounting
Principles Board Opinion No. 16 and all published rules, regulations and
policies of the Commission.
5.13 WARN ACT. Parent has no intention of initiating a "plant closing"
or "mass layoff" within the meaning of the Worker Adjustment and Retraining
Notification Act with respect to Calogic employees.
5.14 CERTAIN TAX MATTERS. To Parent's knowledge, neither Parent nor any
of its subsidiaries has taken or agreed to take any action that would reasonably
be expected to cause the Merger to fail to qualify as a reorganization within
the meaning of Section 368(a) of the Code.
ARTICLE VI
COVENANTS OF CALOGIC
During the period from the date of this Agreement (except as
otherwise indicated) and continuing until the earlier of the termination of this
Agreement or the Effective Time, each of Calogic and the Stockholders agree
(except as expressly contemplated by this Agreement or otherwise permitted with
Parent's prior written consent which consent shall not be unreasonably
withheld):
6.1 CONDUCT OF BUSINESS IN ORDINARY COURSE. Calogic will carry on its
business in the ordinary course in substantially the same manner as heretofore
conducted and, to the extent consistent with such business, use all reasonable
best efforts to preserve intact its present business organization, keep
available the services of its present officers, consultants and employees and
preserve its relationships with customers, suppliers and distributors and others
having business dealings with it. Calogic will confer on a regular and frequent
basis with representatives of Parent to report operational matters of a material
nature and to report the general status of the ongoing operations of the
business of
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Calogic. The foregoing notwithstanding, Calogic will not except as consented to
in writing by Parent (such consent not to be unreasonably withheld):
(a) other than in the ordinary course of business, enter into
any material commitment or transaction, including but not limited to any
purchase of assets (other than raw materials, supplies or cash equivalents) for
a purchase price in excess of $50,000;
(b) grant any bonus, severance or termination pay to any
officer, director, independent contractor or employee of Calogic except as set
forth in Section 3.8 of the Calogic Disclosure Schedule;
(c) enter into or amend any agreements pursuant to which any
other party is granted support, service, marketing or publishing rights, or is
granted distribution rights of any type or scope with respect to any products of
Calogic, other than in the ordinary course of business;
(d) other than in the ordinary course of business, enter into
or terminate any contracts, arrangements, plans, agreements, leases, licenses,
franchises, permits, indentures, authorizations, instruments, or commitments, or
amend or otherwise change in any material respect the terms thereof in a manner
adverse to Calogic;
(e) commence a lawsuit other than: (i) for the routine
collection of bills, (ii) in such cases where Calogic in good faith determines
that failure to commence suit would result in a material impairment of a
valuable aspect of Calogic's business; provided, that Calogic consults with
Parent prior to filing such suit, or (iii) for a breach of this Agreement or any
agreement related hereto;
(f) modify in any material respect existing discounts or other
terms and conditions with dealers, distributors and other resellers of Calogic's
products or services in a manner adverse to Calogic;
(g) accelerate the vesting or otherwise modify any Calogic
Option, restricted stock or other outstanding rights or other securities;
(h) take any action which would make any representation or
warranty in this Agreement untrue or incorrect, as if made as of such time;
(i) make or change any material election in respect of Taxes,
adopt or change any accounting method in respect of Taxes, enter into any
closing agreement, settle any claim or assessment in respect of Taxes, or
consent to any extension or waiver of the limitation period applicable to any
claim or assessment in respect of Taxes; or
(j) agree in writing or otherwise to take any of the foregoing
actions.
6.2 DIVIDENDS, ISSUANCE OF, OR CHANGES IN SECURITIES. Calogic will not:
(i) declare or pay any dividends on or make other distributions to its
stockholders (whether in cash, shares or property), (ii) issue, deliver, sell,
or authorize, propose, or agree to, or commit to the issuance, delivery, or sale
of any shares of its capital stock of any class, any Company Voting Debt or any
securities convertible into its capital stock, any options, warrants, calls,
conversion rights, commitments, agreements, contracts,
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understandings, restrictions, arrangements or rights of any character obligating
Calogic to issue any such shares, Company Voting Debt or other convertible
securities except as any of the foregoing is required by Calogic Options; (iii)
split, combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of capital stock of Calogic, (iv) repurchase or otherwise acquire,
directly or indirectly, any shares of its capital stock or options or warrants
related thereto, or (v) propose any of the foregoing except as contemplated
herein in connection with the transactions described in this Agreement.
6.3 GOVERNING DOCUMENTS. Calogic will not amend its Charter Documents.
6.4 NO ACQUISITIONS. Calogic will not authorize, recommend, propose or
announce an intention to authorize, recommend or propose, or enter into a letter
of intent (whether or not binding), an agreement in principle or an agreement
with respect to any merger, consolidation or business combination (other than
the Merger), or any acquisition of assets or securities, other than acquisitions
in the ordinary course of business.
6.5 NO DISPOSITIONS. Calogic will not sell, lease, license, transfer,
mortgage, encumber or otherwise dispose of any of its material assets or cancel,
release, or assign any material indebtedness or claim, except in the ordinary
course of business.
6.6 INDEBTEDNESS. Calogic will not incur indebtedness in excess of an
aggregate amount of $500,000 for borrowed money by way of direct loan, sale of
debt securities, purchase money obligation, conditional sale, guarantee or
otherwise.
6.7 COMPENSATION. Calogic will not adopt or amend, or modify in any
material respect, any Plan or pay any pension or retirement allowance not
required by any existing Plan. Calogic will not enter into or modify any
employment or severance contracts, increase the salaries, wage rates or fringe
benefits of its officers, directors or employees or pay bonuses or other
remuneration except for current salaries, severance and other remuneration for
which Calogic is obligated under arrangements existing prior to the Unaudited
Balance Sheet Date to which Calogic is a party and which have been disclosed in
the Calogic Disclosure Schedule.
6.8 CLAIMS. Calogic will not settle any claim, action or proceeding,
except in the ordinary course of business.
6.9 ACCESS TO PROPERTIES AND RECORDS. Subject to contractual and other
obligations, Calogic will give Parent and its representatives full access, at a
place reasonably acceptable to Calogic, during reasonable business hours and
following reasonable notice but in such a manner as not unduly to disrupt the
business of Calogic, to its senior management, senior technical personnel,
premises, properties, contracts, commitments, books, records and affairs, and
will provide Parent with such financial, technical and operating data and other
information pertaining to its business as Parent may reasonably request. With
Calogic's prior consent, which will not be unreasonably withheld, Parent will be
entitled in conjunction with Calogic personnel to make appropriate inquiries of
third parties in the course of its investigation.
6.10 BREACH OF REPRESENTATIONS AND WARRANTIES. Calogic will not take
any action that would cause or constitute a breach of any of the representations
and warranties set forth in Article III or that
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would cause any of such representations and warranties to be inaccurate in any
material respect or that would constitute a breach of any of its other
obligations under this Agreement. In the event of, and promptly after obtaining
knowledge of, the occurrence of or the pending or threatened occurrence of any
event that would cause or constitute such a breach or inaccuracy, Calogic will
give detailed notice thereof to Parent and will use its reasonable best efforts
to prevent or remedy promptly such breach or inaccuracy.
6.11 CONSENTS. Calogic will promptly apply for or otherwise seek and
use its reasonable best efforts to obtain, all Consents, and make all filings
required with respect to the consummation of the Merger.
6.12 TAX RETURNS. Calogic will promptly provide or make available to
Parent copies of all of its tax returns, reports and information statements that
have been filed or are filed prior to the Closing Date.
6.13 STOCKHOLDER APPROVAL. Each of the Stockholders agrees to vote all
of such Stockholder's shares of Calogic Common Stock for the approval of this
Agreement and the appropriate Merger Documents as required by the CGCL.
6.14 PREPARATION OF DISCLOSURE AND SOLICITATION MATERIALS. As promptly
as practicable after the execution of this Agreement, Calogic will promptly
submit to its stockholders, information and documents relating to Calogic, its
business or operations, Parent, its business or operations, the terms of the
Merger and this Agreement as reasonably agreed by counsel to Parent and Calogic
and intended to comply in all material respects with Regulation D under the
Securities Act and the material facts concerning all payments which in the
absence of stockholder approval would be "Parachute Payments" as defined in Code
Section 280G(b)(2), in form and substance satisfactory to Parent and its
counsel, to satisfy all requirements applicable to Calogic of applicable state
and federal securities laws, the CGCL and Code Section 280G(b)(5)(B) and the
regulations thereunder. Calogic will promptly set a record date, give notice of
a special meeting, solicit consents and/or give notices to holders of Dissenting
Shares so as to facilitate the Closing of the Merger as of the earliest
practicable date.
6.15 EXCLUSIVITY; ACQUISITION PROPOSALS. Unless and until this
Agreement will have been terminated by either party pursuant to Article XI
hereof and thereafter subject to Section 11.5, neither Calogic nor any of the
Stockholders will (and each will use its reasonable best efforts to ensure that
none of its officers, directors, agents, representatives or affiliates) take or
cause or permit any Person to take, directly or indirectly, any of the following
actions with any party other than Parent and its designees: (i) solicit,
encourage, initiate or participate in any negotiations, inquiries, or
discussions with respect to any offer or proposal to acquire all or any
significant part of Calogic's business, assets or capital stock, whether by
merger, consolidation, other business combination, purchase of assets, tender or
exchange offer or otherwise (each of the foregoing, an "ACQUISITION
TRANSACTION"), (ii) disclose, in connection with an Acquisition Transaction, any
information not customarily disclosed to any Person other than Parent or its
representatives concerning Calogic's business or properties or afford to any
Person other than Parent or its representatives access to its properties, books,
or records, except in the ordinary course of business and as required by law or
pursuant to a governmental request for information, (iii) enter into or execute
any agreement relating to an Acquisition Transaction, or (iv) make or authorize
any public statement, recommendation or solicitation in support of any
Acquisition Transaction or any offer or proposal relating to an Acquisition
Transaction other than with respect to
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the Merger. In the event that Calogic is contacted by any third party expressing
an interest in discussing an Acquisition Transaction, Calogic will promptly
notify Parent of such contact and the identity of the party so contacting
Calogic.
6.16 NOTICE OF EVENTS. Throughout the period between the date of this
Agreement and the Closing, Calogic will promptly advise and consult with Parent
regarding (i) any and all material events and developments concerning its
financial position, results of operations, assets, liabilities or business and
(ii) any and all material adverse changes to the representations, warranties and
covenants of Calogic and the Stockholders contained in this Agreement.
6.17 REASONABLE BEST EFFORTS. Calogic and each of the Stockholders will
use their reasonable best efforts to effectuate the transactions contemplated
hereby and to fulfill and cause to be fulfilled the conditions to Closing under
this Agreement.
6.18 INSURANCE. Calogic will use its reasonable best efforts to
maintain in force at the Effective Time policies of insurance of the same
character and coverage as those described in the Calogic Disclosure Schedule,
and Calogic will promptly notify Parent in writing of any material changes in
such insurance coverage occurring prior to the Effective Time.
ARTICLE VII
COVENANTS OF PARENT
During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Effective Time (or later
where so indicated), Parent and Merger Sub agree (except as expressly
contemplated by this Agreement or with Calogic's prior written consent which
consent will not be unreasonably withheld):
7.1 BREACH OF REPRESENTATIONS AND WARRANTIES. Neither Parent nor Merger
Sub will take any action which would cause or constitute a breach of any of the
representations and warranties set forth in Article V or which would cause any
of such representations and warranties to be inaccurate in any material respect
or that would constitute a breach of any of its other obligations under this
Agreement. In the event of, and promptly after becoming aware of, the occurrence
of or the pending or threatened occurrence of any event which would cause or
constitute such a breach or inaccuracy, Parent will give detailed notice thereof
to Calogic and will use its reasonable best efforts to prevent or remedy
promptly such breach or inaccuracy.
7.2 ADDITIONAL INFORMATION; ACCESS. Parent will provide Calogic and its
stockholders with the information relating to Parent referred to in Section 5.5.
In addition, Parent will afford to Calogic and to its counsel and to the persons
expected to become stockholders of Parent pursuant to the Merger access
throughout the period prior to the Effective Time to its senior management and
all other information concerning Parent as Calogic or such stockholder may
reasonably request. Such stockholders will also be afforded the opportunity to
ask questions and to receive accurate and complete answers from Parent
concerning the terms and conditions of the Merger and the issuance of the Parent
Merger Shares pursuant thereto.
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7.3 CONSENTS. Parent will promptly apply for or otherwise seek, and use
its reasonable best efforts to obtain, all consents and approvals, and make
filings, required with respect to the consummation of the Merger.
7.4 REASONABLE BEST EFFORTS. Each of Parent and Merger Sub will use its
reasonable best efforts to effectuate the transactions contemplated hereby and
to fulfill and cause to be fulfilled the conditions to Closing under this
Agreement.
7.5 OFFICERS AND DIRECTORS. Parent agrees that all rights to
indemnification existing on the date hereof in favor of the present or former
officers and directors of Calogic with respect to actions taken in their
capacities as directors or officers of Calogic prior to the Effective Time as
provided in the Charter Documents of Calogic and any applicable indemnification
agreements (copies of which have been provided to Parent) will survive the
Merger and continue in full force and effect following the Effective Time and
the obligations related thereto will be assumed by Parent. Notwithstanding the
foregoing the provisions of such Charter Documents or agreements will have no
effect on the obligations of any stockholders of Calogic pursuant to Article X
of this Agreement or the Escrow Agreement.
7.6 NASDAQ NATIONAL MARKET LISTING. Parent will use its reasonable best
efforts to cause the Parent Merger Shares to be authorized for trading on the
Nasdaq National Market as soon as practicable. Parent will use its best efforts
to issue its fourth quarter 1999 and year-end earnings press release prior to
February 29, 2000.
7.7 NOTICE OF EVENTS. Throughout the period between the date of this
Agreement and the Closing, Parent will promptly advise and consult with Calogic
regarding any and all material adverse change to the representations, warranties
and covenants of Parent and Merger Sub contained in this Agreement.
7.8 THIRD PARTY BENEFICIARIES. Sections 7.5 and 7.6 will survive the
consummation of the Merger, are intended to benefit the stockholders of Calogic
that receive Parent Merger Shares (the "NEW PARENT STOCKHOLDERS"), will be
binding on Parent and its successors and assigns, and will be enforceable by the
officers and directors of Calogic and the New Parent Stockholders.
7.9 EXCLUSIVITY; ACQUISITION PROPOSALS. Unless and until this Agreement
will have been terminated by either party pursuant to Article XI hereof and
thereafter subject to Section 11.5, Parent will not (and will use its reasonable
best efforts to ensure that none of its officers, directors, agents,
representatives or affiliates) take or cause or permit any Person to take,
directly or indirectly any of the following actions with any party other than
Calogic or its Stockholders unless the Board of Directors of Parent believes,
after consultation with outside legal counsel, that the failure to take such
actions would be inconsistent with the fiduciary duties of the Board of
Directors: (i) solicit, encourage, initiate or participate in any negotiations,
inquiries, or discussions with respect to any offer or proposal to acquire all
or any significant part of Parent's business, assets or capital stock, whether
by merger, consolidation, other business combination, purchase of assets, tender
or exchange offer or otherwise (each of the foregoing, an "ACQUISITION
TRANSACTION"), (ii) disclose, in connection with an Acquisition Transaction, any
information not customarily disclosed to any Person other than to Calogic
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and the Stockholders concerning Parent's business or properties or afford to any
Person other than to Calogic and the Stockholders access to its properties,
books, or records, except in the ordinary course of business and as required by
law or pursuant to a governmental request for information, (iii) enter into or
execute any agreement relating to an Acquisition Transaction, or (iv) make or
authorize any public statement, recommendation or solicitation in support of any
Acquisition Transaction or any offer or proposal relating to an Acquisition
Transaction other than with respect to the Merger. In the event that Parent is
contacted by any third party expressing an interest in discussing an Acquisition
Transaction, Parent will promptly notify Calogic of such contact and the
identity of the party so contacting Parent.
ARTICLE VIII
ADDITIONAL AGREEMENTS
In addition to the foregoing, Parent, Merger Sub, Calogic and the
Stockholders each agree to take the following actions after the execution of
this Agreement.
8.1 INVESTMENT AGREEMENTS. All resales of Parent Merger Shares by the
New Parent Stockholders will be subject to the restrictions imposed by the
investment agreements (the "INVESTMENT AGREEMENTS") in the form attached as
EXHIBIT 8.1 and the registration rights agreement (the "REGISTRATION RIGHTS
AGREEMENT") in the form attached as EXHIBIT 8.2, each of which will be entered
into by each New Parent Stockholder and Parent. Parent will be entitled to place
the legends as referred to in the form of Investment Agreement on each
certificate evidencing any Parent Common Shares to be received by New Parent
Stockholders pursuant to the terms of this Agreement and to issue appropriate
stop transfer instructions to the transfer agent for Parent Common Shares
consistent with the terms of the Investment Agreements.
8.2 LEGAL CONDITIONS TO THE MERGER. Each of Parent, Merger Sub, Calogic
and the Stockholders will use all reasonable best efforts to take actions
necessary to comply promptly with all legal requirements which may be imposed on
it with respect to the Merger. Each of Parent, Merger Sub, Calogic and the
Stockholders will use all reasonable best efforts to take all actions to obtain
(and to cooperate with the other parties in obtaining) any consent required to
be obtained or made by Calogic, Merger Sub, or Parent in connection with the
Merger, or the taking of any action contemplated thereby or by this Agreement.
8.3 EMPLOYEE BENEFITS. Nothing contained herein will be considered as
requiring Calogic or Parent to continue any specific plan or benefit, or to
confer upon any employee, beneficiary, dependent, legal representative or
collective bargaining agent of such employee any right or remedy of any nature
or kind whatsoever under or by reason of this Agreement, including without
limitation any right to employment or to continued employment for any specified
period, at any specified location or under any specified job category, except as
specifically provided for in an offer letter or other agreement of employment.
It is specifically understood that continued employment with Calogic or
employment with Parent is not offered or implied for any other employees of
Calogic and any continuation of employment with Calogic after the Closing will
be at will except as specifically provided otherwise in an offer letter or other
agreement of employment.
8.4 EXPENSES. Except as provided below, whether or not the Merger is
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated
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hereby and thereby, including investment banking, legal and accounting expenses,
will be paid by the party incurring such expense; provided, however, that any
expenses incurred by Calogic on its behalf or on behalf of a stockholder in
excess of an aggregate of $450,000 shall be borne or reimbursed by the
Stockholders (without regard to Section 10.4); provided, further, that Calogic
will estimate and itemize any such investment banking, legal and accounting
expenses of Calogic prior to Closing and provide Parent with a copy of such
estimate at least 2 business days prior to the Closing; and provided, further,
that the provisions of this Section 8.4 shall not be construed to relieve a
party from liability resulting from such party's breach of this Agreement.
8.5 ADDITIONAL AGREEMENTS. In case at any time after the Effective Time
any further action is reasonably necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full title
to all properties, assets, rights, approvals, immunities and franchises of
Calogic, the proper officers and directors of each corporation which is a party
to this Agreement will take all such necessary action. Without limiting the
foregoing, on or prior to the Closing Date, Calogic will deliver to Parent a
properly executed statement satisfying the requirements of Treasury Regulation
Sections 1.897-2(h) and 1.1445-2(c)(3) in a form reasonably acceptable to
Parent.
8.6 PUBLIC ANNOUNCEMENTS. Neither Parent, Calogic nor any of the
Stockholders will disseminate any press release or other announcement concerning
this Agreement or the transactions contemplated herein to any third party
(except to the directors, officers and employees of the parties to this
Agreement whose direct involvement is necessary for the consummation of the
transactions contemplated under this Agreement, to the attorneys, advisors and
accountants of the parties hereto, or except as Parent or Calogic determines in
good faith to be required by applicable law) without the prior written agreement
of Parent and Calogic. In the event of any disclosure required by law, Parent
and Calogic will consult each other as to the contents thereof prior to making
such disclosure to the extent permitted by law.
8.7 CONFIDENTIALITY. Calogic and Parent have entered into a Mutual
Non-Disclosure and Confidentiality Agreement dated June 17, 1999 as amended (the
"Non-Disclosure Agreement") concerning each party's obligations to protect the
confidential information of the other party. Calogic and Parent each hereby
affirm each of their obligations under such agreement. If this Agreement is
terminated in accordance with Article XI hereof, Parent will, and will cause its
accountants, counsel and other representatives to deliver to Calogic all
documents and other material, and all copies thereof, obtained by Parent or on
its behalf from Calogic in connection with this Agreement, whether so obtained
before or after the execution hereof, and will not disclose any such information
or documents to any third parties or make any use of such. If this Agreement is
terminated in accordance with Article XI hereof, Calogic will, and will cause
its accountants, counsel and other representatives to, deliver to Parent all
documents and other material, and all copies thereof, obtained by Calogic or on
its behalf or by a Stockholder from Parent in connection with this Agreement,
whether so obtained before or after the execution hereof, and will not disclose
any such information or documents to any third parties or make any use of such.
8.8 POOLING.
(a) Parent, the Merger Sub, Calogic and each of Stockholders
will use all reasonable best efforts, will cooperate fully and will take all
actions as are reasonably necessary to allow the
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Merger and other transactions contemplated by this Agreement to be accounted
for as a "pooling of interests" in accordance with United States generally
accepted accounting principles which will be acceptable to the Commission.
(b) Calogic has delivered to Parent prior to the date of this
Agreement a letter that identifies all persons who it believes (based on the
advice of counsel) may be "affiliates" of Calogic, as such term is used in Rule
145 under the Securities Act and applicable accounting pronouncements of the
Commission (each such Person, an "CALOGIC AFFILIATE"). Each such Calogic
Affiliate has executed and delivered to Parent a written agreement (an
"AFFILIATE AGREEMENT") in the form of EXHIBIT 8.8 hereto to the effect that such
Calogic Affiliate (i) has not made and will not make any disposition of any
shares of Calogic Common Stock or other securities of Calogic in the 30-day
period prior to the Effective Time, and (ii) will not make any disposition of
any of the Parent Merger Shares to be received by such Person after the
Effective Time until Parent shall have publicly released a report including the
combined financial results of Parent and Calogic for a period of at least 30
days of combined operations of Parent and Calogic.
8.9 XXXX-XXXXX-XXXXXX FILING. If and to the extent applicable, Parent,
Calogic and each Stockholder agree to file, and to cause any other Person
obligated to do so as a result of such person's stock holdings in Parent or
Calogic, a Notification and Report Form in accordance with the notification
requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 and the
rules and regulations thereunder (collectively, the "H-S-R ACT") with the
Antitrust Division of the United States Department of Justice and the Federal
Trade Commission within 10 business days of the date hereof and to use its and
their reasonable best efforts to achieve the prompt termination or expiration of
the waiting period or any extension thereof provided for under the HSR Act as a
prerequisite to the consummation of the transactions provided for herein.
8.10 ENVIRONMENTAL MATTERS. Parent has , engaged Xxxxxx-Xxxxxx, Inc.
(the "Environmental Consultant") to do an "environmental site assessment" (the
"Environmental Assessment Report") on Calogic's premises in Freemont and
Pleasanton, California. Calogic agrees to provide reasonable access to Parent
and Environmental Consultant to such premises to permit the preparation of the
Environmental Assessment Report after Calogic has approved the engagement letter
with Environmental Consultant (which approval shall not be unreasonably
withheld) in respect of such Environmental Assessment Report.
Parent agrees to cause such report to be completed as soon as possible,
and in no event later than November 15, 1999. In the event such report indicates
that environmental contamination exists at such premises, then prior to the
Closing Date the parties hereto shall negotiate in good faith as to whether
Calogic will be liable for the costs of remediating any such contamination and
to reduce the number of Parent Merger Shares (valued at the Parent Average
Closing Price) to reflect a reasonable estimate of the liability to Calogic for
the cost of remediating such contamination; provided, however, that in the event
it is not reasonably likely that Calogic would actually be held liable for any
of the costs of remediating such contamination, then no such reduction shall be
made; provided, further, that such reduction shall reflect Calogic's share of
the cost of any such remediation reduced by the liability of any other parties
which may reasonably be determined to share in liability for such remediation
costs or by any anticipated recovery on any available insurance.
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ARTICLE IX
CONDITIONS PRECEDENT
9.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger will be subject to the
satisfaction prior to the Closing Date of the following conditions:
(a) GOVERNMENTAL APPROVALS. Other than the filing of the
Merger Documents with the Secretary of State of California and Delaware, all
statutory requirements and all Consents of Governmental Entities legally
required for the consummation of the Merger and the transactions contemplated by
this Agreement will have been filed, occurred, or been obtained, other than such
Consents for which the failure to obtain would not have a material adverse
effect on the consummation of the Merger or the other transactions contemplated
hereby or on the Business Condition of Parent or Calogic. If and to the extent
applicable, the filing and waiting period requirements under the H-S-R Act will
have been complied with and will have expired or terminated.
(b) NO RESTRAINTS. No statute, rule or regulation, and no
final and nonappealable order, decree or injunction will have been enacted,
entered, promulgated or enforced by any court or Governmental Entity of
competent jurisdiction which enjoins or prohibits the consummation of the
Merger.
9.2 CONDITIONS OF OBLIGATIONS OF PARENT AND MERGER SUB. The obligations
of Parent and Merger Sub to effect the Merger are subject to the satisfaction of
the following conditions unless waived by Parent and Merger Sub:
(a) REPRESENTATIONS AND WARRANTIES OF CALOGIC AND THE
STOCKHOLDERS. The representations and warranties of Calogic and the Stockholders
set forth in this Agreement will be true and correct in all material respects as
of the date of this Agreement and as of the Closing Date as though made on and
as of the Closing Date, except (i) as otherwise contemplated by this Agreement,
(ii) as a result of actions taken or not taken at the direction of or after
consultation with and written concurrence of Parent and (iii) for
representations and warranties specifically limited to an earlier date(s).
Parent will have received a certificate signed by or on behalf of each of the
Stockholders and by the chief executive officer and the chief financial officer
of Calogic to such effect on the Closing Date.
(b) PERFORMANCE OF OBLIGATIONS OF CALOGIC AND THE
STOCKHOLDERS. Calogic and the Stockholders will have performed in all material
respects all agreements and covenants required to be performed by them under
this Agreement prior to the Closing Date except (i) as otherwise contemplated or
permitted by this Agreement and (ii) as a result of actions taken or not taken
at the direction of or after consultation with and written concurrence of
Parent, and Parent will have received a certificate signed by each of the
Stockholders and by the chief executive officer and the chief financial officer
of Calogic to such effect on the Closing Date.
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(c) INVESTMENT AND ESCROW AGREEMENTS. Parent will have
received from stockholders of Calogic constituting at least 95% of the
Outstanding Calogic Shares duly executed Investment Agreements and the Escrow
Agreement.
(d) EMPLOYMENT AND NONCOMPETITION AGREEMENTS. Xxxxxx Del Arroz
will have executed an employment agreement (the "Employment Agreement") and a
non-solicitation agreement (the "Non-Solicitation Agreement") in the form
previously provided by Parent to Calogic.
(e) LEGAL ACTION. There will not be overtly threatened or
pending any action, proceeding or other application before any court or
Governmental Entity brought by any Person or Governmental Entity: (i)
challenging or seeking to restrain or prohibit the consummation of the
transactions contemplated by this Agreement, or seeking to obtain any material
damages from Parent, Merger Sub or Calogic as a result of such transactions; or
(ii) seeking to prohibit or impose any limitations on Parent's ownership or
operation of all or any portion of Calogic's business or assets, or to compel
Parent to dispose of or hold separate all or any portion of its or Calogic's
business or assets as a result of the transactions contemplated by the Agreement
which if successful would have a material adverse effect on Parent's ability to
receive the anticipated benefits of the Merger and the employment of the
individuals referenced in Section 9.2(d).
(f) OPINION OF COUNSEL. Parent will have received an opinion
dated as of the Closing Date of Xxxxx & Xxxxxx, counsel to Calogic, and Xxxxxx
Godward LLP, special counsel to Calogic, substantially in the form attached as
EXHIBIT 9.2.
(g) CONSENTS. Parent will have received duly executed copies
of all Consents relating to the leases for the 235/237/239 Whitney, Fremont,
California and Serpentine, Pleasanton, California locations.
(h) TERMINATION OF RIGHTS AND CERTAIN SECURITIES. Any
registration rights, rights of refusal, voting rights, rights to any liquidation
preference or redemption rights relating to any security of Calogic will have
been terminated or waived or satisfied as of the Closing.
(i) STOCKHOLDER APPROVALS. This Agreement and the Merger will
have been approved by stockholders of Calogic holding at least ninety-five
percent (95%) of the voting power of the Outstanding Calogic Shares. Any
Parachute Payments will have been approved by the percentage of holders of the
Outstanding Calogic Shares as required by law (as reasonably interpreted by
counsel for Parent).
(j) PARENT POOLING LETTER. Parent will have received an
unqualified written opinion from KPMG LLP, Parent's independent accountants, to
the effect that such firm concurs with Parent's management that no conditions
exist that would preclude Parent from accounting for the Merger as a "pooling of
interests" under applicable rules and regulations of the Commission (unless the
failure to receive such opinion results from a breach by Parent or Merger Sub of
any covenant contained in this Agreement).
(k) CORPORATE PROCEEDINGS SATISFACTORY. All corporate and
other proceedings to be taken by Calogic in connection with the transactions
contemplated hereby and all documents incident thereto will be satisfactory in
form and substance to Parent and its counsel, and Parent and its counsel
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will have received all such counterpart originals or certified or other copies
of such documents as they reasonably may request.
(l) SECURITIES LAW COMPLIANCE. Parent will be satisfied, in
its sole discretion, that the approval of the Merger, this Agreement and all
associated transactions by the stockholders of Calogic and the issuance of
Parent Merger Shares hereunder will have been conducted in compliance with
Regulation D under the Securities Act;
(m) TERMINATION OF CERTAIN AGREEMENT AND ARRANGEMENTS. The
agreements and arrangements described in Section 3.17(8) of the Calogic
Disclosure Schedule will have been terminated with no liability to Calogic and
evidence of such termination will have been delivered to Parent.
9.3 CONDITIONS OF OBLIGATIONS OF CALOGIC AND STOCKHOLDERS. The
obligation of Calogic and the Stockholders to effect the Merger is subject to
the satisfaction of the following conditions unless waived by Calogic and the
Stockholders:
(a) REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.
The representations and warranties of Parent and Merger Sub set forth in this
Agreement will be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date, except as otherwise contemplated by this Agreement, and Calogic
will have received a certificate signed on behalf of Parent and Merger Sub by a
duly authorized officer of Parent and Merger Sub to such effect on the Closing
Date.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND MERGER SUB.
Parent and Merger Sub will have performed in all material respects all
agreements and covenants required to be performed by them under this Agreement
prior to the Closing Date, and Calogic will have received a certificate signed
on behalf of Parent and Merger Sub by duly authorized officers of Parent and
Merger Sub to such effect on the Closing Date.
(c) OPINION OF PARENT'S COUNSEL. Calogic and the Stockholders
have received an opinion dated the Closing Date of Xxxxx, Xxxxxxx & Xxxxxxxxx,
LLP, substantially in the form attached as EXHIBIT 9.3.
(d) STOCKHOLDER APPROVAL. This Agreement and the Merger will
have been approved and adopted by the requisite vote of the stockholders of
Calogic, as required by the CGCL and Calogic's Charter Documents; provided,
however, that the inclusion of this condition will not be construed in any way
as excusing any of the Stockholders from fulfilling their covenant in Section
6.13.
(e) ESCROW AND REGISTRATION RIGHTS AGREEMENTS. Parent shall
have duly executed and delivered the Escrow Agreement and the Registration
Rights Agreement.
(f) LEGAL ACTION. There will not be overtly threatened or
pending any action, proceeding or other application before any court or
Governmental Entity brought by any Person or Governmental Entity: (i)
challenging or seeking to restrain or prohibit the consummation of the
transactions contemplated by this Agreement, or seeking to obtain any material
damages from Calogic
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or the Stockholders as a result of the transactions contemplated by this
Agreement or (ii) restricting in any way the receipt, ownership, or ability to
dispose of the consideration to be received by any stockholder of Calogic in the
transactions contemplated by this Agreement.
(g) PARENT AVERAGE CLOSING PRICE. The Parent Average Closing
Price shall be greater than or equal to $ 6.00, subject to adjustment, as
appropriate, for any stock split, stock dividend, reclassification,
recapitalization or similar event.
(h) CORPORATE PROCEEDINGS SATISFACTORY. All corporate and
other proceedings to be taken by Parent in connection with the transactions
contemplated hereby and all documents incident thereto will be satisfactory in
form and substance to Calogic and its counsel, and Calogic and its counsel will
have received all such counterpart originals or certified or other copies of
such documents as they reasonably may request.
ARTICLE X
INDEMNIFICATION
10.1 INDEMNIFICATION RELATING TO AGREEMENT. Subject to Sections 10.4
and 10.6, the Stockholders and, as an integral term of the Merger, all other
stockholders of Calogic who accept the Parent Merger Shares and execute the
Escrow Agreement (which is a condition to receiving such consideration), jointly
and severally, hereby agree to defend, indemnify and hold Parent harmless from
and against, and to reimburse Parent with respect to, any and all losses,
damages, liabilities, claims, judgments, settlements, fines, costs and expenses
(including reasonable attorneys' fees), determined as provided in Section 10.4
("INDEMNIFIABLE AMOUNTS"), of every nature whatsoever incurred by Parent (which
will be deemed to include any of the foregoing incurred by the Surviving
Corporation) by reason of or arising out of or in connection with (i) any
breach, or any claim (including claims by parties other than Parent) that
constitutes a breach, by Calogic or any of the Stockholders of any
representation or warranty of Calogic or the Stockholders contained in this
Agreement or in any certificate or other document delivered to Parent pursuant
to this Agreement, other than any breach or related claim taken or not taken at
the written direction of or after consultation with and written concurrence of
Parent, (ii) the failure, partial or total, of Calogic or any of the
Stockholders to perform any agreement or covenant required by this Agreement to
be performed by it or them other than any breach or related claim taken or not
taken at the written direction of or after consultation with and written
concurrence of Parent and (iii) any federal or state Tax liability, or asserted
liability, of Calogic attributable to periods (or any portion thereof) ending on
or prior to the Closing but only to the extent such liabilities were not accrued
for on the Balance Sheet. The foregoing obligations to indemnify Parent will be
determined without regard to any right to indemnification to which any Person
may have in his or her capacity as an officer, director, employee, agent or any
other capacity of Calogic, and no stockholder of Calogic will be entitled to any
indemnification from Calogic or the Surviving Corporation for amounts paid
hereunder. There will be no right of contribution or subrogation from Parent or
the Surviving Corporation for indemnification payments made by or for the
account of the Stockholders.
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10.2 THIRD PARTY CLAIMS. With respect to any claims or demands by third
parties as to which Parent may seek indemnification hereunder, other than claims
or demands covered by Section 10.3, whenever Parent will have received a written
notice that such a claim or demand has been asserted or threatened, Parent will
promptly notify the "Indemnification Representative" (as designated in the
Escrow Agreement) of such claim or demand and of the facts within Parent's
knowledge that relate thereto within a reasonable time after receiving such
written notice. The Indemnification Representative will then have the right to
defend, contest, negotiate or settle any such claim or demand through counsel of
his own selection, reasonably satisfactory to Parent, and solely at the
Stockholders' own cost and expense, which costs and expenses will be payable out
of the property being held pursuant to the Escrow Agreement. Notwithstanding the
preceding sentence, the Indemnification Representative will not settle,
compromise, or offer to settle or compromise any such claim or demand without
the prior written consent of Parent, which consent will not be unreasonably
withheld. Without limiting Parent's rights to object for other reasons, Parent
may object to a settlement or compromise which includes any provision which in
its reasonable judgment may have an adverse impact on or establish an adverse
precedent for the Business Condition of Parent or any of its Subsidiaries. If
the Indemnification Representative gives notice to Parent within twenty (20)
calendar days after Parent has notified the Indemnification Representative that
any such claim or demand has been made in writing, that the Indemnification
Representative elects to have Parent defend, contest, negotiate, or settle any
such claim or demand, then Parent will have the right to contest and/or settle
any such claim or demand and seek indemnification pursuant to this Article X as
to any Indemnifiable Amounts; provided, however, that Parent will not settle,
compromise, or offer to settle or compromise any such claim or demand without
the prior written consent (which may include a general or limited consent) of
the Indemnification Representative, which consent will not be unreasonably
withheld. If the Indemnification Representative fails to give written notice to
Parent of his intention to contest or settle any such claim or demand within
twenty (20) calendar days after Parent has notified the Indemnification
Representative that any such claim or demand has been made in writing, or if any
such notice is given but any such claim or demand is not contested by the
Indemnification Representative within a reasonable time thereafter, Parent will
have the right to contest and/or settle any such claim or demand in its sole
discretion and seek indemnification pursuant to this Article X as to any
Indemnifiable Amounts.
10.3 TAX CONTESTS. Notwithstanding any of the foregoing, Parent will
have the right to conduct any Tax audit or other Tax contest relating to the
Surviving Corporation. Parent will conduct any such Tax audit or other Tax
contest in good faith. With respect to any matters relating to such Tax audits
or other Tax contests as to which Parent may seek indemnification hereunder,
Parent shall consult with the Indemnification Representative and allow him to
comment before taking any position or making any written submission with any
Governmental Entity with regard to any Indemnifiable matter.
10.4 LIMITATIONS. Notwithstanding any other provision in this Article
X, Parent will be entitled to indemnification only to the extent that the
aggregate Indemnifiable Amounts (which shall be determined for all purposes of
this Article X disregarding any qualification in any representation or warranty
as to "materially" or "material") exceed Five Hundred Thousand Dollars
($500,000) (the "THRESHOLD AMOUNT"). The aggregate amount to which Parent will
be entitled to be indemnified will not exceed a dollar amount equal to ten
percent (10%) of Parent Merger Shares valued at the Parent Average Closing
Price, and the liability of any single Stockholder for indemnification
obligations shall be limited to such Stockholder's pro rata share of any
Indemnifiable Amounts based on the number of
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Parent Merger Shares received by such Stockholder relative to the aggregate
number of Parent Merger Shares; provided, however, that the limitation on the
obligations of any Person for Indemnifiable Amounts arising out of criminal
activity or fraud or willful misstatements or omissions by Calogic or such
Person will be a Dollar amount equal to the aggregate number of Parent Merger
Shares received by such Person valued at the Parent Average Closing Price.
Parent will first seek reimbursement of any Indemnifiable Amounts pursuant to
the provisions of the Escrow Agreement, but may seek indemnification hereunder
with respect to any Indemnifiable Amounts after the termination of the Escrow
Agreement, subject to Section 10.6. During the term of the Escrow Agreement,
Parent's sole remedy will be a claim pursuant to the Escrow Agreement. To the
extent Parent is paid an amount on account of an Indemnifiable matter in excess
of the limitation set forth above, Parent will promptly remit such excess amount
to the party entitled thereto.
10.5 BINDING EFFECT. The indemnification obligations contained in this
Article X are an integral part of this Agreement and the Merger in the absence
of which Parent would not have entered into this Agreement.
10.6 TIME LIMIT. The representations, warranties, covenants and
agreements of Calogic and the Stockholders set forth in this Agreement will
survive the Closing and the consummation of the transactions contemplated by
this Agreement, but, absent fraud, any claims with respect thereto may be made
only on or before the first yearly anniversary of the date of this Agreement;
provided, however, that claims relating to the representations and warranties in
Section 3.6 may be made only on or before the date Parent publishes financial
results covering at least 30 days combined operations of Parent and Calogic.
10.7 SOLE REMEDY. Notwithstanding any other provision in this Agreement
to the contrary, except as provided for in the Holder Agreement of even date
herewith, among Parent, Calogic and Xxxxxx Del Arroz (the "Holder Agreement")
the provisions of this Article X and the provisions of the Escrow Agreement will
be the sole and exclusive remedy of (and corresponding liability of any
stockholder of Calogic, in such stockholder's capacity as such, to) Parent,
Merger Sub and the Surviving Corporation for any damage, claim, cause of action
or right of any nature arising out of or relating to this Agreement, the
certificates or other documents executed or delivered herewith, or the
transactions contemplated hereby; provided, however, that nothing in this
Agreement or the Escrow Agreement will be deemed to limit any right or remedy
for criminal activity or fraud, or willful misstatements or omissions, or
breaches of covenants or inaccuracies in any representations or warranties set
forth in any other agreement contemplated by this Agreement, including any
Investment Agreement, Affiliate Agreement, the Employment Agreement, the Non
solicitation Agreement, the Registration Rights Agreement or the Holder
Agreement.
ARTICLE XA
INDEMNIFICATION BY PARENT
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10.1A INDEMNIFICATION RELATING TO AGREEMENT. Subject to Sections 10.2A
and 10.3A, Parent hereby agrees to defend, indemnify and hold the Stockholders
and all other stockholders of Calogic who accept the Parent Merger Shares (the
"INDEMNIFIED STOCKHOLDERS") harmless from and against, and to reimburse the
Indemnified Stockholders with respect to, any and all losses, damages,
liabilities, claims, judgments, settlements, fines, costs and expenses
(including reasonable attorneys' fees), determined as provided in Section 10.2A
("STOCKHOLDER INDEMNIFIABLE AMOUNTS"), of every nature whatsoever incurred by
the Indemnified Stockholders by reason of or arising out of or in connection
with (i) any breach, or any claim that constitutes a breach, by Parent or Merger
Sub of any representation or warranty of Parent or Merger Sub contained in this
Agreement or in any certificate or other document delivered by Parent or Merger
Sub to the Indemnified Stockholders or Calogic pursuant to this Agreement, other
than any breach or related claim taken or not taken at the written direction of
or after consultation with and written concurrence of Calogic or the Indemnified
Stockholders, and (ii) the failure, partial or total, of Parent or Merger Sub to
perform any agreement or covenant required by this Agreement to be performed by
it other than any breach or related claim taken or not taken at the written
direction of or after consultation with and written concurrence of Calogic or
the Indemnified Stockholders.
10.2A LIMITATIONS. Notwithstanding any other provision in this Article
XA, the Indemnified Stockholders will be entitled to indemnification only to the
extent that the aggregate Stockholder Indemnifiable Amounts (which shall be
determined for all purposes of this Article XA disregarding any qualification in
any representation or warranty as to "materially" or "material") exceed Five
Hundred Thousand Dollars ($500,000) (the "STOCKHOLDER THRESHOLD AMOUNT"). The
aggregate amount to which the Indemnified Stockholders will be entitled to be
indemnified will not exceed a dollar amount equal to ten percent (10%) of Parent
Merger Shares valued at the Parent Average Closing Price, provided, however,
that the limitation on the obligations of Parent for Stockholder Indemnifiable
Amounts arising out of criminal activity or fraud or willful misstatements or
omissions by Parent or Merger Sub will be a dollar amount equal to the aggregate
number of Parent Merger Shares valued at the Parent Average Closing Price. To
the extent an Indemnified Stockholder is paid an amount on account of an
Indemnifiable matter in excess of the limitation set forth above, such
Indemnified Stockholder will promptly remit such excess amount to Parent.
10.3A TIME LIMIT. The representations, warranties, covenants and
agreements of Parent and Merger Sub set forth in this Agreement will survive the
Closing and the consummation of the transactions contemplated by this Agreement,
but any claims with respect thereto may be made only on or before the first
yearly anniversary of the date of this Agreement; provided, however, that claims
alleging fraud or willful misstatements or omissions of Parent or Merger Sub may
be made only on or before the third yearly anniversary of the Closing Date.
10.4A SOLE REMEDY. Notwithstanding any other provision in this
Agreement to the contrary, the provisions of this Article XA will be the sole
and exclusive remedy of (and corresponding liability of Parent and Merger Sub)
the Indemnified Stockholders for any damage, claim, cause of action or right of
any nature arising out of or relating to this Agreement, the certificates or
other documents executed or delivered herewith, or the transactions contemplated
hereby; provided, however, that nothing in this Agreement will be deemed to
limit any right or remedy for criminal activity or fraud, or willful
misstatements or omissions, or breaches of covenants or inaccuracies in any
representations or warranties set forth in any other agreement contemplated by
this Agreement, including any employment agreements or the Registration Rights
Agreement.
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ARTICLE XI
TERMINATION
11.1 MUTUAL AGREEMENT. This Agreement may be terminated at any time
prior to the Effective Time by the written consent of Parent and Calogic.
11.2 TERMINATION BY PARENT. This Agreement may be terminated by Parent
(provided that it is not then in material breach of any representation,
warranty, covenant or agreement contained in this Agreement) alone, by means of
written notice to Calogic, if there has been a material breach by Calogic or a
Stockholder of any representation, warranty, covenant or agreement set forth in
this Agreement or other ancillary agreements, which breach would result in a
failure to satisfy the closing conditions contained in Section 9.2 and has not
been cured within five (5) business days following receipt by Calogic of notice
of such breach.
11.3 TERMINATION BY CALOGIC. This Agreement may be terminated by
Calogic (provided that it is not then in material breach of any representation,
warranty, covenant or agreement contained in this Agreement) alone, by means of
written notice to Parent, if there has been a material breach by Parent of any
representation, warranty, covenant or agreement set forth in this Agreement or
other ancillary agreements, which breach would result in a failure to satisfy
the closing conditions contained in Section 9.3 and has not been cured within
five (5) business days following receipt by Parent of notice of such breach.
11.4 OUTSIDE DATE. This Agreement may be terminated by Parent alone or
by Calogic alone by means of written notice if the Effective Time does not occur
on or prior to November 30, 1999; provided, however, that the right to terminate
this Agreement pursuant to the preceding clause will not be available to any
party whose failure to fulfill any obligation under this Agreement has been a
significant cause of, or resulted in, the failure of the Effective Time to occur
on or before such date.
11.5 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Calogic or Parent as provided in this Article, this
Agreement will forthwith become void and have no effect, and there will be no
liability or obligation on the part of Parent, Calogic, Merger Sub, the
Stockholders or their respective officers or directors, except that (i) the
provisions of Sections 8.4, 8.6, 8.7 (including the provisions of the
Non-Disclosure Agreement) and 12.2 will survive any such termination and
abandonment, and (ii) no party will be released or relieved from any liability
arising from the willful breach by such party prior to termination of any of its
representations, warranties, covenants or agreements as set forth in this
Agreement.
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ARTICLE XII
MISCELLANEOUS
12.1 ENTIRE AGREEMENT. This Agreement, including the exhibits,
schedules and other agreements delivered pursuant to this Agreement, contains
all of the terms and conditions agreed upon by the parties relating to the
subject matter of this Agreement and supersedes all prior agreements,
negotiations, correspondence, undertakings and communications of the parties,
whether oral or written, respecting that subject matter other than the
Non-Disclosure Agreement and the Holder Agreement.
12.2 GOVERNING LAW; CONSENT TO JURISDICTION. The Merger will be
governed by the CGCL and the DGCL to the extent applicable, and all other
aspects of this Agreement will be governed by the internal laws of the
Commonwealth of Massachusetts. Legal proceedings relating to this Agreement, the
agreements executed in connection with this Agreement or the transactions
contemplated hereby or thereby may be commenced only in the state or federal
courts in Boston, Massachusetts. Each of the parties hereby consents to the
exclusive jurisdiction of such courts (and of the appropriate appellate courts)
in any such action or proceeding and waives any objection to venue laid therein.
The foregoing provisions will not be construed to preclude any party from
bringing a counter-claim in any action or proceeding properly commenced in
accordance with the foregoing provisions. Process in any such action or
proceeding may be served on any party anywhere in the world. Notwithstanding the
foregoing, any dispute relating to a claim under the Escrow Agreement will be
resolved in accordance with the arbitration provisions of the Escrow Agreement.
12.3 NOTICES. All notices, requests, demands or other communications
which are required or may be given pursuant to the terms of this Agreement will
be in writing and will be deemed to have been duly given: (i) on the date of
delivery if personally delivered by hand, (ii) upon the third day after such
notice is deposited in the United States mail, if mailed by registered or
certified mail, postage prepaid, return receipt requested, (iii) upon the date
scheduled for delivery after such notice is sent by a nationally recognized
overnight express courier or (iv) by fax upon written confirmation (including
the automatic confirmation that is received from the recipient's fax machine) of
receipt by the recipient of such notice:
IF TO PARENT OR MERGER SUB Sipex Corporation
00 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx XxXxxxxx
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
WITH A COPY TO:
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
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IF TO CALOGIC: Calogic
000 Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Chief Executive Officer
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
WITH A COPY TO:
Xxxxxx Godward LLP
Xxx Xxxxxxxx Xxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000-0000
Attention: Xxxxxx Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
Such addresses may be changed, from time to time, by means of a notice
given in the manner provided in this Section 12.3.
12.4 SEVERABILITY. If any provision of this Agreement is held to be
unenforceable for any reason, it will be modified rather than voided, if
possible, in order to achieve the intent of the parties to this Agreement to the
extent possible. In any event, all other provisions of this Agreement will be
deemed valid and enforceable to the full extent.
12.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties contained in this Agreement, including the exhibits and schedules
delivered pursuant to this Agreement, will survive the Effective Time, but any
claims for breach thereof may only be made within any applicable time limits
specified herein or in the Escrow Agreement.
12.6 ASSIGNMENT. No party to this Agreement may assign, by operation of
law or otherwise, all or any portion of its rights, obligations, or liabilities
under this Agreement without the prior written consent of Calogic, Merger Sub
and Parent, which consent may be withheld in the absolute discretion of the
party asked to grant such consent; provided however, that no such assignment
which materially adversely reflects the rights of a Stockholder will be made
without the written consent of such Stockholder. Any attempted assignment by
Merger Sub or Parent, on the one hand, or by Calogic, on the other hand, in
violation of this Section 12.6 will be voidable and will entitle Calogic or
Parent, respectively, to terminate this Agreement at its option.
12.7 COUNTERPARTS. This Agreement may be executed in two or more
partially or fully executed counterparts each of which will be deemed an
original and will bind the signatory, but all of which together will constitute
but one and the same instrument. The execution and delivery of a Signature Page
to Agreement and Plan of Reorganization in the form annexed to this Agreement,
including a facsimile copy of the actual signature, by any party hereto who will
have been furnished the final form of this Agreement will constitute the
execution and delivery of this Agreement by such party.
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12.8 AMENDMENT. This Agreement may not be amended except by an
instrument in writing executed by Calogic, Merger Sub and Parent; provided
however, that no such amendment which materially adversely affects the rights or
obligations of any Stockholder will be made without the written consent of such
Stockholder.
12.9 EXTENSION, WAIVER. At any time prior to the Effective Time, any
party hereto may, to the extent legally allowed: (i) extend the time for the
performance of any of the obligations or other acts of any other party hereto to
the party extending such time, (ii) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto, and (iii) waive compliance with any of the
agreements, covenants or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver will be valid only if set forth in an instrument in writing signed on
behalf of such party.
12.10 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference will be to a Section, Exhibit or
Schedule to this Agreement unless otherwise indicated. The words "include,"
"includes," and "including" when used therein will be deemed in each case to be
followed by the words "without limitation." The table of contents, index to
defined terms, and headings contained in this Agreement are for reference
purposes only and will not affect in any way the meaning or interpretation of
this Agreement.
12.11 KNOWLEDGE. For purposes of this Agreement, the term "KNOWLEDGE"
(including any derivation thereof such as "know" or "knowing" and regardless of
whether such word starts with an initial capital) in reference to Calogic will
mean the knowledge of the directors and executive officers of Calogic and the
Stockholders (the "Specified Individuals"). For purposes of this Agreement, a
Specified Individual shall not be deemed to have any knowledge of the inaccuracy
of any representation, warranty or other statement unless such Specified
Individual actually knows that such representation, warranty or other statement
is materially inaccurate. No knowledge shall be imputed to any Specified
Individual.
12.12 TRANSFER, SALES, DOCUMENTARY, STAMP AND OTHER SIMILAR TAXES. Any
and all transfer, sales, documentary, stamp and other similar Taxes imposed in
connection with the transactions contemplated by this Agreement will be paid by
the stockholder of Calogic with respect to which such Tax relates. At Parent's
discretion, the amount paid to any Person pursuant to this Agreement will be
reduced by the amount of Taxes payable by such Person pursuant to this Section
12.12. Any amounts so withheld will be promptly remitted to the appropriate
taxing authority.
12.13 REMEDIES NOT EXCLUSIVE. The rights and remedies of the parties
hereto shall be cumulative (and not alternative). The parties to this Agreement
agree that, in the event of any breach or threatened breach by any party to this
Agreement of any covenant, obligation or other provision set forth in this
Agreement for the benefit of any other party to this Agreement, such other party
shall be entitled (in addition to any other remedy that may be available to it)
to a) a decree or order of specific performance or mandamus to enforce the
observance and performance of such covenant, obligation or other provision, and
(b) an injunction restraining such breach or threatened breach. Neither Parent
nor any other Stockholder or Indemnitee shall be required to provide any bond or
other security in connection with any such decree, order or injunction or in
connection with any related action or legal proceeding.
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12.14 LIMITATION ON RECOVERY. For purposes of Article III and Article
IV, neither Calogic nor any Stockholder shall be deemed to have breached any
representation or warranty if Parent or Merger Sub had, on the date hereof,
knowledge of the breach of such representation or warranty and for purposes of
this Section 12.4 Parent and Merger Sub will be deemed to have knowledge of the
contents of any documents delivered to, or reviewed by, them by Calogic or its
representatives. For purposes of Article V, neither Parent nor Merger Sub shall
be deemed to have breached any representation or warranty if Calogic or any
Stockholder had, on the date hereof, knowledge of the breach of such
representation or warranty.
(The remainder of this page has been left blank intentionally.)
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Signature Page to
Agreement and Plan of Reorganization
IN WITNESS WHEREOF, Parent, Merger Sub, Calogic and the Stockholders
have executed this Agreement as of the date first written above.
SIPEX CORPORATION CALOGIC
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxxx Del Arroz
-------------------------------- ----------------------------------
Title: CEO Title: CEO/President of Calogic
CAT Acquisition Corporation I
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------
Title: CEO
STOCKHOLDERS:
Name of Stockholder: /s/ Xxxxxx Del Arroz
----------------------
By: Manny Del Arroz
---------------------------------------
Title, if any: CEO/President of
Calogic Corp.
Name of Stockholder: ______________________
By: __________________________
Title, if any:
Name of Stockholder: ______________________
By: __________________________
Title, if any:
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CERTIFICATES OF APPROVAL BY STOCKHOLDERS
The undersigned Secretary of Calogic hereby certifies that holders of
shares of Common Stock of Calogic, out of 345,000 shares of such Common Stock
outstanding and entitled to vote approved the foregoing Agreement and Plan of
Reorganization on October 19, 1999.
CALOGIC
By: /s/ Xxxxxxx Del Arroz
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Secretary
The undersigned Secretary of CAT Acquisition Corporation I hereby
certifies that the sole stockholder of CAT Acquisition Corporation I approved
the foregoing Agreement and Plan of Reorganization on October 23, 1999.
CAT ACQUISITION CORPORATION I
By: /s/ Xxxxx X. XxXxxxxx
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Secretary
